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NYC’s landlord liability law: Cracking down on unlicensed smoke shops

As unlicensed smoke shops in New York City are gaining popularity, city officials are responding with a new law which targets landlords renting out their commercial spaces to these shops. With approximately 8,000 unlicensed smoke shops operating across the city, concerns about public health, criminal activity, violence, and the loss of tax revenue from licensed operators have driven the need for effective action.

The law, now in effect, approaches the issue by holding landlords accountable for their tenants’ activities. Rather than solely targeting the operators of unlicensed shops, the law specifically forbids landlords from renting spaces to dispensaries selling cannabis or tobacco products without a license.

A crucial aspect of this approach is the issuance of a letter by the sheriff’s office or the NYPD following a raid on the premises. Councilwoman Lynn Schulman, a Queens Democrat and the key sponsor of the law, explained, “The landlord gets a letter from the city saying you’re renting to an entity that’s conducting illegal business and we want you to evict them.”

This letter triggers a follow-up inspection process. If unlicensed activities persist during subsequent visits, fines are imposed: $5,000 for the first violation and $10,000 for subsequent offenses. These fines are adjudicated through the Office of Administrative Trials and Hearings.

Simon Malinowski, a partner at Harris Bricken and the firm’s lead New York cannabis attorney, emphasizes that this mechanism effectively grabs landlords’ attention while also providing them with a path toward compliance. Landlords can mount a defense by demonstrating that they initiated eviction proceedings against the illegal dispensaries.

A recent estimate from the council places the number of these illicit establishments at a startling 8,000 citywide, with a significant subset—2,000—engaged in the unlawful sale of cannabis products. In stark contrast, the state currently hosts a mere 23 legal dispensaries, as per the Office of Cannabis Management.

Manhattan Councilmember Carlina Rivera emphasized the collective commitment to preserving the legal landscape and supporting the accomplishment of equity goals. “We have an obligation to protect a healthy legal cannabis market and ensure that the industry meets its equity goals,” Rivera stated. 


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