NYC Council looks to stop illegal dispensaries – by going after their landlords

New York City officials are pushing a new method for cracking down on illegal weed shops in the city: going after the landlords.

More than half of the City Council's members are sponsoring a bill that will lead to serious penalties for people who knowingly lease space to unlicensed sellers of marijuana, tobacco and other controlled substances.

“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,” Councilmember Lynn Schulman, the bill’s prime sponsor, said during a public safety hearing on Tuesday. “By holding landlords accountable for knowingly enabling these illegal activities, we can restore the trust and security that our residents deserve.”

The state legalized marijuana two years ago. Since then, New York City has struggled to crack down on unlicensed dispensaries – which aren’t required to sell products that are grown and processed by regulated in-state retailers.

Last year, Mayor Eric Adams created a task force specifically aimed at these unlicensed – and untaxed – sellers. In February, the Manhattan district attorney asked landlords to evict tenants who are operating these illegal shops. And last month, Gov. Kathy Hochul signed legislation as part of the state budget that allows shops to be fined up to $20,000 a day for unlicensed sales.

“We acknowledge that Albany dropped the ball here when they legalized these retail licenses without any sort of clear enforcement component,” Councilmember Justin Brannan, who is also sponsoring the measure, said at the hearing. “Unfortunately, in the city, we’re the ones that have to deal with their mess.”

If a landlord continues to knowingly lease a property to an unlicensed seller they will face a $1,000 fine the first time they’re found noncompliant, and $2,000 for each violation thereafter, if the bill passes. The measure also requires the authorities to submit a monthly enforcement report to the mayor and the Council.

Maureen Kokeas, the commanding officer of the Sheriff’s Bureau of Criminal Investigation, criticized the bill’s exclusion of the sale of unlicensed e-cigarettes and the monthly reporting requirement, which she said “would present operational and staffing challenges without providing any substantive additional benefits.”

But she said she ultimately supported the bill’s intent. The proliferation of illegal weed shops, Kokeas said, is leading to “multiple shops on the same block,” although the bureau did not have the exact number of unlicensed dispensaries.

“These unlicensed smoke shops deprive the state and city of vital tax revenue which is intended to be used to support education, housing, community reinvestment, drug treatment and other vital programs,” she said. “Instead, the money is going into the pockets of these unscrupulous scofflaws who have no interest in anything but their own bottom line.”