The illegal marijuana market is not good for legal weed businesses. The products can harm human health. The businesses reduce income for their cities and states and make it difficult for their competitors to thrive in the legal weed market.
New York Governor Kathy Hochul is on it. She has created new legislation that targets illegal marijuana businesses. Over 1000 pounds of illegal weed has been seized in a New York crackdown.
New York is Cracking Down on Illegal Marijuana
The governor announced the results of the first enforcement of the crackdown against illegal marijuana businesses. She stated over 30 businesses were busted and more than $11 million worth of the product was seized.
The enforcement began on June 7 when officials visited 33 dispensaries in Binghamton, Ithaca, and New York City. 31 of those businesses were issued a violation for selling illegal weed.
“Today, Governor Hochul put out a sharp warning to every business selling cannabis without a license: New York State is coming to shut you down. Thanks to the Governor’s efforts, our enforcement teams are out every day putting an end to the proliferation of unlicensed cannabis sales across New York State,” said New York State Office of Cannabis Management Executive Director Chris Alexander.
So far, state officials have seized at least 1000 pounds of illegal marijuana with an estimated value of $11 million. More is being counted.
“Under new power that I fought for in this year’s State budget, we can now conduct enforcement against businesses illegally selling cannabis, and I’m proud to report that in just the first three weeks of our efforts, we’ve seized nearly $11 million worth of illicit products off the streets. These unlicensed businesses violate our laws, put public health at risk, and undermine the illegal cannabis market, and with the powerful new tools in our toolbelt, we’re sending a strong message: if you sell illegal cannabis in New York, you will be caught and you will be stopped,” Hochul stated.
What are the Current Efforts to Stop Illegal Marijuana Sales?
The newly passed legislation to stop illegal weed sales allows the Office of Cannabis to:
- Fine shops selling illegal weed up to $10,000 per day
- Double fines to $20,000 for shops that continue selling illegal marijuana
- The state may pursue a court order to have repeat offenders’ stores padlocked
“Right now, the criminal enforcement personnel at the Tax Department, in conjunction with the enforcement personnel at the Office of Cannabis Management, are working together and jointly inspecting stores where we believe illegal cannabis is being held or sold,” said Amanda Hiller, acting commissioner at the Department of Taxation and Finance.
The new legislation also allows the New York State Department of Taxation and Finance (DTF) to conduct regular business inspections to determine if they are paying appropriate taxes and to levy penalties in cases where taxes are not paid. It also establishes a new tax crime law for businesses that do not pay their taxes.
What is Happening to the Businesses Caught Selling Illegal Marijuana
The 31 dispensaries found selling illegal marijuana have had Orders to Cease Unlicensed Activity affixed to their front doors. The business owners must appear at an administrative hearing where fines and penalties will be determined. They may also be facing a $5000 penalty to have the order removed. Additional fines and penalties may be added.
The OCM and DTF will continue visiting these locations to ensure they are no longer engaging in illegal activity. If they are found to continue selling illegal marijuana, the OCM may petition the State Supreme Court to order that the shop be padlocked until the business complies with regulations.
Issues with Legal Weed in New York
The state has gotten off to a rough start since its first legal dispensary opened at the end of 2022. Officials have predicted there would be hundreds of dispensaries operating in New York since licenses were given out in November. Now, six months later, there are just 15 state-approved shops in New York. Hochul says there will be two more by September.
“Sometimes it takes a while to get it right, and the process has not been easy,” she said.
Entrepreneurs hoping to open cannabis businesses in the state have been unable to do so as low-interest loans that were promised have not yet come through. They have also faced difficulty finding retail spaces. Many that are available require business owners to put up their houses and other valuable assets as collateral on leases.
Those looking to launch cannabis businesses are writing officials to see what can be done.
The repercussions are felt by farms in outlying areas of the state that have harvested crops but have nowhere to send them thanks to limited operating locations. New York is attempting to ease the burden by allowing farmers to sell their products at cannabis farmers’ markets.
Issues with Selling Illegal Marijuana
The definition of ‘legal weed’ varies from state to state but it generally means that the businesses must pay their taxes. They must operate safely in accordance with the law. They must provide products that are contaminant-free and labeled with the appropriate user information. They must keep their products away from children.
Businesses that sell illegal marijuana often do not pay their taxes. The money they save helps them sell their products cheaper so they undercut legal weed businesses. It’s unfair for people looking to sell weed legally.
They may also cut corners on the quality of the weed they sell. They may sell products that contain contaminants and are not as pure and potent as advertised. Doing so poses a risk to people that buy and use the products.
The difficulties people are facing when trying to open businesses are making it challenging to open legal dispensaries in New York. But the new legislation means illegal marijuana is not the way to go. Hopefully, the state will get it all straightened out in the upcoming months.