www.forbes.com Open in urlscan Pro
151.101.1.55  Public Scan

Form analysis
2 forms found in the DOM

<form class="search-modal__form"><input class="search-modal__input" type="text" placeholder="Search" autofocus=""><button class="search-modal__submit" role="button" tabindex="0" title="Submit"><svg class="fs-icon fs-icon--arrow-right"
      xmlns="http://www.w3.org/2000/svg" viewBox="0 0 24 24">
      <path d="M12.6 6.4l4.6 4.6H3v2h14.2l-4.6 4.6L14 19l7-7-7-7z"></path>
    </svg></button></form>

<form id="zephr-registration-form-M-GKKEJv" class="zephr-registration-form" style="--zephr-color-text-main:#000000;
--zephr-color-text-tinted:#333333;
--zephr-color-background-main:#FFFFFF;
--zephr-color-background-tinted:#cccccc;
--zephr-color-accent-main:#DCF1FB;
--zephr-color-accent-tinted:#81cdf1;
--zephr-color-action-main:#006EDB;
--zephr-color-action-tinted:#0f87ff;
--zephr-color-warning-main:#D90B00;
--zephr-color-warning-tinted:#ff190d;
--zephr-typography-title-font:Roboto;
--zephr-typography-title-fallbackFont:sans-serif;
--zephr-typography-body-font:Roboto;
--zephr-typography-body-fallbackFont:sans-serif;
--zephr-button-fontWeight:normal;
--zephr-button-fontSize:16;
--zephr-button-borderWidth:0;
--zephr-button-borderRadius:9;
--zephr-button-height:50;
--zephr-input-borderColor:#333333;
--zephr-input-borderWidth:1;
--zephr-input-borderRadius:5;
--zephr-input-height:50;
">
  <div class="zephr-registration-form-text svelte-i1fi5">
    <h1>Log in or create your account</h1>
  </div><label class="zephr-registration-form-input-label svelte-1ok5fdj" for="zephr-registration-form-identifier-M-GKKEJv" style=""><span class="svelte-1ok5fdj">Email</span> </label>
  <div class="zephr-registration-form-relative-container"><input id="zephr-registration-form-identifier-M-GKKEJv" name="zephr-registration-form-identifier-M-GKKEJv" required="" type="email" placeholder="Enter your email"
      class="zephr-registration-form-input zephr-registration-form-input-email svelte-blfh8x"> </div><button class="zephr-registration-form-button svelte-17g75t9" type="submit" disabled="">Sign In Or Register</button>
  <div class=" svelte-1wyy3bx" id="zephr-recaptcha-badge-M-GKKEJv"></div>
  <div class="zephr-registration-form-divider-container svelte-mk4m8o">
    <div class="zephr-registration-form-divider-line svelte-mk4m8o"></div> <span class="zephr-registration-form-divider-text svelte-mk4m8o">OR</span>
    <div class="zephr-registration-form-divider-line svelte-mk4m8o"></div>
  </div>
  <div class="zephr-registration-form-button zephr-registration-form-social-sign-in-button svelte-gp4ky7">
    <div class="zephr-registration-form-flex-container zephr-registration-form-social-sign-in svelte-gp4ky7">
      <div class="zephr-registration-form-social-sign-in-icon svelte-gp4ky7"><svg class="zephr-registration-form-social-sign-in-icon zephr-registration-form-google-icon svelte-1jnblvg" viewBox="0 0 533.5 544.3" xmlns="http://www.w3.org/2000/svg">
          <path d="M533.5 278.4c0-18.5-1.5-37.1-4.7-55.3H272.1v104.8h147c-6.1 33.8-25.7 63.7-54.4 82.7v68h87.7c51.5-47.4 81.1-117.4 81.1-200.2z" fill="#4285f4"></path>
          <path d="M272.1 544.3c73.4 0 135.3-24.1 180.4-65.7l-87.7-68c-24.4 16.6-55.9 26-92.6 26-71 0-131.2-47.9-152.8-112.3H28.9v70.1c46.2 91.9 140.3 149.9 243.2 149.9z" fill="#34a853"></path>
          <path d="M119.3 324.3c-11.4-33.8-11.4-70.4 0-104.2V150H28.9c-38.6 76.9-38.6 167.5 0 244.4l90.4-70.1z" fill="#fbbc04"></path>
          <path d="M272.1 107.7c38.8-.6 76.3 14 104.4 40.8l77.7-77.7C405 24.6 339.7-.8 272.1 0 169.2 0 75.1 58 28.9 150l90.4 70.1c21.5-64.5 81.8-112.4 152.8-112.4z" fill="#ea4335"></path>
        </svg></div> Continue with Google
    </div>
  </div>
  <div class="zephr-registration-form-button zephr-registration-form-social-sign-in-button svelte-gp4ky7">
    <div class="zephr-registration-form-flex-container zephr-registration-form-social-sign-in svelte-gp4ky7">
      <div class="zephr-registration-form-social-sign-in-icon svelte-gp4ky7"><svg id="" class="svelte-fa svelte-1cj2gr0" style="height:1em;line-height:.75em;font-size:1.33333em;vertical-align:-.225em;transform-origin:center;overflow:visible"
          viewBox="0 0 512 512" aria-hidden="true" role="img" xmlns="http://www.w3.org/2000/svg">
          <g transform="translate(256 256)" transform-origin="128 0">
            <g transform="translate(0,0) scale(1,1)">
              <path
                d="M504 256C504 119 393 8 256 8S8 119 8 256c0 123.78 90.69 226.38 209.25 245V327.69h-63V256h63v-54.64c0-62.15 37-96.48 93.67-96.48 27.14 0 55.52 4.84 55.52 4.84v61h-31.28c-30.8 0-40.41 19.12-40.41 38.73V256h68.78l-11 71.69h-57.78V501C413.31 482.38 504 379.78 504 256z"
                fill="#1877f2" transform="translate(-256 -256)"></path>
            </g>
          </g>
        </svg></div> Continue with Facebook
    </div>
  </div>
</form>

Text Content

Subscribe to newsletters

Subscribe
Sign In






















BETA
This is a BETA experience. You may opt-out by clicking here
Edit Story

Vices

Daily Cover


THE KING OF UNLICENSED WEED DISPENSARIES DECLARES WAR ON NEW YORK

Empire of Green: Siblings Jonathan and Lenore Elfand, have built dispensary
chain Empire Cannabis Cl... [+]Empire of Green: Siblings Jonathan and Lenore
Elfand, have built dispensary chain Empire Cannabis Club without a license. [-]
Julia Nikhinson/AP
Will Yakowicz
Forbes Staff
FollowingFollow
Jul 24, 2023,06:30am EDT|
 * Share to Facebook
 * Share to Twitter
 * Share to Linkedin


JONATHAN ELFAND BUILT A $25 MILLION-DOLLAR KINGDOM WITH EMPIRE CANNABIS CLUB.
THEN STATE TAX OFFICIALS RAIDED HIS DISPENSARIES. AND HE’S READY FOR BATTLE.

BY WILL YAKOWICZ, FORBES STAFF



--------------------------------------------------------------------------------

On a hot Tuesday morning in July, a phalanx of New York State Department of
Taxation and Finance agents, with bulletproof vests and handguns on their hips,
descended on two unlicensed cannabis dispensaries in Manhattan. But the
employees of Empire Cannabis Club, which has six locations in the city and is
one of the largest unlicensed marijuana retail operators in the state, were
prepared and would not let them in without a warrant.



So began the mellowest standoff.



Hours later, Jonathan Elfand, co-founder of Empire, lumbered up to the door of
his Chelsea location. He told the agents, who had been standing in the sun, that
he was going to open the door and they can push through behind him but are not
welcome inside. An agent told Elfand he was under arrest for obstruction of
governmental inquiry and slapped cuffs around his wrists. “My attorneys will
love this—let’s go,” the 54-year-old Elfand told the officer. (He was later
released and not charged.) A few miles south, at Empire’s Lower East Side
location, Elfand’s younger sister and business partner, Lenore, was arrested and
charged with obstruction of justice and brought to a police precinct. (The state
has not filed any charges against the business.)




Tax agents seized several pounds of cannabis flower, THC-infused edibles and
vaporizers from an open safe inside one of Empire’s establishments, according to
official evidence documents reviewed by Forbes. The products, which filled a few
trash bags, are worth between $50,000 to $60,000, according to Elfand. For some
businesses, this raid would be devastating. But it was only a small
inconvenience for Empire, which Elfand claims distributed $20 million worth of
product last year. He hopes to hit $35 million in 2023. Launched in September
2021, Empire has 120,000 paying members—some of whom spend $35 per month, while
others shell out $15 for a single visit—and these fees bring in another $5
million a year, Elfand claims. The authorities did not shutter the stores and
the following day all Empire locations were still operating.




Inside his club’s Chelsea location hours after the raid, Elfand, who was with
his sister, brother, Blake, and father, Ralph, was unperturbed by the day’s
festivities. “I’m the fucking king of New York,” he says. “I own the cannabis
trade.”

Lenore, who had just been released from the NYPD’s 7th Precinct, says the Elfand
family is ready to go to war to protect its cannabis kingdom. “We are going to
court—it’s time to prove our legality, what we believed all along and how we're
operating under the law New York wrote,” she says. “We have to fight, and now is
our chance—they came at us.”

The raid of Empire marks a major turning point in the years-long battle between
New York lawmakers, regulators and the state’s vibrant and robust marijuana gray
market. Since legalizing cannabis in March 2021, New York has been slow issuing
licenses—there are currently only 19 licensed stores throughout the state—and
the authorities have been light on enforcement. This environment has led to the
proliferation of an estimated 3,500 unlicensed pot shops across the state. But
New York Governor Kathy Hochul and New York City Mayor Eric Adams have remained
adamant that unlicensed operators are going to be snuffed out.

Last summer, the New York State Office of Cannabis Management sent Empire, and a
slew of other unlicensed operators, a cease-and-desist letter warning that
crackdowns were coming. While some operators closed their dispensaries and
others got raided, the Elfands claim they are operating legally without a
license because of a legal loophole—or what they call a “safe harbor”—in the
state law. Technically speaking, Empire is a private club and does not sell
cannabis—members pay that small fee to enter the store and any money exchanged
for cannabis products is consideration not financial compensation.

--------------------------------------------------------------------------------


CANNABIS LAWS BY STATE



--------------------------------------------------------------------------------



New York regulators don’t see it that way and have stepped up enforcement
efforts in hopes to weed out the unlicensed dispensaries. In June, Governor
Hochul signed new legislation that increases civil and tax penalties for
unlicensed and illicit sale of cannabis. The new law also provides enforcement
power to the Office of Cannabis Management and the Department of Taxation and
Finance to levy penalties—up to $20,000 a day for violations—and shutter stores
selling cannabis illegally. "Unlicensed dispensaries violate our laws, put
public health at risk, and undermine the legal cannabis market,” Governor Hochul
said in a statement at the time.

If New York can successfully scale its recreational marijuana market, it would
become the nation’s second-largest regulated cannabis economy, after California,
with $4.2 billion in annual sales. But with only 19 licensed dispensaries for 19
million residents, legal sales—and the paltry taxes that come from the
struggling legal market—are not bringing in the taxes that were promised. At the
same time, the state is desperately trying to foster an industry composed of
“justice-involved” entrepreneurs, meaning people who have been arrested for
marijuana crimes, with a specific social equity goal of helping Black and brown
entrepreneurs.



Bud Tending: Unlike traditional dispensaries that sell cannabis, Empire operates
with a membership fee, which Elfand believes complies with New York law.

AP Photo by Julia Nikhinson

While the Elfands are white, the family has a long history of selling
cannabis—and many members of the family have the criminal records to prove it.

Jonathan Elfand has been put in handcuffs many times. Born on April Fool’s Day
1969, he grew up between Brooklyn and the Bronx and got into the weed game in
junior high after moving to Florida. He grew his first crop in a house in West
Melbourne and soon expanded to a 12-stall horse ranch his dad owned in Palm Bay.
At 17, he successfully pulled off his first international weed smuggling
operation when he sailed a 32-foot Columbia to Jamaica, loaded it up with 680
pounds of pot and brought it back to Florida. Elfand would repeat that trip half
a dozen times but stopped using the route after an associate was caught by the
National Guard with a shipment off the Florida Keys.

Elfand moved back to New York in 1990, rented a basement in a high-rise in
Manhattan’s Garment District, and converted it into a 200-light grow operation.
By the mid-1990s, he had mastered the art of growing high-end indoor designer
weed with clandestine grows in Brooklyn and became a prolific smuggler who the
government alleged worked with the Arellano-Felix drug cartel in Tijuana. Elfand
would pack trucks with 1,000-pound loads of salsa cans filled with pot and bring
them across the Mexico border to San Diego, where he had a phony marine engine
business that worked as a cover to traffic tens of thousands of pounds of
cannabis to Chicago, Florida and New York via rental trucks, commercial airlines
and the U.S. Mail.



Eventually, America’s war on drugs caught up with him. In 1998, the U.S. Drug
Enforcement Administration and the NYPD busted a sophisticated indoor grow that
Elfand ran with his father and brother inside a four-story Williamsburg
warehouse—the feds alleged there were 2,000 cannabis plants but the exact scale
was never proved in court. "This is the largest seizure of an indoor marijuana
growing operation, within the five boroughs, in recent history for the New York
Division," New York DEA Special Agent Lewis Rice said at the time. The
government alleged that the Elfands’ U.S. Mail scheme alone generated $2 million
a year and the family brought in millions more thanks to their grow operations
and other smuggling routes.

Elfand, who was 30 at the time of his arrest, pleaded guilty to conspiracy to
manufacture and distribute marijuana and was sentenced to 10 years in prison
while his father, then 59, was sentenced to three. “We were bunkies,” says
Ralph, now 83, explaining how father and son shared the same cell in Otisville,
a federal prison in New York’s Hudson Valley. “People would think we were crazy,
but we had a good time in prison.”

Throughout most of his legal issues, Jonathan Elfand has often represented
himself in court and has put forth multiple arguments claiming his arrests,
asset forfeitures and detentions were unconstitutional. He won some, but
Clarence Darrow he is not—having lost many of those arguments in court. Now,
after decades of finding himself standing before judges and sitting in prison
cells, he says he has refined his legal argument and believes even if he gets
indicted on federal marijuana crimes, he could ultimately beat it. His first
step is to go to state court and get his seized product back, which he believes
was taken illegally since he is operating legally under New York’s law.

If the court rules in his favor, Elfand will continue to expand his business. If
it doesn’t go his way, then he will appeal and put forth an argument that he
believes will prevail. “The 14th Amendment is one of the biggest treasures that
we have in the Constitution,” says Elfand.



--------------------------------------------------------------------------------



His argument, which he explains with the conviction of someone without a law
degree, relies on the amendment created after the Civil War that gives equal
protection under the law to all Americans. Elfand believes it will help him
prove that he can legally operate his business, state license or not. He says
the government cannot charge him with marijuana-related crimes without taking
down multibillion-dollar businesses like Curaleaf, Trulieve and Green Thumb
Industries, all of which grow, distribute and sell cannabis legally in multiple
states.

“How are you not charging Curaleaf?” he asks. “It is totally unconstitutional.
Everyone has to be treated the same way.”

Not everyone believes Elfand’s defense is airtight. Paul Armentano, the deputy
director of the non-profit organization NORML (National Organization for the
Reform of Marijuana Laws), dismisses much of Elfand’s legal posturing. “It’s
exasperating,” says Armentano. “I've been doing this for 30 years and I've heard
them all. Just because a law is a bad law doesn’t make it unconstitutional.”

But Sam Kamin, a professor at the University of Denver Sturm College of Law who
has expertise in marijuana laws, gives Elfand some credit for creativity. “The
legal theory, to a layperson, sounds persuasive,” says Kamin. “But I don’t think
a court is likely to buy that argument.”

Kamin, who helped Colorado implement its recreational marijuana program, says
unlicensed businesses try to operate in every new state that launches cannabis
sales, but they eventually get licensed or go out of business. “People think
legalization will be the end of enforcement, but that’s not true,” he says.
“Cannabis legalization isn’t the end of enforcement, it’s regulation and
anything outside of that conduct is criminal.”



But there are some local attorneys who agree with Elfand. Paula Collins, a New
York lawyer who represents many unlicensed cannabis entrepreneurs but is not
involved with the Elfands, says New York “goofed” while writing its law and club
memberships can legally operate under the guidelines.

“We are going to see more activity—a big legal fight,” says Collins. “This is
not illicit cannabis. What they are calling illicit cannabis they have
improperly defined in the law.”

While sitting in Empire Cannabis Club after the raid, and with a new baby at
home, Elfand says he has learned from all the mistakes he’s made that got him
locked up and studied the law so intently that he knows how to operate in a
federally illegal industry without going to prison again. And now he’s ready to
test out his refined legal argument and put his future on the line.

“My kid is always going to be able to look up and know that their dad had the
balls to walk through everything he walked into,” he says. “I do everything
because I know I'm right. If I am wrong somehow, and I lose, I'll take 30
years—let’s get on with it.”






MORE FROM FORBES

MORE FROM FORBESWelcome To New York, The Wild West Of WeedBy Will YakowiczMORE
FROM FORBESNew York's Massive Cannabis Gray Market Could Cost The State $2.6
Billion In Lost Taxes By The End Of The DecadeBy Will YakowiczMORE FROM
FORBESNew York City Starts Weeding Out Its Vast Cannabis Gray MarketBy Will
Yakowicz

Follow me on Twitter. Send me a secure tip. 
Will Yakowicz
Follow



I am a staff writer on the vices beat, covering cannabis, gambling and more. I
believe in the many virtues of vices. Previously at Forbes, I covered the
world’s richest people as a member

... Read More



 * Editorial Standards
 * Print
 * Reprints & Permissions







LOG IN OR CREATE YOUR ACCOUNT

Email

Sign In Or Register


OR


Continue with Google

Continue with Facebook



PREMIUM
Get the tools you need to find success
Subscribe to gain access to premium journalism and members-only events that help
you get ahead

Already a member? Sign in


$6.99

Billed Monthly

Subscribe
SAVE 42%

$49.99

Billed Annually

Subscribe
SAVE 17%

$139.99

Billed Every Two Years

Subscribe
Subscriptions renew automatically. You may cancel your subscription at any time.
Benefits
Premium journalism, deeply reported stories and breaking news
Members-only events
Back to the Home page