The state Office of Cannabis Management has stopped holding trials where judges may recommend fines and other penalties for illegal sales — pausing consequences following its raids on unlicensed smoke shops.
The state cannabis agency made that admission to THE CITY after repeated requests from a reporter to observe one of OCM’s enforcement hearings. The office attributed the change to a lack of resources, and did not say when it planned to restart the administrative trials.
The same email disclosing that OCM had suspended its hearings, with its last trial held on Oct. 20, included a seemingly contradictory statement from OCM Executive Director Chris Alexander about how those “hearings are accessible to the public, and members of the press are able to attend.”
He added that “The Office of Cannabis Management continues to bolster our staffing levels and update standard operating practices to meet the safety and enforcement needs facing our budding adult-use cannabis market.”
As of last Friday, the agency said it has issued 270 enforcement actions across the state since June, seizing an estimated $45 million worth of illicit cannabis that is being held in a locked facility at an undisclosed location. Typically, those involve armed agents from the State Department of Taxation and Finance, along with unarmed OCM investigators, dressed in tactical gear to search a smoke shop, seize cannabis products and then post a sign with “ILLICIT CANNABIS SEIZED” in red block letters on the store front.
But OCM has held only 26 trials since June, levying $220,000 in fines. Decisions are still pending in the other 10 cases.
The abrupt stop comes despite Gov. Kathy Hochul’s push to crack down on an explosion of unlicensed shops selling cannabis statewide, including by granting what she said were significant new enforcement powers to the Office of Cannabis Management.
“We’re sending a clear and strong message: if you sell illegal cannabis in New York, you will be caught and you will be stopped,” Hochul said in June while trumpeting the first enforcement actions OCM took with its new powers.
Asked about OCM’s decision to suspend trials, Hochul spokesperson Jason Gough said this week that the governor “has repeatedly stressed the importance of cracking down on illicit cannabis shops that sell unregulated products and undermine New York’s nation-leading equitable cannabis industry.”
Meanwhile, OCM is not only pausing hearings, where judges may issue fines including for sales of illicit cannabis, but also withdrawing some cases entirely. Two lawyers who represent clients who’d had cases pending before the office told THE CITY that in the last week they had received notifications of withdrawal.
The Office of Cannabis Management said it could not answer how many cases have been withdrawn because the investigations are active and they may still be rescheduled for trial at a later date.
While new regulations this month gave OCM new power to levy fines of up to $20,000 a day against businesses that continue to sell pot without a license after the office has caught them doing so, that hasn’t deterred many businesses — including one a stone’s throw from THE CITY’s Financial District office that simply reopened the day after it was shut down in August and again after a second shut down earlier this month.
Alexander has expressed reservations about enforcement, noting during a meeting with community boards on Oct. 12 that lots of unlicensed shops reopen quickly after being raided.
“It was never OCM’s mission to do this type of enforcement,” Alexander said. “I want to be very clear that the strategy has not worked.”
‘A Moment of Shock’
After New York State legalized pot in March 2021, establishing a program designed to repay the communities that have been disproportionately impacted by marijuana arrests, smoke shops around the state began selling cannabi without applying for a license. With almost no enforcement by police, since selling without a license is a civil matter, these gray-market operations proliferated.
“In no other state did you end up with 5,000 stores in a year and a half,” State Sen. Liz Krueger (D-Manhattan) told THE CITY in an interview last month. Since those stores aren’t necessarily paying taxes, she added, “it’s damn hard for others to compete and get into the market” when they do receive licenses.
The Office of Cannabis Management launched its enforcement efforts in early 2022, sending 52 cease and desist letters to businesses warning them to stop selling cannabis without a license.
At the same time, the state was opening license applications for farmers to grow weed, processors to develop products and retailers to open dispensaries in what it said would be a “seed-to-stem” legal marketplace. It announced the creation of a $200 million public-private fund that would support retail proprietors who have a history of pot-related charges. State officials boasted that 50 new stores would be open by the end of the year. Instead, only one opened. In that vacuum, more illegal shops proliferated.
In May 2023, a new law expanded the Office of Cannabis Management’s enforcement authority to inspect unlicensed shops for illicit cannabis as well. By the end of June, Gov. Hochul held a press conference announcing the results of the enforcement actions, touting how agents had seized 1000 pounds of illicit cannabis from more than 30 stores across the state.
Among the first stores raided was a shop near Astor Place on a busy stretch of Broadway called Roll Up Nation. It’s just a block or so away from the Housing Works Cannabis Co, the state’s first legal shop and the only one that opened in 2022.
According to a transcript of a June 21 OCM trial, one of the employees of Roll Up Nation, Veronica Guerrero, described being overwhelmed when state investigators entered to search the store. “I did go into a moment of shock,” Guerrero said. “We never wanted to do something illegally.”
Although four months have elapsed since that trial and the cannabis shop has been closed, the enforcement action is still pending, according to Paula Collins, the shop’s lawyer.
In OCM’s trials, representatives of the state and shop owner present evidence, cross-examine witnesses and file motions. After the hearing, an administrative law judge can order a fine.
THE CITY reviewed transcripts and motions from three cases against stores that had been raided for selling illicit cannabis. In all three, lawyers for the defendants argued that their shops had been illegally searched.
After a July bust of a shop in Rochester, lawyers argued that the raid went beyond the scope of a regulatory inspection as armed officers swarmed the shop, barricaded doors and seized cannabis without a warrant or explicit permission of the shop owner.
On Thursday, the day after OCM told THE CITY it had suspended its hearings, lawyers for the Rochester store received an official notice that the case against it was being withdrawn.
“Given the procedural violations in this case, it was absolutely the right decision,” said Collins, one of the attorneys for the Rochester store as well. On Friday morning, she received a notice of withdrawal from OCM for a separate client with a trial scheduled for Nov. 3.
All Open Investigations?
The Office of Cannabis Management declined to provide a list of addresses for its raids, with Spokesperson Aaron Ghitelman saying that “because these are still open investigations, we will not share addresses of served locations until those investigations close.”
Earlier this month, OCM was again given additional enforcement powers, while raided businesses must certify they are no longer selling cannabis or face fines of up to $20,000 a day.
When a reporter went to the address of the enforcement hearings listed on the notices slapped on raided stores, it turned out to be the location of the Office of Cannabis Management. After that reporter rang the bell and identified herself, Ghitelman came to the door and said the office policy was to bar anyone without an appointment from entering the space where its supposedly public hearings are held.
It was seven days later, after additional emailed requests to observe one of the office’s trials, that Jessica Woolford, OCM’s director of communications, said that all proceedings had been paused.