New Laws Empower the Office of Cannabis Management and the Department of Taxation and Finance to Take Actions Against Unlicensed Dispensaries
Penalties Include Fines of Up to $20,000 Per Day
OCM May Seize Product and Seek Injunctions to Close Illicit Shops; DTF May Issue Fines and Penalties for Unpaid Taxes
Governor Kathy Hochul today signed new legislation to increase civil and tax penalties for the unlicensed and illicit sale of cannabis in New York as part of the FY 2024 Budget. The legislation, first proposed by the Governor in March, provides additional enforcement power to the Office of Cannabis Management and the Department of Taxation and Finance to enforce the new regulatory requirements and close stores engaged in the illegal sale of cannabis.
"As New York State continues to roll out a nation-leading model to establish its cannabis industry, these critical enforcement measures will protect New Yorkers from illicit, unregulated sales," Governor Hochul said. "Unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market. With these enforcement tools, we're paving the way for safer products, reinvestment in communities that endured years of disproportionate enforcement, and greater opportunities for New Yorkers."
The legislation empowers the Office of Cannabis Management and the Department of Taxation and Finance to curb the sale and/or gifting of cannabis from unlicensed storefronts and trucks across New York State. Specifically, this change to state law will allow the Office of Cannabis Management to assess civil penalties against unlicensed cannabis businesses that would undercut their efforts, with fines of up to $20,000 a day for the most egregious conduct. This legislation also makes it a crime to sell cannabis and cannabis products without a license.
Additionally, this legislation will bolster the Office of Cannabis Management's ability to conduct regulatory inspections of businesses selling cannabis and cannabis products, as well as businesses that sell and give away cannabis and cannabis products in indirect ways, such as so-called "sticker shops." The Office of Cannabis Management will seize untested cannabis and cannabis products from unlicensed businesses, and will seek court-orders, closing orders, and removal of commercial tenants who are selling cannabis and cannabis products without the appropriate license.
The Department of Taxation and Finance will now be able to conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid and will be able to levy civil penalties in cases where appropriate taxes have not been paid. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxes, or knowingly possess for sale any cannabis on which tax was required to be paid but was not.
Office of Cannabis Management Executive Director Chris Alexander said, "Today, the State took a necessary step to protect the public health of New Yorkers and to support our state's growing cannabis industry. I appreciate Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie for demonstrating their commitment to establishing the most equitable cannabis market in the nation. Today's legislation will further those goals by giving the Office of Cannabis Management real power to shut down businesses trying to flout our laws and ensure that communities who were promised reinvestment dollars are not shortchanged."
New York State Acting Commissioner of Taxation and Finance Amanda Hiller said, "Strengthening tax laws as they pertain to the cannabis industry and providing for robust and fair enforcement will help the industry to be successful over the long term."
OCM has awarded 165 licenses to date with more to be awarded this month at the Cannabis Control Board meeting. There are currently eight successful dispensaries and one delivery operation in the State, including non-profits, entrepreneurs and a woman-owned business in Manhattan and Queens, entrepreneurs in Ithaca and Schenectady, a non-profit in Binghamton and the state's first delivery business in Albany, with more dispensaries to open in the coming weeks and months. All regulated, licensed dispensaries must post the Dispensary Verification Tool near their main entrance.
On April 18, Governor Hochul announced the launch of "Why Buy Legal New York" to promote safer, informed, legal purchases of cannabis from licensed dispensaries in New York State. This public education campaign provides information on how to find legal dispensaries in New York and tips on how to consume cannabis safely. Materials are available at: cannabis.ny.gov/consumers.