ALBANY — A state Supreme Court justice issued a temporary restraining order last week allowing the operators of two Manhattan hemp stores to remove “illicit cannabis” signs that had been placed on the storefronts by marijuana regulators following raids.
The judge’s ruling came as attorneys for dozens of hemp store owners whose shops have been raided and had products seized are fighting back in court. The cases include challenging the constitutionality of state regulators posting “illicit cannabis seized” signs on the fronts of shops whose owners have not had their cases adjudicated and argue they did nothing wrong. The regulations include hefty fines for any shop owners who remove the signs without authorization.
Joshua S. Bauchner, a Manhattan attorney who represents numerous hemp store owners across New York, said the temporary restraining order is an indication that judges are beginning to question the legality of the enforcement tactics being used by state regulators and the New York City Sheriff’s Office.
“As our challenges are now subject to judicial review having exhausted administrative remedies, the courts are confirming what we have been arguing in Albany — this all is unconstitutional and needs to stop.” Bauchner said.
Bauchner noted that state Supreme Court Justice Arthur F. Engoron, who signed the temporary restraining order, had raised concerns during an earlier hearing about the regulatory processes and seizures being carried out by state cannabis regulators, often in coordination with the New York City Sheriff’s Office and other law enforcement agencies.
The petition filed by Bauchner on behalf of the operators of two CBD Kratom stores sought “the removal of incendiary signs proclaiming (the owner) engaged in criminal activity without any hearing or due process.”
The court case is one of numerous legal challenges that hemp store owners are pursuing in response to ongoing raids of their shops in which they claim regulators and police are improperly treating them like unlicensed marijuana stores. The litigation notes that regulators place the “illicit cannabis seized” signs on the front of the stores prior to any hearing and they often remain there for months.
Bauchner’s petition noted that the CBD Kratom stores have retail hemp licenses but are being “caught up in the state’s disorganized dragnet against retailers illegally selling marijuana, an entirely different product subject to an entirely different set of regulations which are unlawfully and unconstitutionally being thrust down petitioner’s throat with reckless impunity.”
In a separate case involving a hemp store in Queens, another state Supreme Court justice recently issued a ruling finding that the New York City Sheriff’s Office had overstepped its authority in September when it ordered the shop to shut down for a year after investigators raided the shop and seized what they alleged were illicit cannabis products for sale.
The sheriff’s investigators had conducted their “inspection” of the store without a search warrant and when it was closed. They turned off the store’s security cameras when they entered to prevent their actions from being recorded. An administrative law judge issued a ruling following a hearing that found the shop should not have been raided during its off hours and should be allowed to reopen. But under New York City’s cannabis regulations, the sheriff has the ability to ignore the administrative judge’s decision and can order shops to remain closed for up to a year.
“The sheriff is permitted to entirely disregard the (hearing) officer’s recommendation, which is issued after an evidentiary hearing, rendering the hearing useless, or even a potential farce,” wrote state Supreme Court Justice Kevin J. Kerrigan. “Indeed, if the final arbiter has the authority to confer no weight to the hearing, there is no real meaningful ‘opportunity to be heard,’ which vastly increases the risk of erroneous deprivation and raises a due process concern.”
On Friday, in response to Kerrigan’s ruling, the sheriff’s department lifted the sealing order that had closed the hemp store on Francis Lewis Boulevard in Queens, according to Bauchner.
The recent rulings in favor of hemp store owners come as a broader lawsuit challenging the legality of New York’s ongoing regulatory raids of licensed hemp stores is pending in state Supreme Court in Albany against the state Office of Cannabis Management, the Cannabis Control Board and New York City Sheriff Anthony Miranda. That case, pending before state Supreme Court Justice Thomas Marcelle, accuses the agencies of “trampling on hemp retailers’ constitutional rights.”
The case was filed on behalf of three licensed hemp stores: Smoke N Save on West Avenue in Saratoga Springs; Two Strains on Aviation Road in Queensbury, and Breckenridge on West 31st Street in Manhattan. The New York City Sheriff’s Office, which is also named as a defendant, has led the regulatory inspections in New York City that store owners and their attorneys have described as “military-style raids.”
Hundreds of licensed hemp stores across New York have been raided over the past several months by state regulators and police agencies that have seized millions of dollars in cannabinoid products — goods that the retailers had been selling without penalty over the past six years as state and federal laws had expanded the legalization of hemp.
The seizures followed new regulations governing hemp and cannabis that were authorized by the state Cannabis Control Board in December, without public comment or involvement of the state Legislature. The crackdown is part of a broader effort by Gov. Kathy Hochul’s administration to shut down stores selling cannabis without a license as New York’s retail marijuana market has stumbled.
The regulations adopted a year ago tightened the rules governing hemp products and effectively outlawed millions of dollars in products that many of the state’s thousands of licensed hemp retailers had been selling since New York legalized marijuana in 2021. As part of that law change, the state also set rules for hemp products and gave the Cannabis Control Board the power to regulate them.
The lawsuit in Albany, which follows a similar case filed in U.S. District Court in Manhattan, accuses state regulators of improperly treating the licensed hemp stores like illicit marijuana shops. The hemp stores have been increasingly targeted by the raids, which the Office of Cannabis Management characterizes as “inspections.” The Albany case also seeks a temporary restraining order enjoining the New York City Sheriff’s Office and Office of Cannabis Management from carrying out seizures in hemp stores without a formal hearing, among other demands.
Many hemp store owners said the inspections usually have a heavy police presence in which the enforcement teams, which also may include state tax and labor department investigators, turn off a store’s video surveillance cameras, refuse to provide identification, search the personal belongings of workers and threaten to break open locked cabinets or doors if the employees decline to open them.
“Under the guise of an ‘administrative inspection,’ a single (cannabis office) inspector, accompanied by a double-digit contingent of heavily armed police wearing body armor, and without notice, probable cause, or a warrant, are bursting into legal licensed hemp retailer’s business establishments, immediately turning off all cameras to avoid a record of their unlawful actions, and carrying out their unlawful tactics without any regard that the retailer they are raiding is not selling marijuana but is a lawfully operating state-licensed hemp retailer,” the lawsuit states.
Last month, Marcelle conducted lengthy hearings in the case, including hearing testimony from hemp store owners and employees as well as regulators. He is expected to issue a ruling in December.
The civil complaint alleges that during the inspections regulators and police instruct customers to leave, seal entrances and detain any employees present. They allege the subsequent seizures are improper and that “authorities are conducting their inspections pursuant to the wrong regulations. The regulations that govern marijuana do not apply to licensed hemp retailers.”
Hemp store owners and their attorneys contend the new regulations and enforcement efforts have crippled their businesses. In court filings, attorneys for state regulators have argued that the hemp stores have been selling products that contain amounts of cannabis higher than what regulations allow — products that effectively make consumers high.
The hemp industry took off after 2018, when Congress passed the Agriculture Improvement Act — or Farm Bill — that legalized hemp. Under the federal law, hemp is cannabis with not more than 0.3 of what’s known as “delta 9” tetrahydrocannabinol, or THC, the psychoactive compound of marijuana plants that’s also found at very low levels in hemp plants.
Although hemp stores sell dried flower, the hemp-infused edibles and beverages they sell are more dense than the dried plants and many contain other forms of THC or similar intoxicating substances.
The new regulations adopted last year — first on an emergency basis — stipulated that all hemp products distributed or offered for retail sale in New York are prohibited from containing any synthetic cannabinoids, artificially derived cannabinoids, or cannabinoids created through a process called isomerization, which is used to produce them. Until then, the hemp stores had been operating under the belief that as long as the products did not contain more than 0.3 percent delta 9 THC, they were legal.
Hemp industry stakeholders contend the rule changes were designed to prevent their businesses from selling products that may be legal under federal law but were competing with New York’s new retail marijuana stores.
Many store owners said they were not aware the products they had been selling were no longer legal until they were seized from their shelves. But regulators also have seized products that were not unlawful — including those packaged for online sales outside of New York.
H/T: www.timesunion.com
