New York City Begins To Eliminate Its Vast Gray Cannabis Market

New York City Begins To Eliminate Its Vast Gray Cannabis Market

After the legalization of marijuana, countless dispensaries and unlicensed pot shops sprang up in the city. Now Mayor Eric Adams says the party is over.

Jhe sheriff has come to New York to instill law and order in the weed wild west.

On November 16, police arrested two people for selling untaxed and illegal cannabis and tobacco products at a store on Third Avenue and 73rd Street in the Bay Ridge neighborhood of Brooklyn. A joint task force comprised of the New York City Sheriff’s Office, the New York City Department of Consumer and Worker Protection, the New York City Police Department, and the Bureau of Management State Cannabis Department conducted a search after receiving a slew of complaints from residents about how the store, Big Chief, was openly selling unlicensed marijuana as well as illegal nicotine vaporizers.

A smoking room in Manhattan’s West Village and another in the Bronx were also raided last month. New York City Mayor Eric Adams said the joint interagency law enforcement pilot program has already seized nearly 100,000 packages and cartons of cannabis and issued more than 300 civil and criminal offenses.

“These unlicensed and unregulated stores not only undermine the legacy operators that legalization is supposed to help,” Mayor Adams said. Forbes, “but they also threaten the health and well-being of New Yorkers, especially young people.”

New York Sheriff Anthony Miranda told LLN NYC, who was on the scene during the Brooklyn raid, that it was the first of many enforcement actions aimed at eliminating the thriving gray cannabis market. At New York. “It’s a danger to the community,” Sheriff Miranda said. “Currently, it is illegal to sell marijuana.”

And yet, unlicensed cannabis stores and convenience store owners began selling pot last year thanks to a loophole in state law. Some lawyers who represent unlicensed cannabis dealers argue that the wording of the current law narrowly defines a sale as a financial exchange, which is why they advise clients to operate on a donation or club membership model. .

“Whether we like it or not, this is what the industry has shaped in New York City,” says attorney and accountant Paula Collins, who represents several unlicensed cannabis dispensaries and bodegas. “The reality is that it’s here.”

And the state deserves some responsibility. In March 2021, New York legalized recreational cannabis, but regulators have been slow to grant dispensary licenses. In the meantime, the city’s former pot market has operated openly to serve the multi-billion dollar cannabis economy. Last week, the state issued the first 36 retail licenses to people charged with a drug-related crime, and the first legal sales are expected to begin this month.

But with two markets – the legacy market and the legal market yet to be launched by the state – operating at the same time, the stakes are also high. New York is expected to become the second-largest legal cannabis market after California, with an estimated $4.2 billion market within five years. The Marijuana Regulation and Taxation Act legalized pot in a way that effectively sidelined police and prosecutors who sought to curb the gray market. As the state winds down its war on weed, law enforcement has been relegated to issuing fines to violators and seizing truckloads of weed for parking tickets or violations. selling food.

“The law as currently written does not provide an enforcement mechanism when an unlicensed establishment displays cannabis for sale,” a spokesperson for the NYPD Deputy Commissioner of Public Information said. . “The law only provides an enforcement mechanism if an actual sale is observed, and even then the penalties are limited due to issues with the law as written.”

A bill was introduced in Albany during the last legislative session that would have criminalized donation and membership models, but it was not put to a vote. Now, with unlicensed dispensaries popping up across the city and state, and no appetite to reignite a war on pot and arrest hundreds, the state is stuck with its gray market.

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Paula Collins customers, many of whom are long-time weed dealers, want to get licensed and become legit. But the state licensing process takes a long time. And shutting down their existing businesses pending a license, which state officials suggest, is not an option, Collins says.

“My clients aren’t thugs – they’re not mean people, they’re people who really want to do the right thing, pay their mortgage, send their kids to college and step out into the light of day” , says Collins. “2021 was a long time ago and the state had time to pull itself together and it just isn’t.”

If it were up to Collins, she would propose a framework that issues provisional licenses to anyone who wants to sell cannabis, collects sales tax on those sales, and allows people to renew their licenses every two years if they comply with rules and regulations.

“It’s not a perfect process,” she admits, “but here’s the other problem with every unlicensed sale that takes place: the city is missing 4% in tax revenue and the state is missing another 9%. “

State regulators, meanwhile, have been trying for months to shrink the gray market. In February, the Office of Cannabis Management, the agency responsible for licensing and regulating the legal marijuana industry in New York City, sent cease and desist letters to numerous unlicensed dispensaries, threatening prosecution and a lifetime ban from entering the state. legal sector. But most pot entrepreneurs ignored the warning and even more unlicensed shops have since opened.

For now, regulators are relying on raids, summonses and tough talk. Aaron Ghitelman, CMO’s deputy director of communications, says the agency has the power to “permanently bar” people from the legal industry if they don’t follow the rules. “Put simply: you need a license to sell cannabis in New York,” says Ghitelman.

Craig Sweat is the exact type of person New York is trying to support in the legal industry with its social equity agenda. Sweat, a black man from Harlem, was sentenced to 21 years in prison on a RICO charge related to a cocaine distribution ring when he was 24. He came out six years ago and started Uncle Budd, a company that parks green dispensary trucks around town offering weed in exchange for donations. “I don’t sell anything. If you donate, cool; otherwise, cool,” says Sweat. “It’s not just about bending the law, it’s just about showing people that it’s time for a change.”

In September, the New York Sheriff’s Office seized four of its mobile clinics. Now with just one, parked on 116th Street and Frederick Douglass Boulevard, Sweat also operates a cannabis delivery app. He currently does not have a license, but says he will apply for one eventually.

For Sweat, it’s time for the black community to get what it deserves, which is to get the first licenses and the opportunity to make a living selling cannabis legally. In the $25 billion US legal cannabis market, only 2% of business owners are people of color.

“I got into this because I’m sick of seeing black culture struggle,” says Sweat. “I know what it can be: the 40 acres and a mule we claim.”

As for the New York crackdown, none of the Collins clients who were raided have been arrested. The store owners get a summons, but most cops don’t bring them to court, so Collins thinks it’s just a scare tactic. To top it off, many of the stores that were raided also sell untaxed cigarettes, which she says poses a greater legal threat than selling weed.

“They killed Eric Garner for this,” Collins says, citing the man killed by Staten Island police in 2014 for selling loose cigarettes. “New Yorkers take their cigarettes very, very seriously. I tell all my traders, “I know you sell weed, but leave the cigarettes alone.” Don’t even go there.

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On 39th Street and 7th Avenue, a 39-year-old hustler who goes by the name “JR” stands behind a folding table, selling weed like sidewalk vendors a block away sell pashminas. He started selling weed in Harlem at age 14, working from noon to 8 p.m. and earning around $100 a day. Now he says he makes over a thousand a week selling THC gummies and plain old pot to tourists and people leaving work in Times Square. But the cops started giving him tickets.

“The police bothered us,” says JR, explaining that he has received about five tickets in the past few months, including one for distributing food without a permit. He has yet to pay any, and at least one summons has been rejected.

JR knows he’s not supposed to sell weed, but he saves his money to apply for a license and get legit. In the meantime, he’ll keep doing what he’s been doing for decades: selling weed to New Yorkers and dodging the cops. “We’re not going anywhere,” he said, “so they just have to take care of us.”

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