In Response to Explosion of Unlicensed Smoke Shops in NYC, Council Members, Real Estate Officials Announce New Law Taking Effect to Curb Illegal Stores
New York, NY – 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 [across] 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.
“When New York finally legalized recreational marijuana in 2021, it represented a milestone achievement for communities who have been unjustly and disproportionately criminalized for cannabis use,” said Council Member Carlina Rivera. “We must support legal vendors who operate within a framework that protects public health and safety, and who are genuinely committed to equity and justice in their business model. To help prevent unlicensed vendors from undermining the legal market, City Council recently passed legislation sponsored by Council Member Schulman to increase accountability and prevent landlords from knowingly renting to businesses selling unlicensed cannabis or tobacco products.”
“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.”
“This commonsense law will keep bad actors out of commercial spaces and help ensure that real estate brokers and property owners are working with properly licensed retail establishments,” said Steve Soutendijk, Co-Chair of the Real Estate Board of New York Retail Committee and Commercial Broker with Cushman & Wakefield. “We applaud Council Member Lynn Schulman for her leadership on this important issue and thank all the Council co-sponsors, City officials and other stakeholders who played a role in getting this job done.”
“Illegal smoke and cannabis shops have been an ongoing challenge in our communities,” said Heather Beers-Dimitriadis, Chair of Queens Community Board 6. “We appreciate this creative approach from Council Member Lynn Schulman and Council Member Carlina Rivera. It is important to protect our community from businesses selling adulterated cannabis, to protect our city from the theft of tax dollars, and to protect future regulated cannabis shops that continue to open throughout our borough.”
“These landlords who knowingly rent spaces to illegal smoke shops have no regard for the law or the safety of our children,” said Sherry Algredo, Chair of Queens Community Board 9. “Ultimately, leaving our kids vulnerable to these products, untested and mostly dangerous and addictive. This will be a great step in the right direction to hold those accountable and we are grateful for Council Member Schulman for standing firm on this.”
Banner Image: Smoking Land. Image Credit – George Vogiatzis