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Adams Vows New Crackdown On Landlords Of Illegal Dispensaries As State Reaches Deal To Issue New Licenses

As New York City's legal cannabis market has been a slow, grinding process, a gray retail cannabis market has proliferated throughout the city.

Relief has arrived for licensed cannabis dispensaries months after an injunction stopped hopeful New York marijuana retailers in their tracks and Mayor Eric Adams launched renewed efforts to take down illegally operating weed shops.

Settlements have been reached for two lawsuits that had brought the state’s legal cannabis industry to a standstill, Green Market Report first reported. The deals, approved by the state's Cannabis Control Board, would allow the state to continue issuing Conditional Adult-Use Retail Dispensary licenses if it is approved by the Albany County judge who blocked the program.

The suits, both of which were brought in August by plaintiff Carmine Fiore, sought to challenge how the Office of Cannabis Management had designed the licensing process.

While the state’s cannabis retail laws allow the OCM to prioritize licenses for social equity candidates, the plaintiffs, which included disabled veterans, argued that there was no legal basis for prioritizing people who had been affected by prior marijuana charges over other types of social equity candidates. A state judge agreed and imposed an injunction in August, preventing new licenses from being issued.

Although the terms of the settlement remain confidential, the board's agreement includes the dismissal of both suits.

The settlement could be good news for the 436 businesses that had been hanging in limbo after the OCM granted them retail licenses but who hadn't yet opened. Despite hundreds of licenses being issued, just a handful of dispensaries are open in New York City and across the state. Even prior to the lawsuits this summer, licensees had spent months complaining about slow response times for approvals from the OCM and the Dormitory Authority of the State of New York, which is in charge of approving locations.

The settlement wasn't the only good news licensed retailers received on Monday. Adams announced a new round of enforcement against dozens of landlords who lease space to unlicensed cannabis dispensaries.

As many as 1,500 unlicensed stores are open across the five boroughs, according to September estimates from the city’s Independent Budget Office. Only nine licensed dispensaries are open in the city.

The administration sent letters to 50 landlords warning them that they are leasing to unlicensed cannabis retailers and are liable to face penalties. Those landlords have already faced penalties — they are the owners of buildings where roughly $3.9M of illegal product has been seized and $3.2M of civil penalties have been levied, according to the mayor's office.

The new letter sent to building owners clarifies that they could face fines of $1K per day, with the potential to increase to $5K, plus the cost of covering legal fees for the city, if landlords don't evict tenants selling cannabis without a license.

"Property owners or landlords can be held liable for penalties up to three times the amount of rent being charged, if legal action is not taken to remove the tenant engaged in the unlicensed sale of cannabis," the letter says.

The mayor's office didn't identify the landlords it was sending the letter to. They are far from the only place that the city has found illegal sales of cannabis taking place.

The New York City Sheriff’s Office Joint Compliance Task Force to Address Illegal Smoke Shops — made up of the sheriff’s office, the New York Police Department and the Mayor’s Office of Special Enforcement — so far has issued more than $63M in penalties and conducted more than 1,300 inspections, a spokesperson for Adams told The City.

“The proliferation of unlicensed smoke shops across our city must stop,” First Deputy Mayor Sheena Wright said in a statement. “Today, we are putting landlords on notice of their responsibility to ensure their property is not being used to sell illegal cannabis or tobacco. The letter is intended to educate property owners about the significant consequences they will face for flouting the law.”