The Council passed the bill the same day Governor Hochul announced additional state measures to address illegal smoke shops. On June 22, 2023, the City Council Committee on Public Safety passed a new bill to address New York City’s ongoing problem with unlicensed smoke shops. Int. 1001-B (2023), sponsored by Council Member Lynn Schulman from Queens, will hold landlords accountable for knowingly leasing a commercial premises to an unlicensed tenant who sells controlled substances or tobacco products on the premises.
Under the bill, the first time an unlicensed seller is found operating in a leased commercial premises, either the Sheriff’s Office under the NYC Department of Finance or another enforcement agency will issue a written warning to the landlord. This will provide the landlord with knowledge of the tenant’s unlicensed activity and allow the landlord to evict the tenant. If an unlicensed seller is found operating in the same commercial premises after a warning has been issued, the landlord will be fined $5,000 for the first violation, and $10,000 for each subsequent violation.
To measure the success of the proposed bill’s efforts, Prop. Int. No. 1001-B also requires the Sheriff, in collaboration with the NYPD and other relevant agencies, to submit a monthly report on the enforcement of unlicensed sellers of controlled substances and tobacco products to the Mayor and the Council.
According to the Council Committee Report, Int. No. 1001-B was introduced in response to the hundreds (or potentially thousands) of unlicensed businesses selling marijuana and tobacco products in New York City. These estimates include the selling of illegal flavored vape products and counterfeit or smuggled cigarettes and tobacco products. The Council is especially concerned with unlicensed sellers of controlled substances because they often sell laced products and become magnets for robberies due to their large inventories of cash. The Council is also concerned with unlicensed sellers of tobacco products because they often sell harmful counterfeit tobacco products which not only cost taxpayers millions in lost tax revenue but also pose greater health risks to consumers.
Although selling marijuana and other tobacco products in New York City is legal, sellers must first obtain a license to do so. The City’s large number of unlicensed controlled substance and tobacco product sellers is due in large part to the challenges and costs of acquiring licenses. According to the Council Committee Report, not only are multiple licenses required to sell tobacco products (with an additional license required to sell electronic cigarettes), but there is also a cap on the total number of licenses issued to dealers in each community district, which was significantly reduced in 2018. Moreover, licensed marijuana sellers also bear additional operating costs, making it more difficult for them to compete with unlicensed sellers, who have lower costs and easier access to products.
On June 13, at the Council Committee on Public Safety’s hearing on the bill, chaired by Council Member Kamillah Hanks, Council Member Schulman stated that the bill, “represents a crucial step towards maintaining the integrity and safety of our communities. This bill seeks to address a pressing issue that has plagued our neighborhoods for far too long: the presence of illegal businesses operating under the guise of legitimate enterprises. By holding landlords accountable for knowingly enabling these illegal activities, we can restore the trust and security that our residents deserve.”
After Council Member Schulman spoke, Maureen Kokeas, Commanding Officer of the Bureau of Criminal Investigation for the New York City Sheriff’s Office, testified that New York City is experiencing an epidemic of unlicensed sellers of controlled substances and tobacco products. Kokeas emphasized the importance of addressing this epidemic, stating that unlicensed activities could jeopardize the regulated cannabis industry, endanger citizens, expose minors to controlled substances and tobacco products, and deprive the city of tax revenue intended to fund vital programs. However, while she supports the bill’s goals, she is concerned about its effectiveness because it requires monthly reports, which create operational and staffing challenges without providing any additional benefits that a quarterly or biannual report would.
Kokeas then responded to questions from Council Member Hanks, Council Member Schulman, Council Member Justin Brannan and Council Member Rita Joseph. When asked about the current procedure in place for handling repeat offenders, Kokeas noted that “There’s a lot of places that we close down and we take everything out of the store, and the next day they’re loaded up again.” Kokeas went on to explain that it is difficult to repeatedly return to the same stores because there are so many illegal smoke shops in New York City and limited resources to combat them. Kokeas believes that holding landlords accountable for their tenant’s unlicensed activity will save the Sheriff’s Office and all other relevant enforcement agencies a significant amount of time and effort.
Two additional members of the public gave their testimonies as well, neither of whom disagreed with the need to act against landlords for their tenant’s unlicensed activity. Times Square Alliance President Tom Harris testified, “Anything that will help address the proliferation of illegal weed stores in our city is appreciated. In 5 months, Times Square has gone from 2 illegal weed stores to 12—these stores make Times Square less safe.” Though he added, “While this bill is helpful, more is needed.”
On June 22, 2023, the bill was unanimously passed by both the Committee on Public Safety and the full Council. Following the passage, Council Member Schulman stated, “Illegal weed shops have been proliferating in NYC, putting our communities at risk. The products they are selling have been found to be adulterated and these shops prevent licensed sellers from opening legitimate businesses. The legislation being passed today will be a game changer in addressing this problem and keeping our neighborhoods safe.”
The law will take effect immediately.
The law was passed the same day Governor Kathy Hochul announced a new enforcement legislation to further combat NYC’s illegal smoke shops. These enforcement measures include making it a crime to sell cannabis products without a license, and authorizing the New York State Office of Cannabis Management (OCM) to fine unlicensed cannabis businesses between $10,000 to $20,000 per day for conducting unlicensed activities and padlock businesses found to be in repeated violation of the law.
To read more about the state’s efforts, click here.
Governor Hochul stated, “These unlicensed businesses violate our laws, put public health at risk, and undermine the legal cannabis market, and with the powerful new tools in our toolbelt we’re sending a clear and strong message: if you sell illegal cannabis in New York, you will be caught and you will be stopped.”
By: Dylan Shusterman (Dylan is the CityLaw intern and a New York Law School student, Class of 2025.)
CC: Stated Meeting, Int. 1001-B; Governor’s Office: “Governor Hochul Announces Results of First Enforcement Actions Under New Law Against Unlicensed Cannabis Businesses” June 22, 2023.