Office of Cannabis Management Targets Illegal Cannabis Operations

Michael Roche


The Office of Cannabis Management (the “OCM”) announced on Tuesday that it has sent cease-and-desist letters to more than two dozen businesses across New York State that had been selling cannabis without a license.

In the form letter released on Tuesday, the OCM expressed concern that unlicensed sales could undermine the legal market that the OCM is tasked with building.  The letter specifically disallowed a perceived loophole, stating that gifting transactions “where consumers purchase non-cannabis items or services, such as a membership in a club, and are then provided cannabis as part of the sale” are illegal sales.

Any business that continues to engage in illegal sales will jeopardize their ability to obtain a license and may be subject to fines and criminal penalties.  Similarly, any landlords that continue to host businesses with illegal activity will jeopardize their ability to house a licensed retail dispensary or on-site consumption lounge.

These notices build upon a statement made by Chris Alexander at the Cannabis Control Board’s meeting on October 21, 2021, where he stated that gifting cannabis along with the sale of another commodity or service is illegal.  The OCM has differentiated illegal gifting from bona fide gifts from one adult to another, which is legal.

The action by the OCM serves as a reminder that people looking to engage in the adult-use cannabis market should wait until the licensing becomes available.

If you have any questions regarding this LEGALcurrents, please do not hesitate to contact any member of the firm’s Cannabis Law practice group at 585.232.6500 or 716.853.1616.

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