Illegal weed shops in NY slapped with $25M in fines — but they’ve only paid $22K
New York’s revenue from illegal weed dispensaries is taking a hit.
State regulators have issued $25 million in fines to unlicensed marijuana operators but only managed to collect a paltry $22,500 from the offenders – amounting to less than 1% of the penalties, data show.
“It’s not even the cost of doing business,” fumed Joe Rossi, a lobbyist who represents a number of clients with state licenses in New York’s cannabis industry.
“There are no repercussions,” Rossi said. “You won’t enforce your way out of this problem unless people go to jail for breaking the law.”
The state Office of Cannabis Management has confirmed the figures that show the enormous gap between fines and enforcement, first reported in The City media outlet.
“Currently, the State is prioritizing shutting down illegal shops and seizing unlawful products,” OCM spokesman Aaron Ghitelman said.
“Since new laws were passed in 2023, OCM and Tax [Department] have seized tens of millions of dollars in illicit products and levied more than $25 million in fines.
“While we recognize entities being fined have a right to due process, we are committed to working within the confines of the law to collect the fines once the legal process is complete.”
Gov. Kathy Hochul proposed new legislation to strengthen enforcement against illicit cannabis sales by helping OCM, New York City and other local governments impose higher fines and more quickly shut down unlicensed businesses.
The root of the problem is the language of the original law approved by then-Gov. Andrew Cuomo and the legislature legalizing the sale of cannabis in March 2021, insiders said.
Little thought was given to enforcement during the drafting of the Marijuana Regulation and Taxation Act, according to legislative sources involved in discussions at the time.
Cracking down on an illicit black market has simply not been a priority during the slow and rocky rollout of the legal market, critics said.
The Office of Cannabis Management has since appeared woefully unprepared to police what has become a thriving illicit market that includes an estimated 2,000 unlicensed weed shops in New York City alone, according to Mayor Eric Adams and Sheriff Anthony Miranda.
Last fall, the OCM even temporarily suspended enforcement hearings following raids of unlicensed shops because of a lack of staffing.
Meanwhile, the illicit operators have the legal right to appeal fines imposed by the Tax Department as well as OCM, stretching out the timeline of the collection process.
Regulators and industry sources said shutting down the illegal weed shops while growing the taxpaying licensed market is the ultimate goal.
“It’s out of control. It’s a public health crisis. Who knows what the unlicensed operators are selling?” Rossi, the cannabis industry rep said, noting a survey showing that illicit pot dealers were selling tainted weed.