Empire Cannabis Clubs, the most prominent membership-based dispensaries in New York City, are facing legal challenges after recent raids resulted in the seizure of cannabis products and multiple arrests. This article explores the crackdown on unlicensed cannabis outlets, Empire Cannabis’ compliance with the 2021 Marihuana Regulation & Taxation Act (MRTA), and their unique membership-based model. Let’s delve into the unfolding legal saga and the implications it holds for the city’s cannabis sector.
Empire Cannabis Clubs: Targeted Raids and Legal Confrontations
In a significant development on July 11, state tax agents, accompanied by New York City police, conducted raids at two Manhattan locations of Empire Cannabis Clubs. Surprisingly, the charges filed against the club’s owners and employees were only for “obstruction” since the raids were carried out without obtaining warrants.
Empire Cannabis staunchly asserts that it operates in full compliance with New York state’s 2021 MRTA. Despite receiving “cease and desist” letters from the Office of Cannabis Management (OCM), the club remained unaffected until the recent raids. The aftermath of the raids saw both club locations resume normal operations, and no formal charges have been filed against Empire Cannabis to date.
Confrontations and Detentions During Raids
The raids at Empire Cannabis outlets on Eight Ave. in Chelsea and Allen St. on the Lower East Side resulted in confrontations with the club’s management, leading to arrests and temporary detentions. Jonathan Elfand, one of Empire’s co-owners, reported being physically prevented from entering the Chelsea location and briefly handcuffed before being released without charges. At the Chelsea outlet, two employees were also charged with “obstruction,” and cannabis products worth approximately $30,000 were seized. Lenore Elfand, another co-owner, faced arrest at the Lower East Side location for refusing a warrantless search and was later released.
Interestingly, officers refrained from entering the Allen Street store, and no property was seized. Attorney Steve Zissou interprets this as an acknowledgment that Empire Cannabis operated within the bounds of the law, as MRTA requires authorities to obtain a state judge’s order if access for inspection is denied.
Crackdown on Unlicensed Cannabis Sector in NYC
The legal actions against Empire Cannabis Clubs coincide with a long-anticipated crackdown on unlicensed cannabis outlets in New York City. While the state has only 19 licensed adult-use dispensaries, around 1,000 unlicensed dispensaries continue to operate, with the majority located in NYC.
In an effort to curb unlicensed cannabis sales, Governor Kathy Hochul signed a law imposing higher fines for retail outlet violations. Violators may now face fines of up to $10,000 per day for engaging in “illegal” sales and an astounding $200,000 fine if unlicensed cannabis is found in a store’s inventory.
Empire Cannabis’ Stand and Safe Harbor Provision
Empire Cannabis maintains that its operations remain unchanged under MRTA provisions. They argue that since they do not profit from cannabis transfers and generate income through membership fees, their activities do not qualify as “sales” under New York state law. The club emphasizes paying state taxes diligently since the opening of their flagship Chelsea outlet in October 2021.
Jonathan Elfand is determined to reclaim the seized property through court proceedings, arguing that the items are legal under MRTA and citing provisions that permit cannabis possession for others with their permission.
As the legal battles unfold, the courts will determine the legality of Empire Cannabis Clubs’ membership-based model under the MRTA’s provisions. Meanwhile, the Department of Taxation & Finance’s silence leaves room for speculation. The outcome of this high-profile case will have significant implications for New York City’s cannabis sector, setting a precedent for the future of membership-based dispensaries operating within the bounds of the law.
