According to Buffalo Newsthe New York budget bill has set aside $16 million for unlicensed processing Cannabis dispensaries in New York. Gov. Kathy Hochul (D) signed the legislation that raises fines for illegal operators from $500 to a maximum of $7,500 for initial violations. The bill also increases financial penalties to triple the taxes that would have been generated from the sales.
In addition, the bill would give the state the power to force store closures, sue unlicensed stores for tax fraud, pursue restraining orders, and allow landlords to evict illegal dispensaries. The wording in the bill is subtle in distinguishing that these regulations will apply only to illegal cannabis stores and not to individual citizens.
Unlicensed cannabis dispensaries have been on the rise in cities across the state, particularly in New York City, where the government has been slow to grant adult retail licenses. Initially, Gov. Kathy Hochul (D) proposed fining up to $10,000 per day for illegal cannabis storefronts. However, the wording in the budget proposal would provide the state with a broader range of possibilities for closing these businesses.
In February, a report commissioned by Acreage Holdings, a multi-state cannabis operator, warned New York of the consequences of not granting licenses to cannabis companies immediately. The report cited a loss of nearly $2.6 billion in tax revenue over eight years. The New York budget was delayed by more than a month.
Why is the illegal market still thriving in New York City?
The first legal cannabis dispensaries in New York are now operating, providing opportunities for both consumers and sellers. However, concerns have arisen about how the legal market will handle illegal sales.
Marijuana is the most widely used federally prohibited substance in the United States. New York, which is one of 21 states, along with the District of Columbia, has legalized its recreational consumption. It’s been more than a decade since Colorado and Washington became the first states to pass ballot initiatives to legalize cannabis.
Since then, subsequent state laws have attempted to reflect the growing public acceptance of a substance viewed as less harmful than nicotine and alcohol. There is also recognition from local communities that the criminalization of cannabis has disproportionately impacted.
The state has made social justice a central focus of its strategy for a legalized cannabis market, setting aside initial licenses for individuals and non-profit organizations that negatively impacted enforcement of the cannabis ban. Services that support those who have been previously incarcerated were also eligible for the initial licence.
So far, primary dispensaries have opened across the city in recent months, and more than 60 licenses have been granted across the state. However, many unlicensed and illegal shops still litter the streets of all five boroughs, selling cannabis in venues ranging from small bodegas to expansive operations that could be mistaken for established retailers.
Alison Martin, founder of Cannabis Wire, a platform covering The cannabis industry in New York And beyond, he stated that officials conservatively estimated there were 1,400 unlicensed stores across the five boroughs. However, she believes the actual number is much higher.
According to Martin, the COVID-19 pandemic has resulted in many store closures, causing bootleg shops to emerge. These illegal dispensaries profited from the cannabis industry in the largest city in the United States. These illegal sellers became consumer-friendly and offered cheaper cannabis.
Amanda Chicago Lewis, a freelance investigative journalist who covers the cannabis industry, reports that consumers typically prefer bootleg stores because of the cost. Why would anyone buy $80 of weed from a legal dispensary when they could get the same amount for $25 from an illegal dispensary? In a city as big as New York, the nearest legal dispensary could be more than an hour away, while an unlicensed store might be right next door.
The dangers that come with illegal weed
According to Martin, while the price is cheap, illegal marijuana poses health risks to consumers and could endanger the legal cannabis industry.
Selling legal marijuana in New York requires it to be grown within the state, according to federal law, which prohibits the interstate trade of marijuana. However, illegal cannabis circumvents this system. the Marijuana sold in New York is often grown in California, Due to the region’s favorable growing conditions and well-established growers.
Hemp grown illegally in California avoids state environmental regulations for legal marijuana and its labor laws. Furthermore, illegal cannabis evades testing requirements, leading to the potential for misleading or inaccurate dosing labels.
The study was commissioned by the Medical Cannabis Industry Association of New York, a trade group that represents legal and licensed cannabis growers. It involved researchers who bought 40 products from illegal markets in New York City. They then tested these products in a third-party lab to determine what levels of THC were present. They also screened for harmful substances such as pesticides, salmonella, and e. coli and heavy metals. The study was conducted in 2022.
The study discovered that 40% of the products would have failed at least one of the tests given to legal cannabis products. The study found that many of these The products have no THC levels declaredand all of them have failed state standards for the legal market.
Additionally, marijuana sold outside of the legal market violates New York State packaging laws, resulting in some products featuring attractive images for children, or imitating cartoons or popular candy.
Conclusion
The growth of illegal dispensaries remains a major concern as the legal marijuana market in New York develops. These unlicensed firms may offer customers reduced costs and easier access, but they also pose severe risks to the health of the general public and the integrity of the legal sector.
New York’s recent budget bill allocating $16 million to tackle unlicensed cannabis dispensaries is a promising step toward regulating the industry and protecting consumers. With the state’s new powers to enforce store closures, prosecute tax fraud, and pursue restraining orders against illegal dispensaries, the hope is that the legal cannabis market can finally thrive.
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