State senators this week passed a bill that would expand authority for the New York Office of Cannabis Management to seize illicit marijuana and for the state Department of Taxation and Finance to penalize people allegedly selling weed illegally.
The bill also doubles civil penalties for “any person knowingly who possesses ‘illicit cannabis.’
State Sen. Liz Krueger introduced the proposed legislation on Sunday, and lawmakers in the Senate passed it on Wednesday. Krueger’s spokesperson, Justin Flagg, said the bill is meant to empower OCM and Tax and Finance to crack down on illegal marijuana sales, specifically ones that have popped up since last year.
“This bill is aimed at gray market operators such as retail cannabis stores that have emerged during the period after legalization but before licensed businesses begin operating,” Flagg said in an email. Krueger wrote the bill with substantial input from OCM and Tax and Finance, he added, “prompted by the difficulty of enforcement against several illegal cannabis stores that have been hard to shut down under the existing statute.”
A spokesperson from OCM said the office doesn’t comment on pending legislation.
June 2 is the final day of New York’s 2022 legislative session, so if the State Assembly doesn’t pass the bill by midnight, it will be dead until at least the start of the ’23 legislative session in January, unless a special legislative session is called before that, Flagg said.
Since MRTA passed last year, some gray market operators have exploited possible loopholes in the legalization law, which allows adults to give and receive marijuana as a gift. To that end, this bill would consider the transfer of cannabis connected to any compensation (including membership programs) to be a marijuana sale.
In addition to allowing OCM to confiscate marijuana from individuals or groups selling weed without a license, the new legislation would allow Tax and Finance officials to revoke certificates of registration for businesses that sell or possess “illicit cannabis.” If passed into law, the bill would also make it a Class A misdemeanor for distributors and retailers to sell weed without a license.
Under the rules proposed in the bill, “illicit cannabis” is defined as taxable weed products for which no taxes were paid. Krueger’s spokesperson said it basically means any cannabis that wasn’t grown by or purchased from a licensed operator in New York.
Fines for possession of illicit cannabis under the bill would rise to at least $400 per ounce of flower (they are currently $200 per ounce), $10 per milligram of THC in edibles (currently $5), $100 per gram of concentrate (currently $50) and $1,000 per plant (currently $500).
Joshua Waterman, a cannabis cultivator who co-founded the Legacy Growers Association, said that even though legislators’ and regulators’ intent behind this bill may be good, he cannot support it.
“Although the idea of shutting down dispensaries that are flooding the market with … products from other states is something we would support, we just don’t see that in this bill,” Waterman said. “I’m afraid this will end up being another way for the state to fine and penalize lower-class individuals, especially minorities.”
Waterman also said he believes passing a bill like this would further alienate legacy operators from the legal market, despite the fact that state officials have expressed a desire to fold them into the regulated adult-use market.
“The state and the OCM keep saying they want to include and incentivize legacy people to enter the legal market,” Waterman said. “Putting out a bill to stop legacy operations before releasing applications for licensing is disgraceful, and truly shows where lawmakers stand when it comes to the legends that created the cannabis industry without ever asking for their support.”
Krueger spokesperson Justin Flagg said in an email that it’s important to address the issue of illegal cannabis sales partly because they’re currently selling products that don’t conform to regulatory requirements – including a proposed ban on packaging that could appeal to children. He said that the bill could stop bad actors from competing with current legacy operators who will eventually operate on the regulated market.
“Addressing these illegal operators will help ensure that licensed equity operators have the opportunity to succeed and also help ensure that cannabis products are sold in a responsible way,” Flagg said.