State Closes Smoke Rite Shop Amidst Growing War on Unlicensed Cannabis Sales in New York
State shuts down New Scotland shop for illegal cannabis sales
Cannabis enforcement seizure signs were posted in June on the storefront of an illicit marijuana shop on the corner of Maple and New Scotland Road in Slingerlands.
SLINGERLANDS — A small smoking supplies store in a rural shopping plaza along Route 85 in New Scotland recently became the latest casualty in the state's ongoing regulatory war with thousands of businesses that are continuing to sell marijuana products without a license.
The state Office of Cannabis Management, like it has done to hundreds of other shops, closed down Smoke Rite, which is in the Stonewell Shopping Center near the border of Slingerlands, about five months after Albany County sheriff's officials and state tax department investigators inspected the store and seized chocolate bars they said contained mushrooms, THC and other substances.
Much of the state's enforcement efforts have focused on thousands of stores selling cannabis products in metropolitan areas without a license, but the alleged violators also have established businesses in rural communities. In New Scotland, authorities said, a steady stream of customers allegedly under the age of 21 are what drew many of the complaints that prompted local officials and law enforcement agencies to take notice of the shop.
The state-issued shutdown notices plastered on the front door and windows of the shop are an indication that the owner, whose identity was not released by state authorities, had previously been warned to cease selling unlicensed cannabis products before receiving an official notification that the business was being shut down. It's an outcome that's increasing as state regulators have closed hundreds of stores across New York over the past few months.
Officials with the state Office of Cannabis Management, who often take more than a day to respond to reporter's questions, declined to comment on the shop’s padlocking.
Caitlin Ward, who works at the Windowbox Cafe — a small restaurant in the same complex as the smoke shop — said that the enforcement posters appeared on the front of the shop last month. She had also noticed police visiting the shop occassionally while the business was operating.
New Scotland Town Supervisor Douglas LaGrange said he began receiving complaints about the smoke shop around the time it opened in March 2022.
“The people that called were basing (their concerns) on their understanding that underage kids were going into the shop and purchasing stuff in ‘the backroom’,” LaGrange said. “I don’t know if that was the case, but that was what a couple of the complaints were that I received.”
LaGrange said he forwarded his information to the Albany County’s Sheriff’s office.
On Feb. 9, state Department of Taxation and Finance investigators and members of the sheriff’s department visited Smoke Rite and seized a dozen chocolate bars that contained mushrooms and THC, according to a sheriff's department incident report.
The tax department's involvement in the enforcement effort came less than a year after New York lawmakers had give the agency the authority it needed to inspect unlicensed cannabis shops and pursue the owners, operators or their landlords for tax violations.
Amanda Hiller, acting commissioner of the state Department of Taxation and Finance, had said a year ago that the Office of Cannabis Management also had lacked the legal powers it needed to shut down the illicit shops.
Hiller, who was appointed tax commissioner three weeks after New York legalized marijuana in 2021, also hinted at the battle that was about to be waged: “We understand that this is going to require us to grind it out. … If we’re going to make a dent here, we’re going to need to be persistent.”
The enforcement powers came with caveats, including a three-strikes rule before regulators can seek a court order to padlock a shop for up to a year — a process that can drag on for months and allow well-funded entrepreneurs to shutter one place and quickly open another.
But the consequences for shops that continue selling THC products in the face of warnings can be severe. And Hiller had noted that building criminal cases against those operators is now possible because the cannabis being seized “are products on which taxes were due and have not been paid. By the time we’ve been there three times, that’s $1 million, and that’s a C-felony.”
The state’s legalized marijuana in March 2021, an action that was expected to result in a billion-dollar industry in New York. But due to the cannabis management office’s slow rollout of licenses, the tax revenues have lagged and thousands of illicit shops have flourished across New York, selling cannabis products at low prices without the burden of taxes and drawing business away from the relatively few licensed retailers.
Businesses that break the rules face fines of up to $20,000 per day of illegal activity, potential additional tax violations and follow-up visits from both offices with escalating consequences. If the businesses continue violating the law, authorities pursue a court order to padlock them.
Two months ago, a report issued by Jeanette M. Moy, commissioner of the Office of General Services, highlighted widespread problems with licensing and leadership within the office. The issuance of that report coincided with Gov. Kathy Hochul announcing a leadership shakeup and an overhaul of how the cannabis office does business. The office's executive director, Chris Alexander, stepped down, along with other top officials in the office who have departed over the past month.
Unlicensed cannabis stores usually receive a cease-and-desist letter from the state prior to being padlocked, and are warned to halt sales immediately. Those who fail to comply also risk their chance of obtaining a license to sell cannabis legally in the future. The letters do not specify a timeframe for illicit businesses to close on their own or respond before the state can seized their unlicensed products.
The Office of Cannabis Management has seized 17,761 pounds of unlicensed cannabis products — which they peg as valued at more than $82 million. In a news conference last month, Hochul touted what she said was a 27 percent increase in legal marijuana sales since the office started closing unlicensed shops.
