Unlicensed Dispensary Landlords Face New Penalties Under Council Bill

This story was republished with permission from Crain’s New York and written by Nick Garber.

The City Council passed a bill Thursday that would hold landlords accountable for renting to illegal marijuana retailers, the latest effort to step up enforcement against unlicensed smoke shops.

When city inspectors find an unlicensed shop selling cannabis, cigarettes or other tobacco products, the city could issue a warning to the shop’s landlord. If a subsequent inspection turns up more illicit sales, the landlord could be fined $5,000, followed by $10,000 for any subsequent violations, the bill says.

“By holding landlords accountable for knowingly enabling these illegal activities, we can restore the trust and security that our residents deserve,” Lynn Schulman, the Queens Council member who sponsors the bill, said in a hearing last week.

The wave of illegal weed shops— numbering 1,200 earlier this year—has compromised the state’s sluggish rollout of its legal cannabis retail program, which has resulted in only 15 shops thus far. The illicit sellers, besides competing unfairly with the legal retailers, have also been known to sell contaminated products and rely on cash-only transactions, resulting in lost sales tax revenue and frequent robbery attempts, Schulman said.

The bill passed the City Council by a vote of 48-0 on Thursday, with one abstention.

The council’s effort echoes a similar landlord-focused enforcement push announced earlier this year by Mayor Eric Adams and Manhattan D.A. Alvin Bragg. Bragg’s office sent letters to hundreds of shops suspected of illegal cannabis sales, saying prosecutors could force their landlords to evict them, while the city filed lawsuits against a handful of East Village smoke shops that implicated each shop’s landlord as a defendant.

The city has continued filing similar suits since then, court records show, including at least four complaints within the last month targeting smoke shops and their landlords in the East Village and Hell’s Kitchen. A spokesperson for Bragg said Thursday that the office has “ongoing investigations” into a number of stores, and is contacting landlords to educate them about the unlicensed cannabis market and ways to evict illegal tenants.

The council bill also comes weeks after state lawmakers took their own step toward cracking down on illicit weed shops. A provision in the state budget will allow the state’s Office of Cannabis Management to levy heftier fines to illegal sellers—up to $20,000 per day—and seize paraphernalia from unlicensed shops.

Hochul on Thursday announced the first results from those new enforcement powers, saying the state had seized nearly $11 million worth of cannabis since early June, through inspections of 33 shops in New York City and upstate.

Officials hope that this beefed-up enforcement will prove more effective than the city’s efforts so far, with smoke shops often reopening just days after being raided by the sheriff’s office.

The state’s reforms were somewhat belated, coming two years after New York legalized recreational marijuana.

“We acknowledge that Albany dropped the ball here when they legalized these retail licenses without any clear enforcement component,” Brooklyn Council member Justin Brannan said during last week’s hearing. “Unfortunately, in the city, we’re the ones that have to deal with their mess.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.

 Sign up

About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


Recent Tweets

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.