Just a day after New York police and state tax agents raided two locations of the Empire Cannabis Club, the marijuana dispensaries are back in business, showing the challenges of shutting down unlicensed weed stores.
(Bloomberg) — Just a day after New York police and state tax agents raided two locations of the Empire Cannabis Club, the marijuana dispensaries are back in business, showing the challenges of shutting down unlicensed weed stores.
On Wednesday, Empire’s Chelsea location, sandwiched between a vintage poster shop and a Chipotle just north of Google’s Eighth Avenue offices, was open to customers, with air conditioning and hip hop filtering through the sleek store.
A clerk working at the dispensary said its THC products — the component that gets consumers high — had mostly been confiscated by authorities on Tuesday, but Empire Cannabis Club-branded merchandise, hemp dog treats and CBD-infused aftersun lotions were available. He handed out business cards showing plans to open another location in Brooklyn.
The Chelsea store was one of two Empire joints raided on Tuesday — the other was in the Lower East Side, as the state makes good on promises to crack down on pot shops operating without state-issued licenses. Dozens of the stores have proliferated in the past two years since the state legalized the possession and gifting of small amounts of marijuana, but before they set up a regulatory regime to allow licensed stores to operate.
Agents from the state’s Department of Taxation and Finance arrived at the storefront and two of Empire Cannabis Club’s owners, Lenore and Jonathan Elfand, were briefly detained, according to the company’s attorney Steve Zissou. He said Lenore has been charged with obstruction and he hit out at authorities for entering without a warrant in Chelsea.
Spokespeople for Governor Kathy Hochul’s office, the state Office of Cannabis Management and the State Department of Taxation and Finance declined to comment because the investigation is ongoing.
Empire Cannabis Club has been one of the most brazen of the unlicensed dispensaries, billing itself as a chain with five locations in New York City. The club has a sophisticated website and presence on social media, with Twitter and Instagram accounts, and its owners have been quoted extensively in the media. New York City radio station Hot 97 promoted the grand opening of the company’s Soho storefront in May.
Empire has maintained that it’s all legal, because it’s operating as a not-for-profit members-only club. It charges $15 for a daily pass to enter its storefronts and $35 for a monthly membership. Zissou said that takes advantage of the New York State Legislature legalizing recreational marijuana in 2021, when it allowed people to possess or gift as many as three ounces of cannabis.
It took more than two years to finish setting up a system of licensing dispensaries to sell the product and just 19 licenses have been issued for operators to legally sell cannabis statewide.
“Empire is prepared for this,” Zissou said of the state’s enforcement actions. “In many ways Jonathan [Elfand] invites this because he wants to have a forum to prove that Empire’s business license complies” with the 2021 law that legalized recreational marijuana use in New York, Zissou said.
The Empire raid comes on the heels of a broader crackdown by the State Office of Cannabis Management and the Department of Taxation and Finance. The agencies conducted inspections at 33 storefronts in New York, Ithaca and Binghamton last month, issuing violation notices to 31 of those businesses, according to Hochul. They seized at least 1,000 pounds of illicit cannabis with an estimated value of $11 million, she said.
Some operators of the state’s few licensed cannabis dispensaries, like Union Square Travel Agency CEO Paul Yau, also welcome the state’s crackdown.
Yau said it’s difficult for most consumers to tell whether a store is licensed or not just by walking in. Licensed stores, he says, offer consumers a safer option because of the state-mandated licensing and testing their products undergo.
Though the state’s cannabis rollout initially came with a large legal gray area, Yau said recent efforts are getting rid of it. Going after unlicensed stores and making sure they follow state law through increased enforcement is a good thing for business owners who waited to get their cannabis licenses, he said.
“We all abided by the rules, got in line, and had to wait,” Yau said. “We don’t think it’s fair for other people to jump the line.”
(updates with comments from Paul Yau and Empire Cannabis Club attorney)
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