New York City Targets Landlords in Push to Close Illegal Cannabis Shops

This story was republished with permission from Crain’s New York and written by Nick Garber.

Landlords who rent to illicit marijuana retailers are facing new legal action from the city, while hundreds of smoke shops suspected of selling cannabis without a license will be threatened with eviction by Manhattan’s top prosecutor, officials said Tuesday.

District Attorney Alvin Bragg’s office has sent letters to more than 400 stores suspected of illicit cannabis sales, threatening to force their landlords to evict them. And Mayor Eric Adams announced four new lawsuits against East Village smoke shops accused of selling marijuana to undercover officers—also naming each of the shop’s landlords as defendants.

The announcements, made in a joint news conference by Adams and Bragg, represent a major escalation in the city’s war against the unlicensed smoke shops that have proliferated around the five boroughs in recent months, coinciding with New York’s legalization of recreational marijuana.

As the state sluggishly rolls out a licensing system for prospective cannabis retailers, hundreds of businesses have flouted that process entirely, openly selling marijuana products out of garishly decorated, unlicensed storefronts. The city has struggled to get a handle on the influx, conducting raids on some stores but leaving a large majority uninspected.

Targeting landlords is a new tactic, and the city has already gotten the ball rolling, filing a series of lawsuits Tuesday morning against the landlords and proprietors of four smoke shops in the East Village. The suits allege that undercover, underage police officers bought marijuana at each of the shops on three occasions in December.

A Dec. 15 sting at a shop on the corner of First Avenue and East 1st Street resulted in the officer paying $30 for a bag of weed labeled “Dubz Garden Oreoz Cannabis Americas Favorite Nugz,” one suit says. Testing at an NYPD laboratory confirmed that the substance was cannabis, authorities wrote.

In each filing, the city demands financial penalties from both the landlords and store owners. The city is relying on its law against public nuisances, historically used to shut down brothels and drug dens—though reports that the law had been disproportionately applied in communities of color prompted a series of reforms in 2017.

“The East Village community raised complaints with the NYPD, and working with the Law Department, the city took action,” said Sylvia O. Hinds-Radix, the city’s corporation counsel.

While the filings also request court orders to shutter each shop for one year, Hinds-Radix said the city would seek to close the shops only if they continued to break the law.

Significant real estate players could be caught up in the proceedings: one of the buildings named in Tuesday’s filings, 24 Avenue A, is owned by the Sabet Group, a firm that owns properties across Lower Manhattan. A company representative did not immediately comment on the suit.

As for the DA letters, Bragg’s office said it would determine in the coming weeks whether there is enough evidence to start eviction proceedings against any of the hundreds of shops suspected of illicit sales. Prosecutors will then use their authority under state law to require landlords to evict the shops—and authorities will start its own proceedings if the landlord fails to act, Bragg’s office said.

The city is walking “a delicate tightrope” in going after landlords as part of a cannabis crackdown, said Jeff Schultz, an attorney at Feuerstein Kulick who represents licensed cannabis operators.

“We’re probably past the point of locking people up for selling cannabis,” Schultz said. “But at the same time, failure to take action here is not consistent with the goals of the adult-use program” — which calls for awarding New York’s first licenses to people affected by the drug’s past criminalization.

As aspiring legal retailers watch the illicit boom with dismay, Schultz said he has called for authorities to focus on landlords. There would be precedent, he argues, pointing to a Los Angeles law that holds landlords liable for illegal marijuana businesses.

That law’s effectiveness has been unclear, Schultz said—but he was heartened by New York’s beefed-up enforcement.

“It’s a good sign that the city is taking this seriously,” he said.

Bragg’s office did not say how it identified the hundreds of shops that received the eviction threats. But local officials have publicly accused cannabis shops of operating illicitly in their districts—including Manhattan Council Member Gale Brewer, whose office found 26 unlicensed retailers during a December survey.