N.Y. Cannabis Law § 131: Local opt-out; municipal control and preemption

§ 131. Local opt-out; municipal control and preemption. 1. The

licensure and establishment of a retail dispensary license and/or

on-site consumption license under the provisions of article four of this

chapter authorizing the retail sale of adult-use cannabis to cannabis

consumers shall not be applicable to a town, city or village which,

after the effective date of this chapter, and, on or before the later of

December thirty-first, two thousand twenty-one or nine months after the

effective date of this section, adopts a local law, subject to

permissive referendum governed by section twenty-four of the municipal

home rule law, requesting the cannabis control board to prohibit the

establishment of such retail dispensary licenses and/or on-site

consumption licenses contained in article four of this chapter, within

the jurisdiction of the town, city or village. Provided, however, that

any town law shall apply to the area of the town outside of any village

within such town. No local law may be adopted after the later of

December thirty-first, two thousand twenty-one or nine months after the

effective date of this section prohibiting the establishment of retail

dispensary licenses and/or on-site consumption licenses; provided,

however, that a local law repealing such prohibition may be adopted

after such date.

2. Except as provided for in subdivision one of this section, all

county, town, city and village governing bodies are hereby preempted

from adopting any law, rule, ordinance, regulation or prohibition

pertaining to the operation or licensure of registered organizations,

adult-use cannabis licenses or cannabinoid hemp licenses. However,

towns, cities and villages may pass local laws and regulations governing

the time, place and manner of the operation of licensed adult-use

cannabis retail dispensaries and/or on-site consumption site, provided

such law or regulation does not make the operation of such licensed

retail dispensaries or on-site consumption sites unreasonably

impracticable as determined by the board.

3. (a) As used in this subdivision and for purposes of any local law

adopted pursuant to it, the following terms shall have the following

meanings: "person" shall have the meaning provided for in subdivision

forty-a of section three of this chapter; "unlicensed activity" shall

refer only to unlawfully selling cannabis, cannabis product, or any

product marketed or labeled as such without obtaining the appropriate

registration, license, or permit therefor, or engaging in an indirect

retail sale; "indirect retail sale" shall have the meaning provided for

in subdivision forty-six-a of section three of this chapter, except that

it shall not include cannabinoid hemp or hemp extract product; "place of

business" shall not include a residence or other real property not

otherwise held out as open to the public or otherwise being utilized in

a business or commercial manner, or any vehicle associated with the

business, unless probable cause exists to believe that such residence,

real property, or vehicle, is being used in such business or commercial

manner for the unlicensed activity.

(b) Any county or city may adopt a local law authorizing an officer or

agency to conduct regulatory inspections of any place of business

located within the county or city, including a vehicle used for such

business, not listed on the directory maintained by the office pursuant

to subdivision thirteen of section eleven of this chapter. Any such

regulatory inspection shall only occur during the operating hours of a

place of business and be conducted for purposes of civil administrative

enforcement with respect to premises lacking applicable registrations,

licenses or permits issued pursuant to this chapter, and in furtherance

of its purposes, provided that nothing herein shall limit any

enforcement action under law when illegal activity is observed or occurs

during such inspection.

(c) A local law adopted by a county authorizing regulatory inspections

shall not apply in any city included within the boundaries of such

county that adopts a local law authorizing regulatory inspections within

such city.

(d) The local law adopted by a county or a city pursuant to this

subdivision shall also:

(i) require procedures sufficient to ensure that any regulatory

inspections are conducted in a reasonable manner, are administrative in

nature, designed to detect administrative violations, in furtherance of

the regulatory scheme established pursuant to this section, and designed

to guarantee certainty and regularity of application;

(ii) designate a local official who shall serve as the liaison to the

office and who shall: (1) be required to ensure that updates to the

directory are immediately incorporated into the local inspection

process, coordinate with the office on efforts to inspect such

unlicensed businesses and related local enforcement efforts; (2) send

bi-weekly reports to the office in a manner and format prescribed by the

office detailing recent enforcement efforts, including information

regarding the number and location of inspections conducted, notices of

violation issued, and orders to seal issued and executed, and the amount

and nature of the cannabis, cannabis products, or products marketed as

such seized; and (3) serve as the primary contact for the office in

connection with the office's training program and the sharing of

materials made available to counties and cities with regard to the

inspection and enforcement of unlicensed cannabis businesses;

(iii) be filed with the office, as well as any procedures or

regulations promulgated pursuant to the local law. Notwithstanding the

effective date of any such local law, the local law shall not become

effective until ten days after it is filed with the office;

(iv) establish a system for receiving complaints of such unlicensed

activity by any business within the county or city, as the case may be;

(v) provide that any person who engages in the unlawful sale of

cannabis, cannabis product, or any product marketed or labeled as such,

or in indirect retail sales, shall be subject to a civil penalty of not

less than one hundred dollars and not more than ten thousand dollars for

each day during which such violation continues, with a maximum penalty

of no more than twenty-five thousand dollars. The penalty provided for

in this subparagraph may be recovered by an action or proceeding in a

court of competent jurisdiction brought by the county or city to enforce

the notice of violation referred to in clause one of subparagraph (vi)

of this paragraph; and

(vi) provide that the officer or agency designated to conduct

regulatory inspections of any place of business not listed on the

directory maintained by the office shall have the authority to:

(1) issue a notice of violation and order to cease unlicensed activity

setting forth the nature of the unlawful conduct along with any fines or

penalties for such conduct in amounts not to exceed the fines set forth

in subparagraph (v) of this paragraph and order any person who is

unlawfully selling cannabis, cannabis product, or any product marketed

or labeled as such without obtaining the appropriate registration,

license, or permit therefor, or engaging in indirect retail sale, to

cease such prohibited conduct, provided that any such notice of

violation and order to cease unlicensed activity may only be issued

against the business that is conducting the unlicensed activity or an

individual owner of the business. Any notice of violation and order to

cease unlicensed activity shall be served by delivery of the order to

the owner of the business or other person of suitable age or discretion

in actual or apparent control of the premises at the time of the

inspection and shall be posted at the building or premises that have

been sealed, secured and closed. A copy of the order shall also be

mailed to any address for the owner of the business at any address

provided by the person to whom such order was delivered pursuant to this

paragraph;

(2) seize any cannabis, cannabis product, or any product marketed or

labeled as such, found in the possession of a person engaged in the

conduct described in clause one of this subparagraph and in their place

of business, including a vehicle used for such business, providing that

the business that is conducting the unlicensed activity or an individual

owner of the business, maintain documentation of the chain of custody of

such seized products, and ensure that such products are properly stored,

catalogued, and safeguarded until such time as they may properly be

destroyed by the county or the city;

(3) issue an order to seal the building or premises of any business

engaged in unlicensed activity, when such activity is conducted,

maintained, or permitted in such building or premises, occupied as a

place of business subject to the procedures and requirements set forth

in this subparagraph:

A. The officer or agency may issue an order to seal with an immediate

effective date if such order is based upon a finding by the officer or

agency of an imminent threat to the public health, safety, and welfare.

B. Any order to seal shall be served by delivery of the order to the

owner of the business or other person of suitable age or discretion in

actual or apparent control of the premises at the time of the inspection

and shall be posted at the building or premises that have been sealed,

secured and closed. A copy of the order shall also be mailed to any

address for the owner of the business provided by the person to whom

such order was delivered pursuant to this paragraph. The order shall

remain in effect pending a hearing and final determination of a court,

or until such order is vacated by the officer or agency pursuant to the

local law adopted pursuant to this subdivision. An order to seal shall

explicitly state that a request for a hearing may be submitted in

writing to the corporation counsel or to the county attorney as

applicable within seven days. Upon receiving such a request for a

hearing, the corporation counsel or county attorney shall file a copy of

the request with the clerk of the city court or county court in the city

or county where the building or premises is located.

C. The court that receives notice of a request for a hearing from a

corporation counsel or a county attorney shall fix the date of such

hearing no later than three business days from the date such notice is

received by the court and provide notice to the parties of the date,

time, and location of the hearing. Upon such date, or upon such other

date to which the proceeding may be adjourned by agreement of the

parties, the court shall hear testimony and receive evidence presented

by the parties. The city or county, as applicable, and the person that

requested the hearing shall be parties to the proceeding. Within four

business days of the conclusion of the hearing, the court shall make a

determination as to: (i) whether the person upon which the order to seal

was issued was engaged in unlicensed activity, (ii) if the person is

found to have engaged in unlicensed activity, then whether such

unlicensed activity presents an imminent threat to public health, safety

and welfare according to subdivision four of section one hundred

thirty-eight-b of this article, and (iii) whether the unlicensed

activity as described in this section is more than a de minimis part of

the business activity on the premises or in the building to be sealed

pursuant to the order. However, when an order to seal has been issued

upon a second or subsequent inspection in which unlicensed activity is

confirmed to be continuing more than ten calendar days after a notice of

violation and order to cease unlicensed activity was previously issued,

the court need only determine: (i) whether the person upon which the

order to seal was issued was engaged in unlicensed activity; (ii)

whether a notice of violation and order to cease unlicensed activity had

been issued eleven or more days prior to the issuance of the order to

seal; and (iii) whether the order to seal was issued in compliance with

paragraph (a) of subdivision six of section one hundred thirty-eight-b

of this article. If the court determines that an order to seal was not

properly issued, the court shall vacate such order. If the court is

satisfied that an order to seal was properly issued, the court may

render a judgment affirming the issuance of an order to seal, and direct

the closing of the building or premises by any police officer or peace

officer with jurisdiction to the extent necessary to abate the

unlicensed activity and shall direct any police officer or peace officer

with jurisdiction to post a copy of the judgment and a printed notice of

such closing conforming to the requirements of this chapter. The closing

directed by the judgment shall be for such period as the court may

direct but in no event shall the closing be for a period of more than

one year from the posting of the judgment provided for in this section.

Failure of a party that requested a hearing to appear at the hearing

will result in a default and order of sealing to remain in effect for

such period as the court may direct but in no event shall the order be

in effect for a period of more than one year from the posting of the

judgment unless otherwise vacated pursuant to the local law adopted

pursuant to this subdivision.

D. The local law adopted pursuant to this subdivision shall include,

without alteration the provisions of subdivisions four through twelve of

section one hundred thirty-eight-b of this article. Any provisions

adopted by a local law to the contrary shall be considered specifically

preempted by this paragraph, provided however that a county or city

shall be permitted to substitute the officer or agency authorized by the

county or city to conduct regulatory inspections pursuant to this

subsection for any reference to the office or board;

(4) seek injunctive relief against any person engaging in conduct in

violation of this section, including through an action pursuant to

section sixteen-a of this chapter.

(e) Upon a demand by the county or city, a respondent or defendant

shall provide to the county or city prior to a hearing pursuant to

subparagraph (v) of paragraph (d) of this subdivision or an order to

seal pursuant to clause three of subparagraph (vi) of paragraph (d) of

this subdivision, within five days after a demand or sooner if a hearing

is scheduled less than five days from the date of demand, a verified

statement setting forth:

(i) If the responding party is a natural person, such party's: (1)

full legal name; (2) date of birth; (3) current home or business street

address; and (4) a unique identifying number from: (A) an unexpired

passport; (B) an unexpired state driver's license; or (C) an unexpired

identification card or document issued by a state or local government

agency or tribal authority for the purpose of identification of that

individual;

(ii) If the responding party is a partnership, limited liability

partnership, limited liability company, or other unincorporated

association, including a for profit or not-for-profit membership

organization or club, the information required pursuant to subparagraph

(i) of this paragraph for all of its partners or members, as well as the

state or other jurisdiction of its formation;

(iii) If the responding party is a corporation, its state or other

jurisdiction of incorporation, principal place of business, and any

state or other jurisdiction of which that party is a citizen;

(iv) If the responding party is not an individual, in addition to any

information provided pursuant to subparagraphs (ii) and (iii) of this

paragraph, and to the extent not previously provided, each beneficial

owner of the responding party by: (A) full legal name; (B) date of

birth; (C) current home or business street address; and (D) a unique

identifying number from: (1) an unexpired passport; (2) an unexpired

state driver's license; or (3) an unexpired identification card or

document issued by a state or local government agency or tribal

authority for the purpose of identification of that individual. As used

in this section, the term "beneficial owner" shall have the same meaning

as defined in 31 U.S.C. § 5336(a)(3), as amended, and any regulations

promulgated thereunder.

(f) Notwithstanding any provision to the contrary in this section, a

city with a population of more than one million may enforce any

violations, orders to cease, and orders to seal related to unlicensed

activity through an administrative hearing process.