How New York City became a free-for-all for unlicensed weed

One Sunday afternoon Austin Garza, a tourist from Dallas, stopped by the Weed World Candies flagship store in Midtown Manhattan and bought two pre-rolled joints.

Outside, he opened a yellow tube labeled Super Silver Haze. He took out a joint to smoke and offered puffs to passers-by, three of whom were obliged.

The store opened in 2019 and was an outlier among the pizzerias, novelty stores, and officer’s towers on 7th Avenue between Times Square and Penn Station. But in recent months, several other smoke shops and dispensaries have sprung up on the same strip, illegally selling cannabis products to tourists, city dwellers and commuters.

The swanky dispensaries and kitschy bodegas are part of an explosion of unlicensed cannabis stores that opened in New York last year to capitalize on the state’s legalization of cannabis before the rules could be set.

Now, on the eve of the launch of the state’s legal market, authorities are facing mounting pressure to reach out to the shops, which have caused confusion among everyone from tourists to police officers.

State regulators and some industry insiders have called for the stores to be shut down, fearing they are undermining the legitimate market. But supporters of the stores say they are employing staff and serving a clientele waiting for legal retail locations that have been slow to launch. New York legalized recreational cannabis for adults in March last year.

In the city, the Adams administration has been reluctant to take a firm hand on the illegal deals. Kayla Mamelak, a spokeswoman for the mayor, said the city sheriff’s office, a small civilian law enforcement agency, has conducted hundreds of business inspections, with deputies seizing illegal products, issuing fines and making arrests. “Mayor Adams has made it clear that no illegal business dealings should be tolerated,” she said.

City authorities have tried to avoid reviving memories of the War on Drugs with widespread arrests, said Jeffrey Hoffman, a cannabis advocate and pro-legalization campaigner.

“We hit the reset button,” said Mr. Hoffman. “The only question became how long they would let it go.”

State cannabis regulators issued the first retail licenses Monday, allowing 36 businesses and nonprofits to open dispensaries for adults 21 and older. State officials have said they hope to get the first retail sales off the ground by the end of the year.

Without a significant change in the landscape, they will be forced into competition with unlicensed sellers who are already established in the market and can offer lower prices because they don’t pay cannabis sales taxes or comply with government regulations.

Since legalization, cannabis stores have popped up almost everywhere: two blocks from a Long Island City police station, across the street from a Harlem middle school, and above a Williamsburg subway station, for example.

Regulators said they would be following businesses across the state but refused guess how many there are. Industry watchers say their number is in the hundreds.

“Everyone does what they have to do to get into the market,” said Mel Rivera behind the counter at Smoker’s World, which opened in Midtown in February and sells cannabis edibles and joints in addition to tobacco and hookahs.

At Weed World, a large acrylic sign advertises indica and sativa strains with quirky names written in neon colors along with the letters “THC,” short for tetrahydrocannabinol, the intoxicating compound in cannabis.

However, the owner, Bilal Muhammad, claims that unlike some newcomers, his company has only ever sold products made with cannabidiol or CBD, which comes from the same plant as THC but doesn’t get consumers high, he said.

Still, both CBD and THC require separate licenses to be sold, and Weed World didn’t have one, Mr. Muhammad said. But he has criticized the authorities for confusing his company with vendors selling potent THC products.

Over the summer, the city impounded more than a dozen of his distinctively colored trucks. However, most of the vehicles were returned after he made arrangements to pay $670,000 in fines for parking and health code violations, according to Mr. Muhammad. The trucks are stored in New Jersey, he said.

Smoking shops aren’t the only places that have popped up to sell cannabis. State regulators have also named a tattoo parlor, an opera house and a beauty salon.

But the smoke shops are of particular concern, regulators said, because they give consumers the impression that they are legitimate when in fact they operate without official oversight.

New York requires that all weed sold in the state has been grown, processed and tested within its borders, a supply chain known as seed-to-sale. But most weed shops in the city sell products in packaging with a California stamp, and some also offer illegal drugs, as well as candy and elixirs made from psychedelic mushrooms.

State Senator Brad Hoylman, a Manhattan Democrat, wrote a letter to Mayor Eric Adams in September expressing concern that more than two dozen businesses were opening without a license on the west side of his borough.

“I can’t tell my constituents that these products are safe, or that they aren’t being sold to minors, or that the potency of cannabis — for example, in gummies — matches the advertising,” Hoylman said in an interview.

Additionally, he added, the stores undermine lawmakers’ intent to prioritize opportunities in the cannabis industry for people convicted of marijuana offenses. The illicit deals also evade taxes designed to fund addiction services, education, and reinvestment in communities where enforcement was concentrated.

Violence is another concern. The stores, which often hold large amounts of cash, have been the target of robberies and burglaries, sometimes escalating to shootings and stabbings.

Julia Deviatkina shut down Freaky Dog, a Brooklyn smoking lounge, after the state released her name and address in a cease and desist letter.

“It was unsafe,” she said.

With all the problems surrounding unregulated cannabis, regulators and some lawmakers have pushed for the closure of cannabis stores. But Paula Collins, an attorney who represents smokers and grocery store owners who sell cannabis, said that would be a mistake.

Closing stores would mean layoffs for thousands of workers, many of whom are people of color, she said. And it would unfairly punish owners who have helped normalize cannabis and boosted the state’s battered commercial real estate market, she added.

Instead of cracking down on the deals, Ms Collins said the state should try to legitimize them.

“We’ve got all these stores popping up, everyone’s worried, and at the same time we’re missing out on all this good tax revenue,” she said.

State legislators have stated that they aim to include the illicit market in the regulated industry. But regulators have bluntly and repeatedly warned that all unlicensed cannabis sales are illegal, regardless of whether the cannabis product is given away after a “donation” or whether the exchange involves purchasing a membership or service.

However, some companies shrugged off the warnings, citing what they perceive as gray areas in the law and a lack of enforcement.

The Empire Cannabis Club, a New York City-based nonprofit organization co-owned by a family whose father and son served time in prison for marijuana crimes, describes itself as a concierge service that purchases cannabis on behalf of its paying members for a monthly fee .

Empire’s attorney Steve Zissou said the business model was based on provisions of the Legalization Act, which he interpreted as allowing social clubs.

“It is a legitimate entity established under current law,” Mr Zissou said. “Don’t you think if they could close it, they would have done it already?”

The city said a lack of legal clarity has prevented it from prosecuting businesses that sell weed and has called for changes to the cannabis law.

Mayor Adams, asked about deals at an independent news conference last month, said the city’s hands are tied because the law hasn’t caught up with reality. “A police officer can’t just walk in and make an arrest or arrest or confiscate the item,” he added. “There is a process.”

The police department said in an email to The Times that it believes the Legalization Act does not give officers the power to make seizures or arrests if they see cannabis for sale, or to shut down unlicensed businesses.

“The law provides for an enforcement mechanism only if an actual sale is observed,” the Bureau of Public Information said.

Chris Alexander, the executive director of the Office of Cannabis Management, said this was a common misconception by local law enforcement that surprised him with its consistency.

State law makes it a crime to possess or sell more than three ounces of cannabis. Penalties range from $125 fines to 15 years in prison. And some of the same municipal regulations that allowed the city to track trucks, such as those governing the sale of groceries, tobacco products and the protection of workers, can be used against store fronts, Mr Alexander said.

“I think the formation took more time than I thought it would,” he said, acknowledging that authorities needed time to adjust to such a major policy shift.

“For an average thug cop who knows we’ve legalized, he sees things happening and he’s like, ‘Well, I don’t know if that’s regulated or not, but I know they’ve legalized, so I think it is matters less to me,’” said Mr. Alexander. “What we’re constantly communicating is, ‘No, you still have to help us protect this thing we’re building’.”

The winds can change. Police and sheriff’s deputies raided a Bay Ridge cannabis dispensary and a Greenwich Village tobacconist earlier this month. Investigators arrested a man on felony cannabis possession charges, seized over 200 pounds of illegal tobacco and weed and levied $8,000 in fines, Sheriff Anthony Miranda’s office said.

“It’s a danger to the community,” he told Loud Labs NYC, a local news outlet. He added, “No one really wants that in their neighborhood.”

But Lance Lazzaro, a criminal defense attorney, said his experience handling three similar cases made him confident the charges would be dismissed in court.

“It’s marijuana,” he said. “It’s not the crime of the century.”