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New York cracks down on unlicensed weed dealers

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With legal sales of recreational cannabis in New York still months away, state regulators are cracking down on unlicensed companies that have already jumped in and sold cannabis. Last week, officials at the New York Office of Cannabis Management (OCM) publicly identified 52 companies to which cease-and-desist orders have been sent to shops to halt all illicit cannabis sales.

“You are hereby directed to cease any and all illegal activity immediately,” read the letters of cessation and cessation Quoted from Gothamist. “Not stopping this activity puts your ability to obtain a license in the legal market for cannabis at great risk.”

OCM added that the retailers identified were misrepresenting their businesses as licensed cannabis dispensaries. OCM President Tremaine Wright said in a press release that unlicensed sales, including via companies that offer ostensibly free marijuana products with the purchase of other merchandise, are illegal and pose a health risk to the community.

There are no companies currently licensed to sell adult cannabis in New York State. Selling any item or taking a donation, then gifting a customer a bag of untested cannabis is already considered a sale under New York’s cannabis law,” Wright said in a statement from the agency. “You need a license to sell cannabis in New York. Licensed sales and a regulated market are the only way New York customers will be assured that the cannabis products they buy have been tested and traced from seed to sale. Selling untested products puts lives at risk.”

The cease-and-desist letters sent by the OCM indicate that the continued illegal sale of marijuana by selected retailers will make companies ineligible to obtain a cannabis business license from the agency in the future. If the storefronts identified by the agency fail to terminate operations immediately, they will be referred to the Cannabis Control Board for “permanent prohibition from receiving any cannabis licenses in New York State,” the agency said.

These stores masquerade as licensed and regulated businesses, but it’s nothing of the sort. “They’re not creating opportunity, they’re creating confusion — New Yorkers think they’re buying a quality, tested product when they aren’t,” said Chris Alexander, Executive Director of the Office of Cannabis Management. “Not only are these stores operating in violation of New York’s cannabis law, they are also in violation of state taxes and many municipal laws. I look forward to working with other regulators across the state to hold these stores accountable for their flagrant violations of the law.”

The companies, which were originally identified, were sent cease and desist orders in February, informing them that their operations are illegal under the Marijuana and Tax Regulations Act (MRTA), which New York lawmakers passed last year. OCM announced the regulatory action at the time but declined to publicly disclose which retailers were affected. But after pressure from local media, OCM made available a list of storefronts the agency had warned about last week.

“We have a commitment to protect New Yorkers from known risks and to strengthen the foundation of the legal and regulated marketplace that we are building. We will achieve MRTA’s goals to build an inclusive, fair and secure industry” Wright said in February. “Therefore, these violators must cease their activity immediately, or face the consequences.”

More retailers under investigation

OCM also noted last week that it has received information from law enforcement and the general public about additional retailers who may be selling cannabis in violation of the law and will review advice for possible additional regulatory action. Until adult-use sales at licensed retailers begin, which is expected to occur later this year, the only legal way to purchase safe, lab-tested cannabis is through the state’s regulated medical marijuana program, the agency added.

“New York is building the most equitable cannabis industry in the country, one that prioritizes the communities most affected under the cannabis ban. Stores that sell unregulated cannabis products without licenses undermine these efforts. Illicit stores do not,” said Damien Fagon, chief equity officer at OCM. It contributes to our communities, does not support our public schools and does not protect consumers. That’s why we work with partners across [the] The government will investigate and hold these operations accountable.”

One operation identified by OCM last week is the Empire Cannabis Club, which has two locations in Manhattan. At Empire, customers purchase daily or monthly club membership and receive cannabis as a free gift. Steve Zissou, an attorney representing Empire, said the company is confident its business is legal under the MRTA, which defines what constitutes a “sale” of cannabis and specifically allows up to three ounces of cannabis to be moved “without compensation.”

“Empire’s business model is based on that,” Zissou said. “It is a non-charitable, not-for-profit cannabis dispensary that does not receive compensation for the transportation of cannabis.”

The lawyer added that Empire is ready to defend its position in court if necessary.

“There is a saying: If you want peace, prepare for war,” Zissou said. “And so the Empire wants peace, but they are ready for war when it comes.”

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