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Tuesday, May 24, 2022

Why New York Retailers Shouldn’t ‘Give Gifts’ Cannabis

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Earlier this week, the New York Office of Cannabis Management (OCM) released Stop and stop texting to more than two dozen retailers suspected of violating the marijuana regulation and tax law (MRTA) by gifting cannabis.

Released March 2021, MRTA Establishing a framework for a regulated, safe and legal cannabis industry to operate in New York State. While possession, consumption and gifting of cannabis among adults of 21 years of age or older became immediately permitted, the legal, licensed sale of cannabis was not. The sale of cannabis will not be allowed until the Cannabis Control Board (China Construction Bank) completes the formal rule-making process and approves the regulations that the OCM will use to issue licenses and oversee cannabis activities in the state.

According to OCM press releaseMost of the alleged offenders were illegally selling cannabis without a license and profiting from the “gift” provision under the MRTA by providing “free” cannabis gifts to adult consumers who were purchasing other legitimate goods and services.

Under New York law, any person 21 years of age or older may give gifts or “transfer,” without compensation (This is the key phrase), up to three ounces of cannabis and up to twenty-four grams of concentrated cannabis for other adults. If you’ve been following this blog, you may be familiar with the “gift economy”. Other jurisdictions that have legalized the production, possession, consumption and sale of cannabis face a similar regulatory dilemma but for different reasons. Capitalfor example, inherited a gray market after the age of a congressman who barred the district from using its local tax dollars to carry out commercial sales, despite approval of a 2014 measure that authorized the possession, cultivation, and gifting of marijuana.

As OCM makes clear in its press release and in letters, it is determined to stop bad actors because illegal and unlicensed sales undermine the legal market by offering untested products in labs that potentially threaten public health and safety. Additionally, illegal sales impede state efforts to build an inclusive and equitable regulated market, particularly for the communities most affected by the excessive criminalization of cannabis ban.

Illegal activities are not only harmful to consumers and the success of a fair and equitable legal market, but also create significant risks for illegal operators. By engaging in the illicit sale of cannabis, offenders are jeopardizing their ability to obtain a license for the legal market. They also face hefty fines and possible criminal penalties.

So, the takeaway from this “gifting” practice is that anyone interested in entering the New York cannabis market should refrain from favoring immediate financial gain. Deferring until government regulators have adopted and implemented a legal framework for cannabis operations will help cannabis companies ensure compliance, and hopefully, have long-term success.

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