Closed down vape store selling illegal cannabis products, Queens, New York. (Photo by: Lindsey … [+] Nicholson/UCG/Universal Images Group via Getty Images)

UCG/Universal Images Group via Getty Images

In a scathing rebuke, a New York judge ruled Monday in favor of five hemp businesses that were subject to a series of “military-like raids” last year, saying that the state’s regulatory agencies likely violated their Fourth Amendment rights during inspections.

New York’s Cannabis Control Board, oversight body of the Office of Cannabis Management (OCM), regulates hemp in the state. Recently, hundreds of raid-like inspections of state-licensed hemp companies were conducted. While Gov. Kathy Hochul turned up the heat on illegal cannabis businesses in New York, the war on illicit pot extended to vape shops that were selling hemp products not adhering to strict regulations. At the city level, crackdowns expanded as well.

Last August, five hemp businesses filed a lawsuit, saying that they were unjustly targeted. One licensed hemp business owner said he was held in jail overnight. Brecken Gold, Breckenridge CafĂ© NYC, 7 Leaf Clover, Super Smoke N Save, and Two Strains were the hemp businesses listed in the lawsuit. The businesses were located in Brooklyn, Manhattan, Saratoga Springs, and Queensbury. Large swaths of product and assets—likely totaling millions in value—were seized. In many cases, armed men in bullet-proof vests walked in, unannounced.

Albany County Supreme Court Justice Thomas Marcelle ruled that New York’s Office of Cannabis Management (OCM) and the New York City Sheriff’s Office are banned from conducting warrantless searches and seizures of state-licensed hemp stores.

The judge’s ruling includes a temporary restraining order against the state Office of Cannabis Management and the New York City Sheriff’s Office, directing state regulators to limit inspections of those stores to no more than two unarmed inspectors, unless they identify a “specific credible documented security concern associated with the particular business that they are inspecting.”

The hemp business petitioners were represented by New York attorney Joshua S. Bauchner. “They’re only inspecting and raiding unlicensed marijuana stores and licensed hemp stores,” Bauchner says in a phone call. “And that’s part of our problem. When you’re an unlicensed store, if you’re selling any cannabis products—be it hemp or marijuana, it’s illegal.” But it’s not the same case for licensed hemp businesses. New York City’s thousands of brazen illegal cannabis shops are treated nearly the same as licensed hemp stores.

Recent crackdowns on illegal cannabis businesses, led by Gov. Hochul, are aimed at thousands of illegal businesses. “The governor gave the OCM $13 million in April of last year for enforcement,” says Bauchner. “And it’s that undertaking which went into the Court’s decision wherein those enforcement efforts were done blindly, incorrectly, and as we’ve now learned—in violation of the Fourth Amendment.”

“In December of 2023, they changed the regulations,” Bauchner says. “And overnight, they made most of my clients’ products illegal contraband because they changed the definition of hemp.” Even when the businesses moved hemp into storage areas and basements, away from sale, they were still punished for being noncompliant.

Impact on Hemp Business Owners

“In many cases, these ‘inspectors’ arrived accompanied by sheriffs, state police, and representatives from the Department of Taxation and Finance,” says Sammy Foda, owner of Two Strains. “In our case, a group of 15 armed officials entered our store, immediately unplugged the cameras, and detained me while they began searching—without presenting a warrant when I asked for one.”

Foda says it was intimidating, leaving a fear in the back of his mind, “wondering if today is the day they’re going to show up again.”

It’s a tightrope act regarding the navigation of New York’s regulations. “One of the most confusing aspects of navigating this industry is the inconsistency between what is legally allowed online versus in person,” Foda says. “For example, we can legally sell Delta-9 THC gummies and THCA flower online to out-of-state customers, yet selling the same products in-store is prohibited. This creates immense confusion about how we’re supposed to store and ship our online orders. If we keep them in the store, we risk having everything seized again during the next inspection—essentially at the whim of the inspectors.”

Foda explained that inspectors made claims under oath in court that they can “smell” the delta-9 THC in potent cannabis flower and use that as a basis for finding noncompliant issues.

“We believe the industry needs clearer regulations based on science and transparency—not subjective interpretations—so that small businesses like ours have a fair shot at succeeding while staying compliant.”

Fourth Amendment Rights and Hemp Businesses in New York

The ruling indicates that the petitioners are “highly likely to establish” their Fourth Amendment rights were violated. The Fourth Amendment protects people from unreasonable searches and seizures by the government.

“Now, just because the government gives an administrative agency the power to conduct warrantless administrative searches does not mean the administrative searches are therefore always in accord with the Fourth Amendment,” Marcelle wrote in the ruling. “No matter the industry, the Legislature may not give the executive branch the power to ignore the Constitution.”

Per the Fourth Amendment of the U.S. Constitution, the sheriff’s office had no authority to conduct warrantless inspections of those shops. OCM representatives typically don’t comment on pending cases, but previously denied that their “inspections” of the hemp businesses are in fact raids.

Although most of the state’s recent seizures are from illegal cannabis businesses, the hemp industry was also hit hard. “I think reasonably, the hemp stores product that has been seized is probably millions—if not $10 millions’ worth—of seized products,” Bauchner says. “That’s not insignificant.”

One of the petitioners, Breckenridge Café NYC, a hemp business, was subject to searches last year, and again last September after getting involved in the lawsuit.

Hemp businesses in New York continue to navigate the rocky legal cannabis and hemp system. Many other lawsuits have plagued New York’s legal cannabis landscape. Last November, the Cannabis Farmers Alliance sued the Cannabis Control Board for the “disastrous” rollout of legal cannabis in the state.