or bill The effort to prevent the diversion of illegal cannabis products into New York’s regulated market has been approved by both the House and Senate, moving it to Gov. Kathy Hochul (D) for final approval.

The legislation defines “illegal cannabis” as any cannabis product on which taxes have not been paid, or proceeds from unlicensed individuals or entities. The bill prohibits the practice of subversion by licensees and testing facilities and includes protections for whistleblowers.

In a statement, state Sen. Jeremy Cooney (D), the bill’s sponsor, said the state has made significant strides in building a successful legal cannabis market…but that market can only continue to grow if New Yorkers can trust the source and safety of their products.

“Illegal products are dangerous and unreliable, which is why this bill says enough is enough. It’s time to make sure only legal products hit our shelves, hold bad actors accountable, and maintain the integrity of our legal marketplace.” – Cooney in one press release

The bill would authorize the Office of Cannabis Management to seek suspension orders against licensees or laboratories suspected of diverting cannabis and creates civil penalties of no more than five times the proceeds of the prohibited sale of cannabis.

A New York appeals court last week struck down a preliminary injunction that banned raids on unlicensed cannabis stores and licensed hemp sellers across the state. Times Union reports. The Third Appellate Division rejected the stores’ claims that the warrantless searches were unconstitutional.

The lawsuit, filed by several hemp businesses in state Supreme Court in 2024, alleges that the Office of Cannabis Management and the Cannabis Control Board (CCB) violated the rights of store owners by protecting against unreasonable search and seizure. In January 2025, a judge agreed and granted a preliminary injunction to stop the raids.

The appeals court found that Superior Court Judge Thomas Marcelle erred in his decision to grant the order, that state regulators had properly defined how the state would conduct inspections and that regulations required vendors to consent to the inspections. The appeals court said those regulations included certain restrictions — such as conducting searches only during business hours — and that penalties were only administrative in nature, not criminal.

“The Cannabis Act and its implementing regulations, when considered together, adequately define how inspections are conducted. An otherwise lawful administrative search is not held unconstitutional simply because the police participate in the search or because the search reveals evidence of criminal activity.” — Decision of the Third Appellate Division via Times Union

The ruling also noted that the retailers did not exhaust all possible administrative appeals processes before filing suit.

Hemp shop raids began in 2023 after the CCB introduced new restrictions on the hemp products that could be sold in the state, targeting many products that were already available.