Illicit cannabis sales plague New York’s legal marketplace

New York’s legal cannabis program is facing competition from illegal sales — a scenario that has played out and plagued other states. 

And now Gov. Kathy Hochul wants to address it through a measure introduced this week meant to curtail the illicit marketplace while also helping expand the legal sector. 

Democratic state Sen. Jeremy Cooney said the proposal from Hochul, as well as legislative fixes, would address an ongoing problem hampering what was meant to be a lucrative industry. 

“What we don’t want to have happen is for us to drag our feet and not develop the types of tools so that local governments are able to get rid of these bad vendors,” Cooney said. 

Hochul’s proposal would fine businesses selling illegal cannabis by as much as $200,000. Regulators at the Office of Cannabis Management, as well as the Department of Taxation and Finance, would have expanded enforcement powers. 

New York legalized cannabis in 2019 and began a process of regulating the marketplace by setting up rules as well as licenses meant for people who have been convicted under prior drug laws. 

“This allows us to put the economic opportunity into the hands of those populations that were most negatively impacted by the failed war on drugs,” Cooney said. “If we don’t get the illicit market under control, we’re not going to be able to deliver on that process.”

The measure must still be negotiated with lawmakers. But the Democratic-led state Senate previously approved a version of it. Differences over enforcement and other provisions remain. 

Lawmakers are also considering broad changes to how cannabis is taxed in New York — changes that could be included in a final budget deal due at the end of next week. 

Cooney didn’t rule out an agreement coming together by April 1, the start of the state’s fiscal year. But he added lawmakers want to “get it right” with enforcement. 

“We’re not going to be successful, we’re not going to be able to have Black and Brown owned legal dispensaries thrive if we have an illicit market working at the same time,” he said. 

Republican state Assemblyman Mike Reilly believes the enforcement push should have been made earlier. 

“I will say it’s a good move, but it’s a long time coming,” Reilly said.

Enforcement needs to be widened to include police agencies as well as state regulators, he said. 

“We have to uncuff the police officers,” Reilly said. “We have to make sure that law enforcement can actually do their job and go down and shut those locations and arrest those that are illegally selling it.”

Legal cannabis in New York was projected to be a multi-billion dollar sector. But the slow development of businesses and the illicit marketplace has made for complications. 

“You could say you’re not going to give a license, you’re not going to do this, you’re going to give a fine, and you know what they do? They’ll shut down that store,” Reilly said. “They’ll open up another LLC and they’ll open up another store and continue to do the same thing.”

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