A recent court ruling is jeopardizing New York’s crackdown on illicit cannabis sellers that Gov. Kathy Hochul and other officials have credited with rescuing the state’s struggling legal marijuana market.
A Queens County Supreme Court judge ruled on Aug. 14 that a smoke shop at 35-12 Bell Blvd. in the borough could reopen after being closed by the New York Sheriff’s Office as part of Operation Padlock to Protect, The New York Times first reported.
The city quickly appealed the ruling, which is the first successful challenge to the statewide crackdown.
The crackdown began May 7 with public fanfare from Hochul, New York City Mayor Eric Adams and other elected officials.
Padlocking without protections
New York City kicked off Operation Padlock to Protect after the state Legislature granted authorities new powers to do something about the thousands of merchants throughout the state selling cannabis without the proper licensing.
What could be the most audacious illicit market in the country – with the number of unlicensed sellers outnumbering licensed marijuana shops by as much as 24-to-1, according to some estimates – has contributed to a botched rollout of legal sales that Hochul famously branded a “disaster” earlier this year.
Through mid-July, authorities in New York City seized $20 million in illegal marijuana and imposed $51 million in fines, Adams said.
But among the new powers lawmakers voted to grant law enforcement is the ability to shut down a merchant suspected of unlicensed marijuana sales – and to keep the premises padlocked.
That’s what happened at 35-12 Bell Boulevard in Queens, where sheriffs padlocked an alleged unlicensed smoke shop on June 26.
‘Not found to have engaged in any illegal activity’
A subsequent summons to the shop’s owners was dismissed, but the NYC Sheriff’s Office determined in an administrative hearing the store should remain closed for a year.
That amounts to forcing a closure on a business even though it was “not found, on this record, to have engaged in any illegal activity, which is a clear violation of due process under the law,” Supreme Court Judge Kevin Kerrigan wrote in a ruling dated Aug. 14.
“The court acknowledges that the unlicensed sale of cannabis within the City of New York represents an enormous public health concern,” he added, according to the Times.
“However, summarily shuttering businesses prior to taking the necessary steps to determine whether a violation has occurred stands against the cornerstone of American democracy and procedural due process.”
The city has appealed the ruling, but it’s likely to encourage many other businesses shuttered under Operation Padlock to Protect to challenge their closures.
Legal marijuana sales up after padlocking
Unchanged:
Legal marijuana sales up after padlocking
Unlicensed sellers are one reason legal adult-use sales in New York totaled only $123 million in 2023, about one-quarter of projections.
Adult-use sales this year totaled $332 million through July, state regulators said recently.
The state now has 165 legal recreational marijuana stores in operation, according to the Office of Cannabis Management, a tally that also includes temporary delivery-only locations.
However, the agency is still moving too slowly for some entrepreneurs.
The state had yet to review hundreds of applications filed last November, officials said last week.
H/T: mjbizdaily.com