Unlicensed Cannabis Sellers Fight Back, Suing NYC For 'Unconstitutional' Crackdowns

New York City’s cannabis market is yet again under dispute. New York City’s aggressive enforcement effort, “Operation Padlock to Protect,” has sparked significant attention and results. But, according to Newton’s Third law, for every action, there is an equal reaction. Well, the reaction has come: affected business owners are claiming the crackdown is unconstitutional. They are taking their case to court via through a class action suit, reported first The Gothamist.

The Action

Unlicensed cannabis has been a problem in New York for quite some time. It’s not only about dispensaries that might not have all their papers in order but more about illicit shops selling cannabis. It’s been calculated that there are as many as 3000 unlicensed shops in NYC alone. So, authorities decided to put an end to this, and they came down strong.

Leveraging new state laws that allow the NYPD and local sheriff’s office to padlock stores without a court order on the first inspection, they launched Operation Padlock. This initiative, presented in early May by Mayor Eric Adams aims to shut down unlicensed cannabis stores swiftly. Partial reports on the operation say that over 300 shops between May 7 and June 3 have been closed down.

The Reaction

Of course, affected stores that might have been found selling a gram or two on the side, but made money from regular sources as well (as food and beverages) are not happy about the closure. Recently 27 businesses filed a class-action lawsuit against the city, arguing that the padlock violated their due process rights by lacking judicial oversight. The lawsuit seeks an injunction to halt these practices and demands compensation for lost revenue and damages.

Legal Aspects Of New York Cannabis

The enforcement effort is part of broader state reforms passed in April, aiming to regulate the burgeoning legal cannabis market and eliminate the widespread illegal sales that have plagued the city. The previous system, which required multiple inspections and lengthy legal proceedings, failed to curb the stores selling unlicensed cannabis across the five boroughs.

Under the new state laws, officers can immediately shut down any store posing an imminent health and safety threat, such as selling to minors or being located near schools. Store owners can request a hearing with the city's Office of Administrative Trials and Hearings within five days, but these hearings often uphold the initial closures, leaving businesses closed for up to a year.

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Attorney Lance Lazzaro, representing the plaintiffs, argues that these hearings should be conducted in a court of law with an impartial judge, rather than an administrative office controlled by the mayor. Other lawyers have also raised concerns about the NYPD conducting searches and seizures without warrants, and point to cases where administrative hearing officers recommended reopening, but were overruled by the sheriff's office.

New York City Cannabis Space

New York City’s legal cannabis market is projected to reach up to $1.2 billion annually, generating around $47 million in local tax revenue. That said, behind this regulatory reinforcement, there is a huge business in dispute. In this context, the crackdown is beneficial to the licensed cannabis space and the taxes it will yield. ​