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New York said it cracked down on marijuana ‘gifting’ — Or did it?
By
Jon Campbell
and
Caroline Lewis
Published May 12, 2022
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RBLFMR/SHUTTERSTOCK
By
Jon Campbell
and
Caroline Lewis
Published May 12, 2022
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New York was trying to send a message.
The state permitted marijuana possession last year, but recreational sales of the drug remain illegal until regulators can set up business licenses. This process has been slow — with the first legal sales still months away. But recreational dispensaries didn’t want to wait and began “gifting” their customers weed with the purchase of, say, a digital video – exploiting a potential loophole in the state law.
So New York’s Office of Cannabis Management (OCM) organized a public crackdown in February – complete with a press release touting its efforts – announcing it mailed out cease-and-desist letters to what it claimed were more than two dozen retailers engaging in unlicensed, unlawful sales.
Or at least that’s what the state agency said at the time.
In an email to Gothamist last week, OCM refused to acknowledge whether the cease-and-desist letters actually exist.
Rashied McDuffie, the office’s deputy general counsel, wrote on May 2nd that OCM had conducted a “diligent search” for the letters after Gothamist filed a Freedom of Information Law, or FOIL, request for them in February.
“Based upon this search, OCM does not confirm nor deny the existence of a letter sent by it to any entity,” wrote McDuffie, who went on to say that if the letters do exist, they would be exempt from public disclosure because they were “compiled for law enforcement purposes.”
The confusing case of the cease-and-desist letters comes as state officials struggle to rein in the legal gray area of “gifting” marijuana, despite threatening to withhold cannabis licenses from anyone found to engage in the practice. Officials have also pledged to impose fines or criminal penalties.
But OCM has repeatedly refused to say which businesses it sent the letters to, leaving unanswered questions about what areas of the state have been targeted for enforcement and how successful or unsuccessful the crackdown effort has been. Gov. Kathy Hochul also pledged a new era of transparency when she took office last August.
Gifting is one of the models being used by gray-market dispensaries in New York City and other parts of the state in recent months. Even though dispensary licenses haven’t been issued yet, it’s become easier for customers to get THC products from stores since legalization took effect, rather than relying solely on underground dealers.
In New York City, the NYPD has made only 17 arrests for marijuana sales since the drug was legalized in March 2021, including five in the first three months of 2022, according to city data. Asked whether any of those arrested were selling cannabis out of a storefront, the NYPD directed Gothamist to file a Freedom of Information Law request.
Gothamist filed its formal request for the state’s cease-and-desist letters on February 8th, the same day OCM issued a press release and “sample letter” detailing its efforts. The request was made to determine which businesses received the letters and where they were located, something OCM had declined to provide.
Under FOIL, state and local entities are required to hand over public records upon request. But the government can hold things back under certain exemptions, including when officials believe releasing documents could “interfere with law enforcement investigations” or “deprive a person of a right to a fair trial or impartial adjudication.”
McDuffie cited that exemption when declining to hand over the letters – “If there were such a letter,” as he put it.
OCM says its decision to avoid acknowledging the existence of the cease and desist letters is largely about declining to reveal the letters' recipients.
In response to questions about McDuffie’s decision, OCM spokesperson Freeman Klopott said the office received a number of different FOIL requests for the letters and settled on a uniform response. Some requests, like the one filed by Gothamist, were broad, seeking all letters sent. Other requests were specific to a particular business, meaning that recognizing the existence of the letter “would have inherently implied a specific business was under investigation,” Klopott said in a statement.
What harm is caused by disclosure? ... I'm not sure how it would interfere with a law-enforcement investigation or judicial proceeding.
Kristin O’Neill, assistant director of the state Committee on Open Government
Kristin O’Neill, assistant director of the state Committee on Open Government, doesn’t buy OCM’s explanation. She said she believes the letters should be publicly disclosed under the Freedom of Information Law, in large part because the businesses that received them are well aware of the letters already.
“What harm is caused by disclosure?” O’Neill asked. “Well, to the people (who received them), it's not a secret. I'm not sure how it would interfere with a law-enforcement investigation or judicial proceeding. […] There's no confidential source or confidential information relating to the criminal investigation.”
OCM considers itself a law enforcement agency, according to Klopott. By contrast, Toni-Anne Blake, a spokesperson for the New Jersey Cannabis Regulatory Commission, which serves a similar role across the Hudson, made it clear: “We don’t handle enforcement.”
Still, in both New York and New Jersey, any consequences for violating the marijuana laws have primarily come from myriad law enforcement entities, not state cannabis regulators. Overall, New York’s Marijuana Regulation and Taxation Act has led to a significant reduction in the number of marijuana arrests statewide for both possession and sales since it was signed into law at the end of March 2021, although enforcement varies by jurisdiction. Between April 2021 and February 2022, cannabis sale or possession was the top charge in 218 arrests of adults statewide, with 89 taking place in New York City, according to data provided to Gothamist by the New York State Division of Criminal Justice Services. That’s down from tens of thousands of arrests in some years prior to legalization.
Outside of New York City, there have been reports of storefronts being raided by police. In February, officers from multiple agencies, including the Tioga County Sheriff's Office, Waverly Police Department and New York State Police conducted a coordinated raid on BMillzz stores in multiple locations that were selling stickers with a cannabis gift.
Some proprietors argue the gifting model is legal and use it as a way to get around the law against unlicensed sales, but OCM says it’s not.
“Illegal sales include the sale of cannabis products in-person at a retail location, online, via delivery, or at an event; and include so-called ‘gifting’ 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,” OCM wrote in the sample cease-and-desist letter posted to its website.
In New Jersey, where the first legal recreational marijuana sales just started in April, law enforcement agencies have reportedly made arrests at several shops that were allegedly selling cannabis without a license.
Tagged
marijuan
Kathy Hochul
Jon Campbell
Jon Campbell covers the New York State Capitol for WNYC and Gothamist. Prior to that, he covered the Capitol for more than a decade for the USA TODAY Network. He has twice earned the Walter T. Brown Memorial Award, an honor given annually by the Legislative Correspondents Association alumni for outstanding state government coverage. Jon grew up in the Buffalo area and graduated from the University at Albany. Got a tip? Email Jon at [email protected] or Signal at JonCampbellNY.90.
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Caroline Lewis
Caroline Lewis is on the health care beat for WNYC and Gothamist. She has covered COVID, a nurses' strike, the overdose crisis and New York’s marijuana legalization effort, and spent a year investigating patients' medical bills. She always wants to hear about how everyday New Yorkers experience the health system. Got a tip? Email [email protected].
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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