New York Cannabis Enforcement Sparks Lawsuit from Hemp Retailers

New York’s Office of Cannabis Management (OCM) is facing yet another lawsuit as its ongoing crackdown on illicit cannabis stores continues to face legal challenges. A group of three hemp retailers—Smoke N Save in Saratoga Springs, Two Strains in Queensbury, and Breckenridge in Manhattan—have filed a lawsuit in Albany’s state Supreme Court, accusing the agency of violating their constitutional rights.

The lawsuit comes amid heightened enforcement actions by the state, which have seen millions of dollars’ worth of cannabinoid products seized in what store owners describe as “military-style raids.” According to the Times Union, the retailers allege that these raids, conducted by the OCM and the New York City Sheriff’s Office, have unjustly targeted licensed hemp businesses as though they were selling illicit cannabis products.

Challenging New Regulations and Enforcement Actions

The legal challenge follows the introduction of new regulations enacted in December by the state Cannabis Control Board, without public consultation or legislative input. These rules impose restrictions on the sale of many hemp-derived products that were previously legal, impacting thousands of licensed retailers who have operated under more lenient federal and state laws since New York legalized cannabis in 2021.

The lawsuit argues that the OCM’s enforcement actions, which it refers to as “inspections,” involve heavy police presence and violate the rights of licensed retailers. Store owners claim that officers conducting these raids often turn off surveillance cameras, search personal belongings, and detain employees—all without proper warrants or just cause. The legal action seeks a temporary restraining order to halt these raids pending a formal hearing.

Operation Padlock: A Statewide Crackdown

The crackdown on illegal cannabis shops, dubbed “Operation Padlock,” was launched to curb the proliferation of unlicensed cannabis retailers in New York. Since mid-May, the New York City Sheriff’s Joint Compliance Task Force, led by Sheriff Anthony Miranda, has conducted inspections of all known illegal cannabis shops, resulting in the seizure of over $63 million worth of products.

Governor Kathy Hochul and other state officials have praised the operation’s success, noting that it has led to the closure of over 1,300 unlicensed shops statewide. Seized goods, stored in NYPD evidence warehouses, were incinerated in an environmentally responsible manner, with the energy generated contributing back to the community.

Despite criticism from some quarters that describe the situation as “regulatory chaos,” state officials argue that the crackdown is already benefiting licensed cannabis retailers. John Kagia, Director of Policy at the OCM, reported that legal cannabis sales in New York reached $529 million by mid-August—just eight months after the state’s first licensed dispensary opened in Manhattan.

Impact on the Legal Cannabis Market

According to Kagia, nearly 40 percent of this year’s legal cannabis sales have been generated since the crackdown began, suggesting a direct link between enforcement actions and the growth in legal market sales. More than two dozen licensed retailers have seen a 100 percent increase in sales since the operation started, with many new customers citing the closure of their usual unlicensed sources as the reason for switching to legal dispensaries.

Governor Hochul, a staunch supporter of New York’s legal cannabis program, has projected that the state could generate up to $1.25 billion in tax revenue from the cannabis industry over the next six years. She has defended the ongoing enforcement efforts, arguing that they are essential to fostering a safe and regulated cannabis market in the state.

A Divided Response

The legal action by hemp retailers highlights the tensions between state regulators and businesses that have operated under previously accepted guidelines. Retailers argue that the sudden shift in regulations and enforcement tactics amounts to government overreach, jeopardizing their livelihoods without fair notice or due process.

As the legal battle unfolds, the future of New York’s cannabis market remains a contentious issue. While state authorities emphasize the importance of maintaining a tightly regulated market, hemp retailers and other stakeholders continue to push back against what they see as aggressive and unjust enforcement actions.

Looking Ahead

The outcome of this lawsuit could have significant implications for New York’s cannabis landscape, potentially reshaping how the state manages enforcement and regulation moving forward. With both sides deeply entrenched, the debate over cannabis regulation in New York is far from over, and the coming months will be critical in determining the future of cannabis commerce in the Empire State.