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New York slow to collect fines against unlicensed operators

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Attention has been turned to the New York Office of Cannabis Management‘s enforcement of unlicensed operations. The City publication reported that despite the OCM levying $25 million in fines, it has only collected $22,500 in fines from unlicensed shops. The City wrote, “The Department of Taxation and Finance has collected $0 in fines so far, said sources familiar with the state’s enforcement progress.”

The OCM’s 2023 annual report stated that “as of December 15, 2023, $1,312,500 in fines had been levied against unlicensed operators following decisions issued through the administrative hearing process.”

The report published a table showing no money was collected.

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The City reported that fines levied by the tax department may be appealed. It went on to write, “And shops fined by the Office of Cannabis Management may be challenged in the administrative hearings the agency paused back in October, which lengthens the state’s timeline to collect the fines.”

According to the OCM’s report for 2023, there were 369 enforcement inspections of illicit operations. The OCM only has 14 staff members tasked with smoking out the unlicensed operations, which is believed to number in the thousands. The OCM also stated in its annual report that as a result of these inspections, 305 notices of violation/ orders to cease have been issued and over 11,600 pounds of illicit products with an estimated street value of more than $56 million have been seized. The OCM said it continues to build enforcement capacity by recruiting needed staff.

Green Market Report recently wrote that New York’s regulators formally awarded 109 new cannabis business licenses in a recent meeting. That meeting was characterized by a debate over whether the state would have a limited amount of licenses. OCM Executive Director Chris Alexander argued that the state couldn’t support 7,000 dispensaries. Still, Board member Dr. Jennifer Gilbert Jenkins said, “I will continue to push back, because I think we have more than 7,000 liquor stores in this state, and I think we probably have more than 7,000 illegal (cannabis) stores in this state… The issue isn’t that there isn’t enough market for us to have all these legal stores. The issue is we still haven’t closed down all the illegal stores.”

The OCM has recommended the ability to levy higher upfront penalties against unlicensed cannabis businesses to be a stronger deterrent and not just a ‘cost of doing business.’ However, if the current fines aren’t collected, it seems increased fine amounts won’t be a threat.

“Currently, the State is prioritizing shutting down illegal shops and seizing unlawful products,” said Aaron Ghitelman, a spokesperson for OCM told The City. “While we recognize entities being fined have a right to due process, we are committed to working within the confines of the law to collect the fines once the legal process is complete.”

 



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