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New York leaders cite progress in shutting down illegal pot shops

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(The Center Square) — New York leaders are touting progress in the war against illegal cannabis dispensaries that have proliferated following the state’s approval of recreational pot sales.

More than 400 unlicensed cannabis shops across New York City have been shut down since the state Legislature expanded the Big Apple’s enforcement power in this year’s state budget, Gov. Kathy Hochul and Mayor Eric Adams announced on Tuesday, seizing over $13 million worth of unlicensed pot products and issuing $30 million in fines.

Hochul said the illegal pot shops are siphoning away sales from legitimate cannabis operators, whom she says have “struggled” to stay in business as the retail pot market has developed.

“We’re being flooded by the illegal operators who made it almost impossible for them to earn what they thought they would and to keep their doors open,” the Democrat told reporters at a Tuesday briefing.

Adams said the illegal cannabis shops were becoming “magnets of criminality” and said shutting them down would “protect children, keep our streets safe, and contribute to the thriving legal market that New York deserves.”

“We were seeing an increase in robberies, shootings. It was targeting our young people,” he said. “These illegal shops were starting to really tear down the quality of life in our city.”

New York legalized recreational cannabis in 2021 under legislation signed by then-Gov. Andrew Cuomo, allowing cultivation and retail sales and setting up a system of taxation and regulation for the new industry. To date, about 77 retail pot shops have opened, state regulators say.

The rollout has been slowed by legal challenges, including a ruling by a New York judge that halted new licenses under a program that favors people with previous drug conviction charges. The ruling stemmed from a legal challenge by veterans who argued that the system of issuing licenses to certain social equity applicants violates the state Constitution.

Meanwhile, illegal storefront operations have proliferated amid the delays in licensing legal pot shops, prompting calls to Hochul and Adams to crack down on unlicensed sales.

Last year, Hochul launched a taxpayer-funded public education campaign calling on pot users to “buy legal” and urging them to avoid the black market. Her administration also pushed a bill through the Legislature to expand the enforcement powers of regulators and taxing agencies to inspect and shut down unlicensed pot shops.

Regulators say the illegal sales are stunting the growth of New York’s recreational pot market and depriving the state government of much-needed tax revenue. Adult-use sales in New York state generated only $160 million last year, despite estimates that sales would top $1 billion during the first year, according to the commission.

Hochul acknowledged that the rollout “has not gone as smoothly as we would have hoped,” but argues the crackdowns have helped improve the market for legitimate cannabis operators. She said legal sales in New York are up 27% following the crackdown and have already surpassed last year’s numbers.

“We’re on pace to pass $13 million a week — but it’s more than the dollars,” Hochul said Tuesday. “It’s about small business owners being able to take care of their families, right?”

To date, at least 23 states, the District of Columbia and the U.S. territory of Guam have legalized recreational marijuana, to the National Conference of State Legislatures. Thirty-eight states have medical marijuana programs.

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