New York Gov. Hochul Signs Legislation Targeting State’s Illicit Cannabis Operators

New York Governor Kathy Hochul on Wednesday signed legislation to increase civil and tax penalties on unlicensed cannabis operators in the state.

The legislation, first proposed by Hochul in March, was included in New York State’s Fiscal Year 2024 budget. It empowers the state’s Office of Cannabis Management and Department of Taxation and Finance to enforce regulatory requirements aimed at reducing New York’s illicit cannabis market.

Under the new state law, it is a crime to sell cannabis and cannabis products without a state license, and OCM can impose fines of up to $20,000 per day on unlicensed cannabis businesses.

In addition, OCM can also impose a number of civil penalties on unlicensed operators, including closing orders, court orders, seizures of untested cannabis products, and removal of commercial tenants.

The Department of Taxation and Finance, meanwhile, is now able to conduct regulatory inspections of licensed cannabis operators to determine if appropriate taxes have been paid. The Department can then impose civil penalties against cannabis operators whose taxes are not up-to-date.

The legislation also establishes a new tax fraud crime for cannabis operators that sell any untaxed cannabis, or willfully fail to collect required cannabis taxes.

“As New York State continues to roll out a nation-leading model to establish its cannabis industry, these critical enforcement measures will protect New Yorkers from illicit, unregulated sales,” Hochul said in a news release.”Unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market. With these enforcement tools, we’re paving the way for safer products, reinvestment in communities that endured years of disproportionate enforcement, and greater opportunities for New Yorkers.”

OCM Executive Director Chris Alexander applauded Hochul’s legislation, saying it gives OCM “real power” to enforce cannabis regulations. OCM has issued 165 cannabis licenses to date, with more to come this month, according to the release.

“Today, the State took a necessary step to protect the public health of New Yorkers and to support our state’s growing cannabis industry,” Alexander said. “I appreciate Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie for demonstrating their commitment to establishing the most equitable cannabis market in the nation. Today’s legislation will further those goals by giving the Office of Cannabis Management real power to shut down businesses trying to flout our laws and ensure that communities who were promised reinvestment dollars are not shortchanged.”

Hochul launched a new “Why Buy Legal New York” educational campaign on April 18 to encourage New Yorkers to purchase cannabis from legally-licensed operators. The campaign provides cannabis consumers information on how to purchase cannabis legally, where to find licensed dispensaries, and how to consume cannabis safely.

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Zach Mentz

Zach Mentz is an editor at Flavor Fix, covering cannabis, CBD and alcohol news and featured stories. Previously, he worked as senior editor of Cannabis Business Times (CBT). Mentz is a graduate of the Tim Russert Department of Communication at John Carroll University.

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