Governor Hochul: “New York has more legal dispensaries owned by people directly harmed by disproportionate enforcement of drug laws in communities of color than every other state combined. So, that objective is being met. The law was written to help those with prior convictions of felonies as well as veterans, service-disabled veterans who need our help, MWBEs. And that's why, accordance with the laws, we issued them their licenses first.”
Hochul: “These illicit vendors flagrantly violate our laws by selling to kids, evading our taxes, and engaging in fraudulent advertising about their products. Sometimes the products are even laced with dangerous chemicals… every day that these shops are open, they endanger public health and hurt people like those standing with me here today.”
Earlier today, Governor Kathy Hochul was joined by representatives of New York’s legal cannabis retailers, including Conditional Adult-Use Retail Dispensary (CAURD) licensees, to announce the State’s steps forward in shutting down the illegal cannabis market. Unlicensed cannabis businesses have continued to open and operate throughout the state, often selling untested product and creating nuisances in communities. Further, these storefronts have stymied the growth of New York’s legal industry and the retailers operating therein.
VIDEO of the event is available on YouTube and in TV quality (h.264, mp4) format.
AUDIO of the Governor's remarks is available here.
PHOTOS of the event are available on the Governor's Flickr page.
A rush transcript of the Governor's remarks is available below:
Good afternoon. Joining me today are an extraordinary group of hardworking New York entrepreneurs. Black, Latino, women, immigrant, military, veteran, business owners who stake their futures on the legal cannabis industry. They've done everything by the book, and they've waited a long time to fill their dreams of being part of a new, emerging, exciting industry here in the State of New York.
But right now, their businesses, their very existence, is under attack by illegal pot shops that seem to line every block, sometimes every other building, in neighborhoods in this City and across the State of New York. These illicit vendors flagrantly violate our laws by selling to kids, evading our taxes, and engaging in fraudulent advertising about their products. Sometimes the products are even laced with dangerous chemicals.
I say every day that these shops are open, they endanger public health and hurt people like those standing with me here today. Some of these entrepreneurs or their families were harmed by the long and futile war on marijuana. That was one of the categories that the law was intended to help and empower. And in a few minutes, you'll hear their stories of trying to build in this environment – building a business with a preexisting market overrun already with bad actors. An unfair competition that has gone on far too long.
But first, let's level set where we are in the cannabis rollout. It's been a long journey to get here. Lots of growing pains along the way. When I first took office, nothing had been done to implement New York's new cannabis law, the legal cannabis law. There was no infrastructure. We needed to step in, literally plant the seeds, cultivate this budding industry from the ground up. And then, just as we were getting the details worked out, regulations took time, it took time to staff. Just as everything was moving along, we were finally making progress, I say a group of greedy out of state corporate conglomerates who wanted to freeze out the little guy, they got a court order bringing our industry to a screeching halt.
Then a series of lawsuits, restraining orders stopping half the growth in our State, were brought in challenging every aspect of our law and regulations. So, we had to spend months, money, time, effort, fighting them in court and in the process, these lawsuits hurt the farmers, they hurt communities of color who were in the process of building this business, and they hurt local families who put everything they had on the table. And putting their dreams of owning their own business on hold – days turned to weeks, weeks turned to months, and people started to wonder, is this dream now dead in the State of New York? Will this ever happen?
Now, with all the legal battles finally behind us, as recently as December, and hopefully no more, the momentum is finally picking up. Fifty licensed dispensaries have been opened since the injunction was lifted in December. We'll be up to 80 by Friday. Finally, some progress. But as this young industry takes steps, another threat looms that I mentioned – the illicit shops that blatantly ignore the rules and undermine our efforts to support legitimate, approved business owners.
Last year we worked with the legislature, wanted to do more but at least we got more fines for the illegal cannabis shops. Much of this was not envisioned in the original law. But we learned over the last year we had to take it a step further – $10,000, $20,000 fines are just too small, and they take too long to collect. They have drawn out investigations, months of hearings and appeals before these shops are told to pony up. In the meantime, guess what happens? The doors are still open. The money keeps rolling in. More and more cash keeps going in their doors and not the doors of our legitimate operators. And that's what needs to change.
Today, I'm renewing my call for stronger measures to enforce our cannabis law, which I first proposed in my State of the State address in January. And I want to give my colleagues in the legislature this message, because we want to work together to make sure this is successful. Let's give states and localities ways that they can padlock the doors, number one, and shut down these flagrant violators.
Let's start doing that. Let's start having some teeth. They can appeal their fines. They can appeal their closure. Everybody gets due process. But while that plays out in the courts, they would be shuttered and out of business. The padlock stays on. And they'll have to factor that into their business model on whether it makes sense for them to continue.
And remember right now, this is what's frustrating because we wanted more, but only the Office of Cannabis Management and the Department of Taxation and Finance, which we had to push hard to get even in the law last year, they're the only agencies in power to enforce our cannabis laws. But by enlisting our localities, places like the City of New York, we'll have exponentially more people investigating and eventually helping shutter these illegal shops.
Now, I've heard some comments about how enforcing the law that was written to protect those who are doing it the right way, again, represented by these individuals – that somehow that's going to return to the bad old days of mass incarceration of people of color. And yet over two thirds of the legal dispensaries we have are minority and woman owned businesses.
And last year we doubled the number of legal black owned dispensaries that exist, not just in New York, doubled the number nationwide because of what we did here in the State of New York. I think that's significant. In fact, New York has more legal dispensaries owned by people directly harmed by disproportionate enforcement of drug laws in communities of color than every other state combined. So, that objective is being met.
The law was written to help those with prior convictions of felonies as well as veterans, service-disabled veterans who need our help, MWBEs. And that's why, accordance with the laws, we issued them their licenses first. But what has happened while we're giving these groups priority, it doesn't mean anything. It's pretty hollow. If we allow the illegal operators to flood the market with impunity, and that's exactly what happened.
These unlicensed shops charge less because they don't pay taxes. Their customer base is large because they market and sell to minors. And you walk into these stores, and you'll find products, like ice cream shaped like ice cream cones and chocolate bars and gummy rings. And it's also cheaper for them because they're not doing the quality control and the testing to make sure the product is safe. So, that gives them an advantage. They plaster their fake labels on products, so people have no idea. They do not know what's legal and what's not legal.
So, in reality, enforcement and equity go hand in hand here. They're not at odds. We know who we're trying to protect here because if we shut down these illicit dealers, we’re putting money back in the pockets of the underrepresented business owners who went through a rigorous licensing process. And I know you have some more stories to tell about that. Those who sourced their product from New York State farms, we want to help our farmers, who don't market to kids and who pay their taxes that in turn are channeled into the communities that we're trying to help.
And that's what has to happen. It's not about re criminalizing cannabis that’s legal here. We're not kicking in doors and hauling off people in handcuffs. We're talking about stronger civil enforcement, which all businesses are subjected to if they don't operate above the law.
And finally, I want to talk about another challenge. We were just chatting about this before we came out here. The role of social media and the big tech companies. Right now, they're allowing the sowing of a lot of confusion in the marketplace. I think the vast majority of customers, we hope, will want to buy safe, tested products from licensed dealers.
And if you type in cannabis dispensaries in Google Maps or Yelp, you'll get a long list of unlicensed illegal vendors. Now, does anybody have a cell phone on them? Anybody want to show me what that looks like? A rhetorical question. Show us, Alfredo, show us what that looks like. And people assume just because you see it on Google or one of the trusted platforms that they must be legal, right? It gives you that, oh my gosh – alright so, are all these legal?
Alfredo Angueira: No.
Governor Hochul: Okay, there's our answer.
Alfredo Angueira: Just based on the math that you, oh, I'm sorry.
Governor Hochul: No, tell them.
Alfredo Angueira: Just based on the math that you presented with 50 legal within the State of New York, it's impossible for all those to be legal, especially with the thousand-foot radius by the regulations. So, I would venture to guess about two thirds of those, or if not more, would be illicit brick and mortar.
Governor Hochul: This is what we have to stop. This gives the importer of being legal and legitimate when you see this and that is false. That is false. And they're hurting our legal shops, and we've been in touch with these companies, these platforms, and we've told them flat out, you need to change this.
Now, I don't expect them to track down and know who the illegal operators are. They would tell us that they're not required to. So, I say to them, “Let us help you. Let us give you the list of legal vendors.” I know who's legal, we all know who's legal, and then you have a responsibility to make sure that you're not posting the location of illegal shops. Now I'm calling on all these platforms to step up, do the right thing, and be part of the solution. Don't be complicit in helping jeopardize the public health and the livelihoods of these legitimate business owners.
So, it all comes down to a simple question. What kind of cannabis marketplace do we want to have in the State of New York? One where chaos reigns and public health is jeopardized and none of these communities that have waited so long see the benefits? Or are we going to build a marketplace where minorities and women owned businesses, service-disabled veterans, and those involved all can thrive? Where consumers know the products are safe.
When I went and visited one of the early ones in Binghamton, people were literally driving hours to get there, except they view that as a shorter trip than those from Western New York who are going to Massachusetts. These are people that are suffering from conditions they want relief from, and they were so happy they only had to drive two and a half hours to Binghamton. Imagine that – the demand is out there. People want help and it's our job to give it to them.
And we also want to make sure that tax revenue is collected, because we know there's an opportunity here to reinvest that in the communities that were harmed in the past. That is what we're trying to do here – and I think we know the answer. We know which path we want. And we'll get there as soon as we have the power, working with the Legislature in the next few weeks, to give states, which is me and us, and the localities the power to padlock the doors of every illicit cannabis shop in the State of New York. That's how we take back our streets. That's how we take back our streets. That's how we build the most equitable cannabis industry in the country. And that's how we invest in the communities it was intended to help.
I do want to recognize the support of our business leaders here as well, Kathy Wylde, representing the partnership, is here to say that they support our efforts here to build a legal industry, but only support a legal industry, and not allow this proliferation that is really damaging the character of so many of our communities as well. People don't want this any longer, and it's incumbent upon all of us to step up, lend our collective voices, which are powerful, and say, we need changes now.