New York state regulators continue to take action against unlicensed cannabis sellers, as legal sales of recreational marijuana are still months away. The New York Office of Cannabis Management issued 52 cease-and desist orders last week to 52 shops directing them not to sell illegal marijuana.

“You are hereby directed to cease any, and all, illegal activity immediately,”  read the cease-and-desist letters quoted by The Gothamist. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk.”

OCM stated that these retailers had falsely described their shops as licensed cannabis dispensaries. Tremaine Wright OCM Chair stated that any unlicensed sale, which includes via retailers that offer ostensibly no-cost marijuana products when you purchase other merchandise, is illegal and a danger to the community’s health.

“There are no businesses currently licensed to sell adult-use cannabis in New York State. Selling any item or taking a donation, and then gifting a customer a bag of untested cannabis does indeed count as a sale under New York’s Cannabis Law,” Wright said in a statement from the agency. “You need a license to sell cannabis in New York. Licensed sales and a regulated market are the only way New York’s customers will be assured that the cannabis products they are purchasing have been tested and tracked from seed to sale. Sale of untested products put lives at risk.”

Legal Weed Industry Bans Businesses Permanently

OCM sent cease-and-desist notices to the retailers stating that they will continue selling illegal marijuana. They are therefore ineligible for a future cannabis license. If the business storefronts named by the agency fail to end operations immediately, they will be referred to Cannabis Control Board “for permanent barring from receiving any cannabis licenses in New York State,” the agency stated.

“These stores are masquerading as licensed, regulated businesses, but they are nothing of the sort. They aren’t creating opportunity, they are creating confusion – New Yorkers think they’re buying a high-quality, tested product when they aren’t,” said Chris Alexander, executive director of the Office of Cannabis Management. “Not only are these stores operating in violation of New York’s Cannabis Law, but they also are breaking state tax and several municipal laws. I look forward to working with other regulatory bodies across the state to hold these stores accountable for their flagrant violations of the law.”

In February 2002, the OCM sent cease and desist orders to identified businesses. They were advising that they were operating illegally under the Marijuana Regulation and Taxation Act. (MRTA) was passed last year by New York legislators. OCM did not identify affected retailers but announced that the OCM was taking regulatory action. The OCM released the last-week’s list of stores that were warned about by the agency after local media pressure.

“We have an obligation to protect New Yorkers from known risks and to strengthen the foundation of the legal, regulated market we are building. We will meet the goals of the MRTA to build an inclusive, equitable and safe industry,” Wright said in February. “Therefore, these violators must stop their activity immediately, or face the consequences.”

We are looking at more retailers

Last week, the OCM noted that it had received information from law enforcement as well as the public regarding additional retail outlets selling marijuana in violation of law. It will review the tips and consider taking additional regulatory actions. The agency added that until sales of adult-use begin at licensed retailers, which is expected to happen later this year, the only legal way to procure safe, lab-tested cannabis is through the state’s regulated medical marijuana program.

“New York is building the most equitable cannabis industry in the nation, one that prioritizes those communities most harmed under cannabis prohibition. Those efforts are undermined by stores selling illegal cannabis products that lack licenses. Plain and simple,” said Damian Fagon, OCM chief equity officer. “Illicit stores don’t contribute to our communities, they don’t support our public schools and they don’t protect consumers. That’s why we’re working with partners across [the] government to investigate these operations and hold them accountable.”

Empire Cannabis Club was identified by OCM last week. They have two Manhattan branches. Customers can purchase either a monthly or daily membership at Empire and get cannabis free of charge. Steve Zissou, a lawyer representing Empire, said that the company is confident that its operation is legal under the MRTA, which defines what constitutes a “sale” of cannabis and specifically allows the transfer of up to three ounces of cannabis “without compensation.”

“Empire’s business model is based on that,” said Zissou. “It’s a non-charitable, not-for-profit cannabis dispensary that does not receive compensation for the transfer of cannabis.”

Empire will defend its position at court if needed, according to the lawyer.

“There’s an old saying: If you want peace, prepare for war,” Zissou said. “And so Empire wants peace, but they’re prepared for war if and when it comes.”