Perkins Coie: New York State Initiates Interagency Enforcement Actions Against Unlicensed Cannabis Businesses

[co-author: Hanna Barker Mullin]

On June 8, 2023, Gov. Kathy Hochul (D) announced a crackdown on sales by unlicensed cannabis sellers, which could face fines of up to $20,000 a day under recent legislation allowing for enhanced enforcement. The legislation allows the Office of Cannabis Management to assess civil penalties against unlicensed cannabis businesses and makes it a crime to sell cannabis and cannabis products without a license. Under the new law, businesses that fail to pay cannabis taxes can also face both civil and criminal penalties for tax fraud.

Illegal cannabis storefronts and trucks that sell untested, unregulated cannabis products are a significant public safety issue, but consumers do not always realize these businesses are unlicensed, given their proliferation amidst the slow ramp-up of the legal, regulated adult-use market. As we have written about previously, the state of New York has attempted to curb these illegal sales by sending warning notices to landlords and establishing QR code verification for licensed businesses.

The latest effort to cease the sale of unregulated cannabis includes an interagency collaboration between the New York State Office of Cannabis Management and the Department of Taxation and Finance, who worked together to conduct inspections at unlicensed cannabis operations in New York City, issuing violation notices and orders to cease unlicensed activity. Additionally, authorities are now allowed to padlock noncompliant buildings. These efforts are expected to be replicated across the state.

Unlicensed sellers are not subject to strict public safety requirements (such as ID verification to confirm that consumers are 21 or older); they similarly avoid paying taxes that not only cover regulatory costs but also are reinvested into communities disproportionately targeted by drug enforcement. Licensed operators in New York must go through a competitive and expensive application and approval process before being authorized to sell lab-tested cannabis products, which must meet certain safety and labeling standards. This enforcement push is calculated to protect both public health and the viability of the regulated marketplace.

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Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Elvin Rodríguez Fabilena


Julie Godard
Carl L Rowley -Thompson Coburn LLP

Jerry Chesler – Chesler Consulting

Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

William Bogot – Fox Rothschild

Valerio Romano, Attorney – VGR Law Firm, PC

Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild