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NYC Pushes Unlicensed Cannabis Enforcement to Landlords

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In April 2023, New York City Councilmember Lynn C. Schulman introduced a bill to the City Council which would prohibit landlords from leasing to a commercial tenant engaged in the unlicensed sale of cannabis. After being approved by the Committee on Public Safety, the bill was sent to, and also approved by, the full Council on Thursday, June 22nd. It will now be sent to the desk of Mayor Eric Adams, who has 30 days to either sign the bill and enact it into law, or veto it.  Meaning NYC is looking at pushing unlicensed cannabis enforcement to landlords.

If enacted, the bill would send city inspectors to suspected unlicensed cannabis stores, which currently number in the thousands. If the inspector finds that illegal cannabis is being sold on premises, the landlord would face a fine between $5,000 and $10,000. A second inspection would later take place, and if the landlord can provide proof that eviction proceedings have begun since the first inspection, the fines may be avoided. Along with the state agencies currently authorized to inspect for relevant violations, the bill would allow the mayor to designate any state agency to inspect for such. While the levying of fines against landlords could significantly reduce unlicensed cannabis stores, a certain provision of the bill may allow for a loophole to be exploited by these unlicensed stores, as further discussed below.

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Actions against the illicit businesses themselves have already begun in earnest, as Governor Kathy Hochul granted the Office of Cannabis Management (OCM) with enforcement powers newly backed by the state’s FY 2024 Budget. The timing of the bill’s approval coincides with the Governor’s report that nearly $11 million worth of illicit cannabis products have been seized throughout the state so far. The additional step of fining landlords who knowingly rent to unlicensed operators has long been proposed as a deterrent against the illicit market.

The Existing Markets

New York effectively has two cannabis industries: the legal one, born of the Marihuana Regulation and Taxation Act (MRTA) in March 2021, and bound by the OCM’s rigid regulatory framework, and the illegal one, which is vastly larger, older, and unfettered by the restrictions placed on legitimate licensees, including the payment of taxes, and public safety prohibitions on operating in sensitive locations or selling to minors.

Long before the first state-licensed dispensaries opened their doors, it was clear that the two industries could not truly coexist. The unlicensed marketplace (AKA the legacy market, the gray/black market) has opportunistically exploded since the MRTA legalized cannabis throughout the state, and has continued to proliferate at light speed when compared to the legal market, the rollout for which has crawled sluggishly forward under the weight of bureaucracy. Even one of the states with the longest running legal adult-use (recreational) cannabis program, California, sees up to $8 billion in illegal sales every year, generating significantly more revenue than the legal market.

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In response, politicians at every level of state government have proposed some sort of landlord accountability. The idea is that if landlords are discouraged from entering leases with these businesses or punished for having done so, operators will be unable to secure the necessary space or, in the event that they already signed a lease, will face eviction. In either event, these illicit operators will be forced to consider going entirely underground, closing their doors or, perhaps, will consider entering the legal marketplace and obtaining a dispensary license. For many legacy operators, the latter may not be realistic. New York was the first state in the nation to prioritize justice-involved license applicants through its Conditional Adult-Use Retail Dispensary (CAURD) program. But nearly two and a half years after MRTA passed, and with thousands of adult-use cannabis applications submitted, there are only a handful of legally compliant dispensaries open for business in New York.

Landlords who lease space to unlicensed operators cannot plead ignorance to avoid fines. It was initially believed that a landlord could not lease directly to a CAURD license holder, but rather would enter into a lease with the Dormitory Authority of the State New York (DASNY), which would then sublease the space to the license holder. The difficulty in locating and securing compliant premises has led to the OCM approving locations for non-DASNY controlled premises. Both DASNY leases and these stand-alone leases, which Falcon Rappaport & Berkman has extensive experience with, are explicit in their structure and purpose. For these unlicensed stores, landlords across the city enter into non-DASNY leases with tenants who conspicuously advertise THC products for sale. Under the proposed bill, these landlords would be at high risk of enforcement action, particularly after a city agency warning letter which could disallow any landlords’ claims of ignorance.  Falcon Rappaport & Berkman can assist Landlords in drafting leases with more robust use restrictions to discourage unlicensed cannabis sales and ease eviction actions in the event such illegal use has occurred.

RELATED: California or New York – Which Has The Biggest Marijuana Mess?

Unforeseen Consequences

Fining commercial landlords and/or encouraging them to evict illicit cannabis tenants is a predictable step in the implementation of New York’s legal cannabis market. Without it, legitimate license holders will continue to be at a disadvantage in the industry, and neither consumers nor the general public will reap the benefits of a well-regulated marketplace.

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However, the way in which we fine these commercial landlords, or enact other enforcement action, must be carefully examined. A provision of the proposed bill, section C.1., specifies that written notice following an inspection (and presumably any future fines) are only for a property that is used to sell illicit cannabis products and “is not occupied for any other licensed or lawful purpose.” While the bill may still result in fines against landlords of unlicensed cannabis stores, this provision means that if the premises is used for another lawful purpose, these fines against the landlords may not apply. The existing unlicensed market consists of not only stand-alone cannabis stores, but of bodegas and convenience stores selling cannabis products, the landlords of which will likely avoid penalties under this proposed bill.

The complexity and adaptability of the unregulated market should not be underestimated. If enacted, this bill will hinder some significant competitors to adult-use dispensary licensees, but will be far from addressing the entire unregulated market in NY. Frequent reassessment of enforcement action and well-crafted policies will be necessary to ensure a flourishing New York adult-use cannabis industry.

Michael A. Curatola, Esq. helped co-author this article along with contributions from Andrew P. Cooper, Esq., LL.M., and Ariel S. Holzer, Esq. 



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Panama And Cannabis

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In the news today regarding the famous canal – but what about Panama and marijuana?

Panama is the only place in the world where the sun rises in the Pacific Ocean and sets in the Atlantic Ocean. It is slightly smaller than South Carolina but has more bird species than the continental United States. It’s also home to many natural attractions, including whitewater rafting, snorkeling, and birding. Long a friend, it was the first Latin American country to use the US dollar as its currency.  Now it is the news with the new administration. Considering the talk here, what about Panama and cannabis?

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The economy of Panama is based mainly on the tourism and services sector, which accounts for nearly 80% of its GDP and accounts for most of its foreign income. Services include banking, commerce, insurance, container ports, and flagship registry, medical and health.  Enjoy a significant number of travelers who enjoy adventure, outdoor activities and chilling, the country’s stance on marijuana is evolving.

Panama has made significant strides in the realm of cannabis, particularly regarding its medical use. In 2021, Panama became the first Central American nation to legalize medical cannabis when President Laurentino Cortizo signed Law 242, allowing for the medicinal and therapeutic use of cannabis and its derivatives. This law was a response to growing demands from patients suffering from various medical conditions, including epilepsy and chronic pain, who had previously resorted to smuggling cannabis products due to a lack of legal options

In September 2022, the Panamanian government established regulations to support the implementation of Law 242. These regulations created a National Directorate for the Monitoring of Activities Related to Medical Cannabis, which operates under the Ministry of Public Security. This body is responsible for overseeing the cultivation, production, and distribution of medical cannabis products, ensuring patient data protection and product traceability from cultivation to sale. The Ministry of Health (MOH) is tasked with issuing licenses for manufacturing and commercializing cannabis products, with an initial cap on manufacturing licenses set at seven for the first five years. Regulations aim to ensure that all medical cannabis produced in Panama adheres to strict quality standards.

The government envisions creating a robust local industry that not only meets domestic needs but also positions Panama as a potential hub for international medical cannabis trade. While they are making advancements in medical cannabis regulation, recreational use remains illegal in Panama. The law against recreational cannabis is often unenforced, leading to a culture where its use is tolerated among the youth.  Both the public and tourist find it an easy atmosphere.

Panama has one of the fastest growing economies in Latin America and has as stable government. Like the United States, it is a republic and engages the public.  They have evaluated cannabis as a benefits and have moved to integrating into their healthcare.



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Does Your Dog Really Care When You Are Sad

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They are more popular than dating apps and are consider a best friend – but are they really there when you need them emotionally?

They are man’s best friend with 38% of Canadians and roughly 50% of Americans having a dog. In the US more men have dogs and in Canada more woman have the furry companion.  While they are fun, loving and play, does your dog really care when you are sad? Dogs have long been known as loyal companions, but recent research suggests that their emotional intelligence may run deeper than mere companionship; they can actually empathize with their owners’ feelings, particularly during times of distress.

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A study published in the journal Learning & Behavior explored how dogs respond to their owners’ emotional states. Researchers found that dogs not only recognize when their owners are upset but also take action to provide comfort. In the experiment, 34 dog-owner pairs were observed in a controlled setting where owners either cried or hummed a cheerful tune. The results showed that while the dogs opened a door to reach their owners at similar rates, those who heard crying did so significantly faster—averaging just 23 seconds compared to 96 seconds for the humming group. This indicates that dogs are more inclined to respond quickly when they perceive their owner is in distress.

Interestingly, the study also noted physiological responses in dogs when their owners cried. Dogs that opened the door displayed lower stress levels than those who did not, suggesting that while they were affected by the owner’s crying, they were not overwhelmed by it. Conversely, dogs  who showed high levels of stress likely cared deeply but were too anxious to act. This highlights a range of emotional responses among dogs, similar to human reactions.

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The bond between dogs and their owners plays a crucial role in these empathetic behaviors. Dogs with stronger attachments to their owners exhibited quicker responses to distress signals. This bond is essential as it fosters a mutual understanding of emotions, allowing dogs to act on their instincts to comfort their human companions. As research continues to unfold, it becomes increasingly clear that our canine companions are not just pets; they are emotionally attuned partners capable of providing significant comfort during our most challenging moments.



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A Look At Martin Luther King And Cannabis

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MLK shared a vision about building a fabric of society, including everyone and working together.  Can this happen with the marijuana industry?

The swearing in a new president always gives hope.  The cannabis industry has seen 3 presidents, none who have helped move the industry truly forward. The public has had a change of heart and now almost 90% believe it should be legal in some form.  The major medical associations and federal agencies (aside from the Drug Enforcement Adminstration) believe it has medical value. And yet, our older, white politicians see it for something it is not. Thousands of mom and pop business are hoping for a change to help them on their ladder to the American dreams.  And tens of millions are turning to marijuana to not only solve medical problems, but to wean themselves off the more dangerous alcohol. Here is a look at Martin Luther King and cannabis.

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Dr. Martin Luther King Jr. is widely recognized for his pivotal role in the American civil rights movement, advocating for racial equality and justice. Although he did not publicly address cannabis use during his lifetime, his principles resonate deeply with contemporary discussions surrounding marijuana legalization and the broader implications of drug policy on social justice.

The prohibition of cannabis in the United States has roots in racial discrimination and social control. The Marihuana Tax Act of 1937, which effectively criminalized marijuana, was influenced by prejudiced attitudes towards minority communities, particularly targeting Mexican immigrants. This historical context is crucial when examining how the “War on Drugs” has disproportionately affected people of color, echoing the systemic injustices that King fought against.

Many scholars and activists argue if King were alive today, he would likely advocate for an end to the War on Drugs, recognizing it as a continuation of racial oppression. Michelle Alexander, in her influential work “The New Jim Crow,” highlights how the drug war has perpetuated cycles of racial injustice and mass incarceration. Statistics reveal that Black individuals are arrested for cannabis offenses at rates significantly higher than their white counterparts, despite similar usage rates. This disparity aligns with King’s vision of equality and justice for all.

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As discussions around cannabis legalization continue to evolve, figures like Martin Luther King III emphasize the importance of equity in the cannabis industry. He advocates for creating opportunities for marginalized communities to participate in this burgeoning market. This aligns with King’s broader vision of building a “beloved community” where economic and social justice prevail.

A large portion of industry leaders who were involved in the incoming president’s campaign are hopeful. Millions of average people want it, millions more need it for medical issues, and thousands of small business owned by a variety of people want it, will this administration take the step forward?



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