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Illegal Marijuana Shops Proliferate In NYC Despite Crackdowns

Source: Spencer Platt / Getty

As the effects of recreational marijuana policies take hold in New York City, a crackdown has begun with “gray market” cannabis shops as the target.

On Tuesday (July 11), New York Police Department officers along with agents from the state’s tax department raided the Empire Cannabis Club in the Lower East Side and in Chelsea. The Empire Cannabis Club has been identified as one of the biggest unlicensed distributors of cannabis products in the city, and the targeted inspections are part of New York’s latest policy measures to quell unlicensed dispensaries since recreational marijuana was legalized in 2021.

A new measure signed by Governor Kathy Hochul into law in May authorizes the Office of Cannabis Management and the Department of Taxation and Finance to carry out inspections of shops that are suspected of selling cannabis without a license. The OCM is also empowered to issue “court orders, closing orders, and removal of commercial tenants who are selling cannabis and cannabis products without the appropriate license,” in addition to enacting fines of up to $20,000 a day on the more serious offenders.

The stores are referred to as “gray-market,” as shop owners have operated under policies such as dubbing themselves as “concierge services,” which requires members to pay a fee to obtain cannabis from their supply as Empire Cannabis Club has done. Regulators have flatly issued warnings to these shops that this approach wasn’t legally sound. New York State has dragged its feet in issuing regulations and licenses, with only 19 legal dispensaries operating in the state to date.

The agents at the Empire Cannabis Club inspections did remove some of the inventory from the Chelsea location after a reported stand-off but served tickets to appear in court to the Lower East Side location’s store manager and a co-owner charging them with obstruction. Governor Hochul has praised the efforts of the OCM and the Department of Taxation, citing that 31 businesses have been inspected with 1,000 pounds of edibles, flower, and vapes valued at close to $11 million being confiscated.

“We’re going to get it right. But if people stand in our way, if there are bad actors out there trying to thwart our efforts to do the right thing? Don’t bother. You will be caught. You’ll be stopped,” she said at a press conference last month.