Pols Question Cannabis Officials About Unlicensed Dispensaries, As New Legal Licenses Readied

With new cannabis licenses being made available by Governor Kathy Hochul, the legal weed market is set to grow exponentially. The head of the Office of Cannabis Management (OCM) told politicians that he supported that push, in part due to more legal shops reducing the market for illegal sales.

| 03 Nov 2023 | 06:35

State senators in Albany questioned various cannabis stakeholders on October 30, including officials from the Office of Cannabis Management (OCM).

Governor Kathy Hochul has recently made a spate of new licenses available, which the assembled guests seized on as a potential vehicle to compete with both illegal shops and unregulated weed.

Only marijuana grown by New York farmers is eligible to be sold in licensed cannabis shops, due to federal interstate commerce laws. Unlicensed (and therefore illegal) shops frequently utilize out-of-state product, preventing local communities and growers from getting a toehold in the market.

“This is a supply chain that we’ve created. When there’s a strangle on one side of that supply chain, everybody is impacted. That is why we’re issuing more licenses, to get more stores open, so that the product has a continued flow-through,” OCM Executive Chair Chris Alexander said.

Yet Manhattan pols such as State Senator Brad Hoylman-Sigal seemed distinctly concerned about the impact of unlicensed shops on teens. Hoylman-Sigal, who represents the UWS, particularly expressed concern about minors being capable of purchasing products from illegal stores. The legal age for cannabis consumption or possession in NYS is 21.

“That remains a felony offense,” said OCM executive director Alexander of the sale to minors. “That is something that remains on the books. I know law enforcement has done underage buys in many of these shops. We want them as closed as bad as you do,” Alexander said.

Daniel Haughney, a colleague of Alexander’s, added that over the course of various inspections he’s seen “product from out of state...it’s not New York licensed locations. We see unlicensed and illegal locations...that are processing their product in the basement. I’ve been in more basements in NYC than a lot of people, and I’ve seen those processes taking place.”

City Council Member Gale Brewer, who also represents the UWS, claimed that she’s counted 65 unlicensed shops in her district alone. She noted that she’s had constituents ask her: “How in the world, Gale, can you have 65 shops—that are mostly illegal—in one location. It’s a mystery! We have to find a way to padlock them.”

Brewer clarified that she’s reached out to the Manhattan District Attorney’s Office about stepping up their enforcement of the N.Y. Cannabis Law’s Section 16-A, which provides for permanent or temporary injunctions against unlicensed weed stores. This comes as The City reports that the OCM has stopped holding trials for illegal sales.

State Senator Liz Krueger, who serves on the Upper East Side, wondered aloud whether officials were “hearing the frustration from people that want to open legitimate stores...but they don’t know if they can make it [competitively], just because there are so many illegal stores?”

Dasheeda Dawson—the head of Cannabis NYC, an arm of NYC’s Department of Small Business Services (SBS)—appeared to answer in the affirmative. She said that she’s heard from licensed dispensaries concerned about competitive fairness “if these illegal stores can operate without any punitive repercussions.”

She deems this frustrating because of recent reports that “New York City in particular has the largest group of cannabis consumers in the world. So, hope is not being given up. With only 20 stores, we have nearly $100 million in sales. There’s a big opportunity.” With more licenses in the pipeline, she hopes that NYC can simultaneously expand the market and regulate stores not following the law.

“If we do eventually close stores and don’t lay down the path for legal stores to eventually open—meaning providing them with the financial support and lowering the barriers of entry—we still will see an illegal market. The market is not going away. It hasn’t gone away in 40 years of our history,” she concluded.

According to City Sheriff Anthony Miranda, there are around 1,400 illegal smoke shops in NYC (a defense lawyer that counts smoke shop owners as clients has made the bold claim that this number may an undercount of nearly 7,000.)

Six of the city’s nine legal dispensaries can be found in Manhattan at: 750 Broadway, 144 Bleecker Street, 62 E. 13th Street, 33 Union Sq. W, 3 E. 3rd Street, and 85 Delancey St.