Since February, New York state regulators had refused to name the dozens of businesses that received cease-and-desist letters claiming they were illicitly selling marijuana and other cannabis products earlier this year.
On Thursday, the Office of Cannabis Management (OCM) reversed course.
After months of pressure from Gothamist, OCM finally made public the unredacted letters it sent to 66 storefronts from Queens to Buffalo – including many that have continued to distribute cannabis even after receiving the correspondence. Those businesses include some of the most prominent players in the New York City market, such as Weed World and Empire Cannabis Club.
Steve Zissou, an attorney representing Empire, says the company – which operates on a model where customers buy a monthly or daily membership, not the product itself – is confident its business model is legal under the 2021 state law legalizing cannabis in New York. He suggested the club is ready and willing to make its case in court if it gets to that point.
“There's an old saying: If you want peace, prepare for war,” Zissou said. “And so Empire wants peace, but they’re prepared for war if and when it comes.”
The decision to make the documents public came after an extended back and forth between OCM’s legal department and Gothamist, which first sought the records under the state’s Freedom of Information Law (FOIL) on Feb. 8, after OCM issued a news release touting the letters without revealing the businesses receiving them.
The letters accused the business owners of “engaging in unlicensed cannabis sales” or allowing them to occur on their property in violation of the Marijuana Regulation and Taxation Act, the state law that immediately legalized marijuana possession but prohibited sales until the state got its licensing and regulatory system up and running.
New York is still months away from its first licensed cannabis sales, but dozens of businesses across the state have continued to market marijuana products under a potential legal loophole, either by selling memberships to a club or “gifting” the drug to a customer that purchased another product.
OCM has taken the position that both activities actually do violate the law. Any cannabis sales remain illegal, the agency claims, even if the product is “gifted.”
“You are hereby directed to cease any, and all, illegal activity immediately,” the cease-and-desist letters read. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk.”
Of the 66 addresses to receive the cease-and-desist letters, 15 were within the five boroughs of New York City. That includes two Empire Cannabis Club locations in Manhattan, two letters sent to Weed World Inc. in Manhattan and Queens Village, and three Paint Puff N’ Peace stores – two in Manhattan and one in the Bronx.
A call to a phone number listed for Paint Puff N’ Peace’s 3rd Avenue store went unanswered.
In an email late Thursday, Weed World owner Bilal Muhammad said his company "never received a letter of cease and desist." He said just because the company's name is Weed World "doesn't mean we're selling actual D9 products," a reference to Delta 9 THC.
Zissou said Empire’s model is permitted under the wording of the 2021 state law, which redefined what constitutes the “sale” of cannabis and included language specifically saying it is permissible to transfer up to three ounces of cannabis (and up to 24 grams of concentrated cannabis) to something over the age of 21 “without compensation.”
“Empire's business model is based on that,” he said. “It's a non-charitable, not-for-profit cannabis dispensary that does not receive compensation for the transfer of cannabis.”
As for the $35-a-month or $15-a-day membership fee, Zissou said there are “other costs and other considerations of running a club,” including “brick and mortar, salaries, the cost of goods and things like that.”
On Thursday, OCM touted the release of the businesses that received the cease-and-desist letters, with executive director Chris Alexander saying the stores are not only violating the state’s cannabis law but also “breaking state tax and several municipal laws.”
“I look forward to working with other regulatory bodies across the state to hold these stores accountable for their flagrant violations of the law,” Alexander said in a statement.
But the agency had refused to publicly identify the businesses several times over the last five months, including as recently as two weeks ago.
In May, the agency denied Gothamist’s formal FOIL request for the letters, even declining to acknowledge they existed. In June, the agency denied an appeal, arguing that releasing the letters – if they existed – could harm an ongoing law-enforcement investigation.
On June 22, after the state Committee on Open Government opened an inquiry on Gothamist’s behalf, OCM’s deputy general counsel Rashied McDuffie acknowledged the existence of the letters, but argued releasing them could “jeopardize the investigation by allowing outside entities to interfere.”
Ten days later – and without further explanation – McDuffie reversed his position, saying “by the close of business on Friday, July 8, 2022, all unredacted cease and desist letters will be posted on the OCM’s website.”
This story has been updated with additional comment.