Bill Forcing NYC Landlords to Police Smoke Shops Becomes Law

A City law that demands landlords squash illegal weed shops went into effect on Monday.

The enacted bill, from Queens Council member Lynn Schulman, will slap fines up to $10,000 on landlords who knowingly lease commercial space to unlicensed marijuana sellers, according to a press release.

While $10,000 appears to be the stiffest penalty, most violations will likely be less costly.

The first time that an illicit cannabis or unlicensed tobacco product seller is found to be operating in leased commercial premises, any relevant city agency would issue a warning to the owner of the premises, the bill says. The owner would be liable for civil penalties if an unlicensed seller is later found operating in the same commercial premises.

Weed sellers themselves get off a lot easier. They face $1,000 fines for their first violation and $2,000 for every one afterward.

The new law had 29 sponsors — more than half of the 51-member body — and passed in late June.

“By holding landlords accountable for knowingly enabling these illegal activities, we can restore the trust and security that our residents deserve,” Schulman said during a hearing that month.

Approximately 8,000 illegal, unlicensed smoke shops are operating in the city, according to the Council. However, Maureen Kokeas, the commanding officer of the Sheriff’s Bureau of Criminal Investigation, put the number at more than 1,300 in June testimony.

Kokeas said the shops, which primarily deal in cash, divert tax revenue from the state. “Instead, the money is going into the pockets of these unscrupulous scofflaws who have no interest in anything but their own bottom line,” she said.

Unregulated products sold illegally in stores avoid the 13 percent tax on legal recreational marijuana sales.

Statewide, illicit sales are expected to total $5.4 billion, while licensed sales are projected only to be $2 billion, Crain’s reported.

The Real Estate Board of New York supported the bill and was scheduled to participate in the bill’s introduction press conference at Union Square Travel Agency Cannabis Dispensary.

REBNY testified in June that it “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,” the trade group said. “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.”