N.Y. budget to embolden local police to combat illegal cannabis shops

New York’s final budget is expected to empower local law enforcement to independently padlock businesses that illegally sell cannabis to suppress thousands of illicit sales that burden its slow-growing legal market.

And a proposed fund to help distressed cannabis farmers remains on the negotiating table after advocates thought this week it was nixed from the final spending plan.

The state budget, now 11 days late, is expected to allow local sheriff’s and police departments to issue civil penalties and padlock illicit stores in their communities. Municipalities will be required to pass a local law to permit sheriffs to padlock doors and act independently of the state Office of Cannabis Management, Senate Cannabis Subcommittee chair Jeremy Cooney said.

“There’s a conceptual agreement around making sure that whatever happens in this budget that there is a way to more timely close down these stores,” Cooney told Spectrum News 1 on Thursday. “… If we don’t close down the illegal stores, what will happen is, it will directly impact the legal stores that won’t be able to get off the ground.”

Legislative leaders reached a conceptual agreement on the cannabis enforcement package earlier this week, as first reported by The Times Union. Illegal shops have impacted the success of New York’s legal market, which stands at 105 adult-use cannabis dispensaries across the state.

The cannabis enforcement change, which Gov. Kathy Hochul included in her executive budget, is intended to expedite the shuttering of unlicensed businesses selling recreational cannabis products. It would also help keep fines collected from civil penalties in local communities.

Current state law does not permit local law enforcement jurisdictions to take enforcement action against illegal cannabis operators — forcing them to rely on OCM.

“This is about bringing more people into the fold; this is about bringing local governments who are eager to participate in empowering them to do so,” said Cooney, a Rochester Democrat. “We don’t want to just say, ‘Hey, we’ll have someone from Albany come to your community.’ Now we’re going to allow local communities to police their communities.”

The budget will not include additional funding for local police departments to combat the illicit market, and will be up to the corresponding municipality.

“Each municipality will treat this differently,” Cooney said. “This is a local government issue. All we’re saying at the state level is, ‘Here are the parameters for where you can do civil fines against these illegal operators.’ “

Lawmakers are considering legislation in the budget to punish businesses found selling illegal cannabis and revoke state licenses to sell cigarettes, tobacco products, alcohol or lottery tickets and prevent unlicensed operators from opening in delis or bodegas.

Leaders are considering including fund in the final spending plan to help distressed cannabis farmers struggling to stay afloat with too few legal dispensaries to sustain a profitable cultivation business.

Assembly Agricultural Committee chair Donna Lupardo said Thursday she was never told the fund is off the table and remains part of negotiations as budget talks continue.

“I think this is a rumor, and an understandable rumor, from people who are very, very worried because of their severe financial losses,” said Lupardo, a Democrat from Endwell. “They want to make sure it doesn’t fall off the table and I’m very committed to making sure it doesn’t.”

The Cannabis Farmers Alliance sent the governor a letter earlier this week after hearing from counsel the fund was dead in the final budget. The Senate one-house budget committed a $128 million fund for immediate cash relief for cannabis farmers, with the Assembly proposing $80 million for related aid.

CFA_NYGov_Letter-240409 by Matthew

Gov. Hochul supports blending the fund for farmers in with a cannabis enforcement policy, and lawmakers have said they’re open to compromise.

Lupardo said she’ll be outraged if the fund to help distressed cannabis farmers is removed from the budget. Intertwining the fund within enforcement policy makes sense, the assemblywoman said, because a healthy supply of illegal shops breed fewer legal options for farmers.

“We can have this conversation and look at it that way — that’s fine with me so long as we have some resolve to help these people,” she said.

Cooney said he expects a relief program for farmers and a revolving loan fund for Social Equity & Economic applicants in the final budget, but it will likely be far lower than advocates requested.

“We want to make sure that we’re investing in [farmers] so that they can continue to be part of our supply chain for legal cannabis in New York state,” the senator said. “The most important thing is that we focus on shutting down these illegal stores, padlocking those doors and opening up new stores so that that can become the dominant force.”

State leaders and their top aides are expected to negotiate the details of tax subsidies in the coming days.

The final budget will also replace the structure of the state’s marijuana potency medical marijuana taxes. They will not be repealed.

Cooney sponsors legislation to change the potency tax to 5%. Meanwhile, the Assembly one-house budget proposed a 7% tax and Gov. Hochul’s executive budget posed a 9% rate — but legislative leaders have yet to settle on a figure.