In 2021, New York State enacted its new Cannabis Law, creating a new licensing structure for cannabis retailers. The Cannabis Control Board issued its first licenses under the new law in November 2022, and in the following months, New York City has seen a proliferation of cannabis retailers setting up shop.
In response to growing concern about unlicensed retailers, on July 23, New York City enacted a new local law prohibiting building owners from knowingly leasing or otherwise allowing the use of commercial premises by unlicensed sellers of cigarettes, electronic cigarettes, tobacco products, or illicit cannabis. The law uses a broad definition of “owners” including any mortgagee or vendee in possession, assignee of rents, receiver, executor, trustee, lessee, agent, or any other person, firm, corporation, or other entity directly or indirectly in control of a premises. This inclusive definition puts a lot of stakeholders in the real estate industry at risk.
Under the new local law, the City may inspect for violations for the unlicensed sale of cigarettes, electronic cigarettes, tobacco products, or illicit cannabis. The first time that an illicit cannabis or unlicensed tobacco product seller is found to be operating in leased commercial premises, any relevant city agency could issue a warning to the owner of the premises. Owners may appeal such written notices within 15 days and may assert an affirmative defense to a violation if the owner has commenced a proceeding to evict the unlicensed seller.
If further violations are found during a subsequent inspection and the owner is already subject to a written notice constituting a final administrative determination on the same premises, the owner will be subject to a civil summons. The civil penalty for the first violation is $5,000, and each subsequent violation will be $10,000.
This law also requires the city to submit to the Mayor and the City Council quarterly reports through December 31, 2024 on enforcement relating to illicit cannabis or unlicensed tobacco product sellers, including information such as the number of inspections in each borough; the number of civil and criminal summonses issued to unlicensed sellers; and the number of arrests made.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.