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Metro

ILLEGAL WEED SHOPS IN NY SLAPPED WITH $25M IN FINES — BUT THEY’VE ONLY PAID $22K

By Carl Campanile

Published Feb. 22, 2024, 6:49 p.m. ET

New York’s revenue from illegal weed dispensaries is taking a hit.

State regulators have issued $25 million in fines to unlicensed marijuana
operators but only managed to collect a paltry $22,500 from the offenders –
amounting to less than 1% of the penalties, data show.

“It’s not even the cost of doing business,” fumed Joe Rossi, a lobbyist who
represents a number of clients with state licenses in New York’s cannabis
industry.

“There are no repercussions,” Rossi said. “You won’t enforce your way out of
this problem unless people go to jail for breaking the law.”

The state Office of Cannabis Management has confirmed the figures that show the
enormous gap between fines and enforcement, first reported in The City media
outlet.

“Currently, the State is prioritizing shutting down illegal shops and seizing
unlawful products,” OCM spokesman Aaron Ghitelman said.

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“Since new laws were passed in 2023, OCM and Tax [Department] have seized tens
of millions of dollars in illicit products and levied more than $25 million in
fines.

“While we recognize entities being fined have a right to due process, we are
committed to working within the confines of the law to collect the fines once
the legal process is complete.”

Gov. Kathy Hochul proposed new legislation to strengthen enforcement against
illicit cannabis sales by helping OCM, New York City and other local governments
impose higher fines and more quickly shut down unlicensed businesses.

The root of the problem is the language of the original law approved by
then-Gov. Andrew Cuomo and the legislature legalizing the sale of cannabis in
March 2021, insiders said.

The Office of Cannabis Management confirmed only $22,500 has been collected in
the last year despite $25 million issued in fines. Getty Images

Little thought was given to enforcement during the drafting of the Marijuana
Regulation and Taxation Act, according to legislative sources involved in
discussions at the time.

Cracking down on an illicit black market has simply not been a priority during
the slow and rocky rollout of the legal market, critics said.

The Office of Cannabis Management has since appeared woefully unprepared to
police what has become a thriving illicit market that includes an estimated
2,000 unlicensed weed shops in New York City alone, according to Mayor Eric
Adams and Sheriff Anthony Miranda.

Last fall, the OCM even temporarily suspended enforcement hearings following
raids of unlicensed shops because of a lack of staffing.

Meanwhile, the illicit operators have the legal right to appeal fines imposed by
the Tax Department as well as OCM, stretching out the timeline of the collection
process.

The state Office of Cannabis Management has confirmed the figures that show the
enormous gap between fines and enforcement, first reported in The City media
outlet. Getty Images
What do you think? Post a comment.

Regulators and industry sources said shutting down the illegal weed shops while
growing the taxpaying licensed market is the ultimate goal.

“It’s out of control. It’s a public health crisis. Who knows what the unlicensed
operators are selling?” Rossi, the cannabis industry rep said, noting a survey
showing that illicit pot dealers were selling tainted weed.

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