Owners Now Being Forced to Police Their Commercial Tenants
The City of New York has just signed into law a new regulation targeting commercial properties where tenants are involved in the unauthorized sale of cannabis. The law requires property owners to take specific actions in response to such illegal activities, under the penalty of fines and potential legal repercussions. If an owner “knowingly” leases or allows their commercial tenant to engage in the illegal sale of marijuana, they will face steep fines of up to $10,000.00. After an initial notice is provided to the landlord which notice is appealable, and then a “subsequent inspection” occurs regarding the same premises, “such owner shall be subject to a civil summons for a violation.” The “civil penalty” for the first violation is $5000 and “$10,000 for each subsequent violation.”
The main concern is that the stores are selling unregulated products that could be dangerous to those who use them and their presence undermines the blossoming legal market, which is supposed to prioritize those who went through the criminal justice system for decades old marijuana-related offenses. The “Marijuana Regulation and Taxation Act,” was designed to first direct dispensary licenses to those negatively impacted by the “War on Drugs.” Shops that are unregulated are believed to be selling to minors and evading sales tax, undercutting prices of legal shops thus making it nearly impossible for legal shops to flourish and pay the amount of sales tax that the city anticipated from the legalization.
In light of the recent NYC law regarding commercial tenants engaged in the illegal sale of marijuana, property owners need to remain vigilant and take proactive measures to ensure compliance with the law. Failure to do so will result in pretty hefty fines and legal actions. It is strongly recommended that property owners seek legal advice and establish comprehensive procedures to address and rectify any illegal marijuana-related activities within their commercial properties.
Recommended Steps for Compliance:
-Regularly monitor your commercial properties for any signs of illegal marijuana activities.
-Consult SDK Heiberger, LLP to ensure you are fully aware of your obligations and rights under the new legislation.
-Develop a protocol for addressing and reporting instances of illegal marijuana sales, including promptly notifying law enforcement and initiating eviction proceedings against the unlicensed seller if necessary, as that is an affirmative defense to a violation under this new law.
Legislation Text can be found here.