The Real Estate Board of New York to The New York City Council Committee on Public Safety Regarding Intro 1001-2023

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Thank you, Chair Hanks, and to members of the Committee on Public Safety for the opportunity to testify today on Intro 1001-2023, regarding unlicensed cannabis sellers.

The legalization of adult-use cannabis in 2021 was a major policy change that has impacts across multiple sectors of the economy. One of those impacted sectors is the storefront retail market, which has weathered difficulties in recent years due to the rise of e-commerce and the Covid-19 pandemic.

Legalization has resulted in new retail opportunities for entrepreneurs and others looking to take advantage of this new segment of the economy. At the same time, anyone who walks through New York City’s streets has seen the enormous proliferation of storefronts advertising themselves as “smoke shops” or cannabis retailers. These storefronts – operating without licenses from the State to sell cannabis – are raising challenges of their own for many communities across the five boroughs. For this reason, REBNY commends the Council for pursuing legislation to root out those who are abusing the system and looks forward to working with all stakeholders to advance the goals of a successful adult-use cannabis program and healthy, vibrant local community retail.

BILL: Intro 1001-2023

SUMMARY: This bill would prohibit knowingly leasing commercial premises to a tenant who uses the premises for distribution or sale of cannabis or cannabis products without a license. The first time that an unlicensed cannabis seller is found to be operating in leased commercial premises, the Sheriff, Police Department, or any other relevant agency would issue a warning to the owner of the premises. If an unlicensed cannabis seller is later found to be operating in the same commercial premises, the owner would be liable for civil penalties. This bill would also require the Sheriff, in collaboration with the Police Department and any other relevant agency, to submit to the Mayor and the Council a monthly report on enforcement relating to unlicensed cannabis sellers.

SPONSORS: Councilmembers Schulman, Menin, Yeger, Richardson Jordan, Velazquez, Hudson, Joseph, Brooks-Powers, Brannan, Louis, Feliz, Marte, Osse, Ung, Gennaro, Powers, Hanks, Lee, Narcisse, Abreu, Brewer, Bottcher, Dinowitz, Aviles, Paladino, Ariola and Vernikov.

REBNY supports Intro 1001. Over the past year, many neighborhoods across New York City have seen new ‘smoke shops’ emerge. A vast majority are not licensed state recreational cannabis dispensaries but sell tobacco or hash products along with other cannabis-related items, such as pipes or rolling papers. In addition, many communities have also seen mobile shops emerge, often in trucks or vans, that advertise as cannabis dispensaries despite not being licensed by the State to sell recreational cannabis.

Unfortunately, certain storefronts or mobile retailers have in fact become hotspots for illegal drug sales and distribution. In certain instances, these smoke shop storefronts have also impacted a community’s streetscape or quality of life. REBNY commends Mayor Adams’ efforts in recent months to step up enforcement, including through the organized raids and padlocking of businesses found to be illegally selling cannabis and other drugs. However, more should be done.

For these reasons, REBNY supports Intro 1001 and strongly condemns any property owner who knowingly leases any property for an illegal or illicit use. The REBNY model retail lease explicitly states that space shall not be utilized illegally. If a space is being utilized illegally and an owner is aware, it is appropriate for that owner to be penalized along with others knowingly involved in the arrangement.

REBNY looks forward to continuing this conversation with the City Council and other stakeholders. Thank you for considering these points.