New York City and state officials tasked with enforcing cannabis laws have acted outside their authority while conducting warrantless raids of licensed hemp businesses, a judge ruled on Jan. 13.

The raids, conducted by the New York City (NYC) Sheriff’s Office and the New York Office of Cannabis Management (OCM) officials, according to a lawsuit, are in connection to unlicensed cannabis shops proliferating throughout the state following former Gov. Andrew Cuomo signing adult-use cannabis legislation into law in March 2021.

After launching adult-use sales in December 2022 via one licensed retail facility, it took another 15 months for 100 licensed dispensaries to open their doors in New York, allowing the illicit market to thrive in the interim. There are 3,600 unlicensed cannabis shops in NYC alone that operate in flagrant violation of the law, according to the NYC Sheriff’s Office.

As a result, city officials and Gov. Kathy Hochul have waged a new war on the state’s unregulated cannabis market to shut down smoke shops, vape shops and other retailers offering products that don’t adhere to the same stiff regulatory standards as licensed dispensaries—from testing for consumer safety to paying excise taxes to fund state programs.

However, state and local agencies have gone too far, according to New York Supreme Court Justice Thomas Marcelle.

“These agencies, as is their charge, began a series of enforcement activities against stores selling marijuana without a license,” Marcelle wrote in a decision and order filed Jan. 13 in Albany County. “The problem in this case, at least according to the petitioners, is that the enforcement activities targeted not only stores operating outside of the law but also against state-licensed hemp stories.”

The five hemp businesses that filed the lawsuit operate with cannabinoid hemp retail licenses. These five petitioners include:

• Super Smoke n Save LLC (located in Saratoga Springs)
• Two Strains Cannabis Co. LLC (located in Queensbury)
• Brecken Gold Athletics NYC LLC (located in Manhattan)
• Breckenridge Café NYC LLC (located in Brooklyn)
• 7 Leaf Clover (located in Brooklyn)

The petitioners claim in the lawsuit that state and/or city officials searched their shops and seized their licensed products in violation of their Fourth Amendment rights under the United States Constitution.

At Super Smoke, for example, the OCM and the state Department of Tax and Finance (DTF) conducted a joint regulatory inspection on June 5, 2024.

That same day, “without warning and without a warrant, and with the aid of armed DTF agents and New York State Police troopers,” OCM officials searched the store and seized $5,000 to $6,000 worth of products deemed unlawful, according to the lawsuit.

According to OCM, its inspector observed containers of THCA flower and concentrates, delta-8 THC concentrates, delta-9 THC edibles, THC-P edibles and concentrates, THC-V edibles, and THC-B concentrates, the judge’s Jan. 13 order states.

“OCM alleges that these products were beyond the scope of Super Smoke’s hemp license,” Marcelle wrote. “This conclusion was reached neither based upon testing nor reviewing the product’s required certificates of analysis (COA), but rather, upon the OCM investigator’s training.”

As a result, the OCM issued Super Smoke a notice of violation and affixed a sticker to the store’s front door proclaiming that illicit cannabis was seized at the premises and that the OCM had ordered the business to cease unlicensed activity, according to the lawsuit.

Since those actions, Super Smoke claims that it has experienced a significant decrease in customer traffic and overall sales, placing its business in potential jeopardy.

As part of Marcelle’s Jan. 13 order, he directed the OCM to remove the violation notices from the petitioners’ stores and return the items seized unless there is definitive proof that the products contain unlawful amounts of intoxicating cannabinoids or contaminants determined by testing rather than by trained or untrained government agents.

Similar stories also unfolded at the four other cannabinoid hemp-licensed businesses acting as petitioners in the lawsuit, including $100,000 of product seized at Brecken Gold Athletics, according to the lawsuit.

Specifically, the five hemp businesses claimed that the warrantless searches violate their right to be free from unreasonable search and seizures in the U.S. Constitution, while the respondents in the case claim that an exception applies because their searches and seizures fall under an administrative search exception, according to the lawsuit.

Marcelle ruled that sales of intoxicants—such as cannabis and hemp-derived cannabinoid products—are considered prototypical examples of “pervasively regulated businesses” in a “closely regulated industry,” which fall under an administrative search exception. However, he said that the “closely regulated industry” exception is not self-executing.

“Rather, it requires the legislature to enact statutes authorizing warrantless administrative searches,” the justice wrote. “In this case, the parties hotly debate whether the legislature allowed the sheriff’s office and OCM to conduct warrantless administrative searches.”

In reviewing the merits of the case regarding statutory authority, Marcelle determined that the NYC Sheriff’s Office is forbidden from conducting inspections of licensed OCM businesses, concluding that those businesses are subject to inspections by the OCM, and “only OCM.”

“As was adduced at the hearing, OCM inspectors are trained on the statutory, scientific, and administrative distinction between hemp and marijuana—sheriff deputies are not,” the justice wrote. “Therefore, under [New York cannabis law], the sheriff’s office lacks any lawful authority to conduct a warrantless regulatory or administrative inspection of any business that possesses either a hemp or marijuana license.”

The sheriff’s office search and seizure of products at 7 Leaf Clover and Brecken Gold violated those businesses’ Fourth Amendment rights, the judge ruled. However, nothing prevents the sheriff’s office from doing the bulk of its enforcement work against unlicensed establishments.

While reviewing the OCM’s statutory authority, Marcelle said that just because an exception to the warrant requirement exists does not mean the government has the power to ignore the bounds of the Fourth Amendment.

“The Supreme Court has told governments that seek to conduct warrantless searches that they must place statutory limits on the administrative agents who seek out contraband without a warrant—this has not been done,” Marcelle wrote. “The court, therefore, believes it highly probable that petitioners will succeed on the merits of their claim that OCM violated their rights secured by the Fourth Amendment.”

While the Constitution OKs warrantless searches in some situations, it never provides the green light to unreasonable ones, the justice determined.

In all instances related to the lawsuit, the warrantless searches were done so with “heavily armed law enforcement officers” whose presence with weapons was to “intimidate and compel employees and customers into compliance,” Marcelle wrote.    

Furthermore, the respondents or their armed associates turned off surveillance cameras before conducting their searches, raising the specter of a search that goes beyond administrative purposes, according to the justice.

As such, Marcelle determined the manner of the searches was damning and “deeply” removed from any reasonable administrative search.

The justice ordered that the OCM may only conduct reasonable inspections moving forward with no more than two inspectors who cannot be armed unless the office has a “specific credible documented security concern” associated with the business it plans to inspect.

“Perhaps, most revealing is what respondents did not do,” the justice wrote. “Respondents omitted what would seem an essential step in conducting a regulatory inspection—inspect the products. Many products contained the OCM’s mandated certificates of analysis. The COAs of the seized products showed that the products were presumptively lawful. But respondents never used the QR codes to check for compliance.”

Additionally, Marcelle determined that the OCM did not perform on-site testing of any of the products in question.

“Shockingly, the sheriff’s office destroyed the product upon seizure so no testing could ever be conducted,” the justice wrote. “This willful ignorance as to the nature of the products exposes a search that is not administrative in nature.”

In addition, state and city authorities seized products that were designated for interstate commerce under the 2018 Farm Bill that were never intended for sale in New York and therefore beyond the lawful reach to seize, according to the ruling.

Marchelle wrote that it’s “always wise to remember history,” pointing to royal customs officers from England who employed writs of assistance to search and seize untaxed contraband during colonial times—a conflict as old as “our nation.” He added that this country’s opposition to such searches was one of the driving forces behind the American Revolution.

“In sum, how respondents conducted their enforcement activities against petitioners was a far cry from an administrative inspective seeking to cull evidence of regulatory violations,” the justice wrote. “The court often hears cases, like those from agriculture and markets, involving state inspectors inspecting businesses—there, regulators come armed with clipboards, forms and pens, and not guns, bulletproof vests and handcuffs.”