ALBANY — A lawsuit challenging the legality of New York’s ongoing regulatory raids of licensed hemp stores was filed late Monday in Albany against the state Office of Cannabis Management, accusing the agency and its oversight board of “trampling on hemp retailers’ constitutional rights.”
The case was filed in state Supreme Court in Albany 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 W. 31st Street in Manhattan. The New York City Sheriff’s Office, which is also named as a defendant, is leading the regulatory inspections in New York City that store owners and their attorneys have described as “military-style raids.”
The Times Union reported earlier this month that 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 have 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 regulations 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, which follows a similar case filed two weeks ago 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 civil action 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 include state tax and labor department investigators, may turn off a store’s video surveillance cameras, refuse to provide their 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.
The civil complaint also says 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 say the new regulations and enforcement efforts have crippled their businesses.
The Office of Cannabis Management has declined for weeks to respond to questions about how many licensed hemp stores have been inspected, how many have had products seized and how many have been padlocked. The office also has declined for more than four months to provide records on any administrative proceedings resulting from the raids.
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.
The lawsuit filed Monday in Albany, and the one filed in federal court earlier this month in Manhattan, are being handled by Joshua S. Bauchner, a Manhattan attorney who represents numerous hemp store owners across New York.
Bauchner and other attorneys have said the state also did little to inform hemp retailers and processors of the strict new regulations governing their products. 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 over the past several months.
Officials with the Office of Cannabis Management have said their office does not comment on pending litigation.
J.D. McCormick, a hemp industry expert who is chairman of the American Healthy Alternatives Association, described the enforcement efforts engulfing New York’s hemp industry this year as “regulatory chaos (that) has sparked illegal raids on hundreds of state licensed hemp stores using heavily armed police officers to burst into small businesses.”
“It all started in December when the state changed the rules for the hemp industry, violating a federal decision, and without legislative approval, without talking to stakeholders, and without explaining the rule change,” McCormick said in a recent interview.
In 2019, the Legislature passed a bill that set the stage to update the cannabinoid hemp program, imposing stricter regulations for testing and packaging and placing the industry under the state Department of Health. The broader hemp market for things like textiles and construction materials remained under the Department of Agriculture and Markets.
It was the first step toward stricter regulations for the state’s cannabinoid hemp industry, which was becoming increasingly popular for providing products like the CBD oils and salves currently sold in many New York farmers markets, gas stations and smoke shops.
But some local processors who were investing in the trade early also started to worry that the industry was becoming a free-for-all, especially for retailers selling products from out-of-state, which remains legal for the licensed hemp stores but not New York’s licensed marijuana stores.
Also, many of the hemp stores’ products have been sold without complying with the stricter regulations governing marijuana that now apply to them after the 2021 law that legalized marijuana also pulled the licensed hemp retailers under the umbrella of the Office of Cannabis Management.
H/T: www.timesunion.com
