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NY cannabis market opens to new businesses

ALBANY — Another expansion of New York’s cannabis market came Wednesday, with Gov. Kathy Hochul announcing a new license application period for those who want to get into the legal growing, processing, distribution or selling business.

The legal market in New York has been beleaguered with a glut of producers and a severely limited network of legal dispensaries to sell products.

While growers have been sitting on hundreds of thousands of pounds of legal weed, less than two-dozen storefronts have opened statewide.

Lawmakers recently urged Hochul to sign legislation authorizing those growers to sell their products to dispensaries licensed by tribal nations in New York, but she has not moved on that bill yet.

In her announcement Wednesday, Hochul said hundreds of licenses under the now-permanent cannabis business license program will open for two months, until Dec. 4.

Existing cannabis businesses, if they’re legally operating, have been operating under a set of conditional regulations that were paused by a court order in August after a group of combat-disabled veterans contested the fact that the early licenses were only available to people who had previously been convicted of cannabis crimes under prohibition in New York.

All the currently licensed businesses in good standing with the state, compliant with all regulations and financially stable were invited to apply for the permanent licenses.

Meanwhile, a network of illegal sales points have opened statewide, often selling legal products brought into New York from elsewhere, including as far away as California. Municipalities and local law enforcement agencies have been slow to react, as these illegal stores appear to operate in a legal gray area, selling a product that is only illegal according to state tax laws.

State lawmakers have made repeated efforts to try to shore up state authority to stop illegal sales, and on Wednesday, Hochul announced the results of the last four months of enforcement.

Since June 7, Hochul said Office of Cannabis Management and Department of Taxation and Finance authorities have inspected 246 storefronts statewide, seizing more than 8,500 pounds of illegal cannabis products at an estimated street value of more than $42 million.

She said officials have concentrated efforts on Manhattan and downtown Brooklyn, which are regions with a “proliferation” of illegal cannabis shops. Estimates are unclear as to how many illegal shops exist statewide, but in August, New York City officials estimated there were about 8,000 unlicensed shops in the city. Upstate cities have apparent illegal shops as well, with illegal marijuana products often sold alongside flavored nicotine ecigarettes or vapes that are banned at a state and federal level.

The Marijuana Regulation and Taxation Act that legalized cannabis in New York allows state officials to impose a $10,000 fine every day a business can be proven to have sold illegal cannabis products before they are caught, and then $20,000 every day they sell products after authorities send the first order to cease sales.

Earlier this year, a new law was enacted that gave the state attorney general the power to take illegal sellers to court when a request came from the Office of Cannabis Management, and could seek a court order to shutter the stores selling products without a license. This law, passed in May, recriminalized the sale of marijuana and cannabis products in New York without a license.

The enforcement law includes a process detailed in Section 16-A, which authorizes local governments including county attorneys to pursue “padlocking orders” to shutter stores found to be engaged in “egregious conduct,” or repeatedly violating cannabis laws.

The governor also detailed other efforts to tackle the other possibly illegal aspects of the illegal shops. The state Workers Compensation Board and Department of Labor are lending their efforts, inspecting businesses for labor and workers’ compensation violations.

“If a business is selling a product without the proper license, there is a concern that they may also be violating other state laws that protect workers, including minimum wage, overtime and sick leave, among others,” said state Department of Labor Commissioner Roberta Reardon. “All employers, unlicensed or not, should be providing the same worker protections that are required under the law.”

In her announcement, Hochul said the state’s legal marijuana market has room for improvement, and said she is committed to getting the job done right.

“My administration is laser-focused on shutting down illegal storefronts, protecting the health and safety of children and helping small businesses thrive,” she said. “We will continue working to build the most equitable adult-use cannabis industry in the nation that invests in communities and rights the wrongs of the past.”

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