NYC Has Padlocked More Than 750 Unlicensed Cannabis Stores, Adams Says

In the three months since the state gave New York City the power to shutter unlicensed cannabis stores, local law enforcement has sealed stores in 779 locations, Mayor Eric Adams announced Wednesday.

City agencies working together on the crackdown, known as Operation Padlock to Protect, issued more than $65.6M in penalties linked to more than 41,500 violations, according to the mayor's office.

The operation has also targeted the networks of illegal cannabis suppliers working on manufacturing, processing and distribution across NYC, collecting more than $41.4M of illegal product over three months. Two raids in July alone yielded a haul of $8M of illegal product, the mayor’s office said.

The operation, carried out by the NYC Sheriff’s Office, the New York City Police Department and the Department of Consumer and Worker Protection, focused on stores that appeared to target children, Adams said. 

“For too long, illegal shops have contributed to a feeling that anything goes on our streets, while targeting our most vulnerable — including children — with dangerous, counterfeit products marketed as candy,” he said in a statement delivered to the press Wednesday. “Today, we are celebrating that this is no longer being tolerated and we are making huge gains to protect communities and usher in a legal cannabis market that will thrive.”

Manhattan had the most shuttered stores, with 217 closures, data from the Office of Administrative Trials and Hearings shows. Another 208 stores were sealed in Queens, 182 in Brooklyn and 172 in the Bronx. No stores appear to have been sealed in Staten Island so far, according to the database.

By contrast, just 153 licensed stores are open statewide, with only around 60 of those in the five boroughs, according to the Office for Cannabis Management's dispensary verification tool.

Not all of the charges issued by the city agencies have stuck. Approximately 115 of the 780 violations issued by the city were dismissed after hearing, and agencies have had to reseal around 16 stores that had been inspected after they were first padlocked, Crain’s New York Business reported. By mid-June, procedural errors had led judges to dismiss around 1 in 5 of the violations issued, the New York Daily News previously reported.

Landlords whose properties were sealed now have to go through the process of getting them unsealed, Cole Schotz member attorney Robert DiPisa, who specializes in cannabis law, told Bisnow. While some landlords may simply not have known what their tenants were doing in the properties, he said, others were fully aware but took the gamble on being able to command higher rents. 

“For landlords that were indifferent or looking the other way, you have to have known you were entering into an agreement with someone who was conducting illegal activity,” DiPisa said. “That's never going to work to your benefit.”

A recent estimate from officials placed the number of unlicensed stores operating in the city at 2,900, The New York Times reported in June.

The closure of unlicensed stores is crucial for the licensed industry’s survival, said Kristin Jordan, founder and CEO of cannabis real estate brokerage Park Jordan.

“We need to get the unlicensed stores shut down sooner rather than later,” she said. “It’s hard enough for our new stores to get open and operational, but to also have to compete with unlicensed stores is a tremendous pain point.”