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More Details Released on Ithaca Cannabis Raids

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Enforcement teams from New York State’s Office of Cannabis Management and Department of Taxation and Finance released details of the inspections conducted at storefront businesses not licensed to sell cannabis in Ithaca and Binghamton. These actions led to Notices of Violation and Orders to Cease Unlicensed Activity being issued, building on actions taken in New York City last week, and they will continue to be replicated across the state to end public sales of illicit cannabis by any unlicensed businesses.

“As the most equitable cannabis industry in the nation gains momentum, we continue to take action against bad actors who seek to skirt around our laws,” Governor Kathy Hochul said. “Unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market, and we will continue to take these critical enforcement measures to protect New Yorkers from illicit, unregulated sales.”

On May 3, 2023, Governor Hochul signed legislation enabling for the enhanced, statewide enforcement by OCM on unlicensed cannabis businesses as part of the FY 2024 Budget. The legislation now enables OCM to also assess civil penalties against unlicensed cannabis businesses, with fines of up to $20,000 a day for the most egregious conduct, and starts the process of potential closure of a retail location selling cannabis without a license among other penalties. The new law also makes it a crime to sell cannabis and cannabis products without a license.

As a result of the legislation, the Department of Taxation and Finance can now conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid and to levy civil penalties in cases where they have not. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxes or knowingly possess for sale any cannabis on which tax was required to be paid but was not.

By taking decisive action against unlicensed cannabis businesses, New York State is making a significant stride toward cracking down on unlawful cannabis operations that jeopardize public safety, consumer well-being, and the integrity of New York State’s legal cannabis market.

On Tuesday, OCM and DTF conducted inspections on three businesses in Ithaca. Each of the locations was issued a notice of violation for selling cannabis without a license. The penalty for this, which will ultimately confirmed through an administrative hearing process, is $10,000 per day, plus potential additional penalties. The inspected businesses may also be subject to additional violations and penalties under the Department of Tax and Finance Law.

The following shops were inspected in Ithaca:

  1. Black Leaf — 103 East State Street
  2. Zaza Convenience — 101 East State Street
  3. The Rezz — 312 Fourth Street

 

City of Ithaca Mayor Laura Lewis said, “The City of Ithaca is grateful to New York State, Governor Hochul and the Office of Cannabis Management for its recent robust enforcement actions against unlicensed cannabis dispensaries in the City of Ithaca. Ithaca is proud to play a role in the regulated cannabis industry, with its focus on equitable economic development, safety, and community benefit. Unlicensed, illegal sales of cannabis undermine this initiative. We stand with the State in its efforts to ensure a flourishing licensed cannabis industry by cracking down on this illegal activity in Ithaca.”

Shawna Black, Tompkins County Legislative Chair, said, “Tompkins County is thankful that New York State has taken the proper steps to legalize and distribute cannabis safely. There have been guidelines and regulations set in place for cultivating, delivery and dispensing cannabis products. Historically, those that have been most impacted through incarceration by the sale of marijuana have been black and brown people of color. We now have a system in place which vets dispensaries, creates safer packaging (not targeted towards children), and clearly identifies the amount of THC a product has. When there are regulations around cultivating and dispensing – we are all safer. Thank you to Governor Hochul, the Office of Cannabis Management and Department of Taxation and Finance for inspecting illegal operations in Ithaca that show disregard to the New York State licensing process.

Shops that were issued notices will next be subject to hearings before an Administrative Law Judge (ALJ). If found to be non-compliant, an ALJ may confirm the fines assessed and require unlicensed operators to pay them.

OCM and the DTF will be following up on locations inspected to ensure unlicensed activity has ceased. If continued unlicensed activity is found to persist, OCM can petition the State Supreme Court to order the retail space padlocked shut until the location complies with the cannabis law and regulated regulations.

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