While the Office of Cannabis Management (OCM) has struggled to get dispensaries opened up throughout the state, they’ve continued to battle the pervasive problem of countless illicit dispensaries stealing market share from licensed or soon-to-be licensed dispensaries. Since decriminalization decreased penalties for possessing cannabis, the initial cease and desist letters the OCM mailed these operators were not very effective.
But in May, Governor Hochul signed new legislation giving the OCM new enforcement power to close and penalize illicit cannabis dispensaries. By increasing penalties for unlawful cultivation, distribution, and possession, the state intends to send a strong message that illegal cannabis operations will face severe consequences including fines of up to $20,000 per day.
Other details of the plan include granting the OCM the authority to seize products and shut down shops for good. This measure aims to resolve the fact that many illegal businesses continue to operate and simply ignore cease and desist letters.
The biggest deterrent of all may be the ability of the Department of Taxation and Finance to pursue illicit dispensaries for unpaid taxes on cannabis sales. The legislation defines a new type of tax fraud that includes failing to collect and pay required taxes on cannabis sales. This means illicit dispensaries may be liable for massive amounts in back taxes owed to New York State.
Now, with new laws in place, we’ll see if NY is able to enforce the legal market and fulfill its aim of safeguarding public safety while promoting economic opportunities for marginalized communities.