In Response to Explosion of Unlicensed Smoke Shops in NYC, Council Members, Real Estate Officials Announce New Law Taking Effect to Curb Illegal Stores

 

Council Member Lynn Schulman, lead sponsor of legislation to hold commercial landlords responsible for renting storefronts to unlicensed smoke shops, was joined by several officials to announced the new law had taken effect. Introduction 1001-B, now known as Local Law 107 of 2023, prohibits owners of commercial spaces from knowingly leasing to unlicensed sellers of marijuana or tobacco products, imposing fines of up to $10,000 on landlords for violations.

The legislation followed a Council oversight hearing on the growing problem of unlicensed smoke shops operating across the city. The bill was passed on June 22, 2023 and went into effect on July 23, 2023.

“My recently enacted legislation, Intro 1001-B, will help shut down the illegal cannabis and smoke shops that have proliferated our city and created public health and safety hazards in our communities,” said Council Member Lynn Schulman, Chair of the Council’s Health Committee and prime sponsor of the unlawful cannabis shop enforcement legislation. “This legislation is a game changer and adds another tool to the enforcement toolbox against these harmful businesses.”

Under this new law, agencies that conduct inspections for unlicensed marijuana or tobacco sales and find such activity may provide written notice to the property owner requiring they ensure such unlicensed activity is ceased, serving as the basis of violation. Any subsequent inspection that finds continued violation would make the landlord subject to a $5,000 civil penalty at first, and a $10,000 penalty for each subsequent violation. The commencement of an eviction proceeding shall be considered an affirmative defense for a landlord. The law also requires the submission of quarterly reports to the Mayor and the Council a quarterly report on enforcement relating to illicit cannabis or unlicensed tobacco product sellers.

It is estimated that New York City is home to approximately 8,000 illegal, unlicensed smoke shops. Consequently, sales by illicit stores undermine the licensed recreational marijuana market, depriving New Yorkers of the tax revenues and community reinvestment funds generated from the 13% tax on legal sales. The products sold in unlawful stores are unregulated, and therefore can pose health risks to consumers.  

“Smoke shops operating illegally pose significant public safety and health risks to our communities, and they destabilize a legitimate, emerging business interest,” said NYPD Commissioner Edward A. Caban. “The NYPD will continue to use every resource available to protect New Yorkers, and to ensure that the safe sale and distribution of legal cannabis in New York City occurs within the parameters of a licensed, regulated, and standardized industry.”

“Like all licensed cannabis dispensaries in New York State, the Union Square Travel Agency understands how important it is for consumers to be able to easily locate safe and reliable cannabis products,” said Robert Cornegy, Senior Advisory for the Union Square Travel Agency Cannabis Dispensary. “We are grateful for the efforts of Council Member Schulman and the NYC Council, for taking steps to quell the unlicensed market, to contribute to the safety of cannabis consumers, and the expansion of a robust and inclusive legal cannabis market here in New York.”