Smoke shop crackdowns, out of state brands and more ‘Ask me anything’ about NY cannabis with Jeffrey Hoffman

Jeffrey Hoffman is a New York City-based attorney who hosts “Ask Me Anything about Cannabis Legalization in New York” each week on LinkedIn. Hoffman and NY Cannabis Insider have partnered to bring those sessions into print in a Q&A format.

Hoffman’s practice focuses on cannabis industry clients, including licensees in the adult-use market, practitioners in the medical cannabis space, and cannabis adjacent product and service providers. He has a particular interest in social and economic equity cannabis license applicants, and he also informs and assists those convicted of cannabis offenses in getting such convictions expunged from their record. He can be reached at

The following AMA from Feb. 8 has been edited for length and clarity. Hoffman’s next AMA is on Feb. 15 at 4:20 p.m.

Any thoughts about the city’s new attempts to crack down on illegal cannabis, smoke shop sales, and the new nuisance abatement suits against, among others, their landlords and lessors?

So anyone that’s been coming on the show for a while now will know that this is what we’ve been talking about for quite some time — we’ve been saying go after the landlords.

So again, what the city has proposed is what we’ve been suggesting now to do all along. We know California tried to do this. Although, it’s not clear to me what level of success. But I think this is a good way to go about it. Right? Really get serious with the landlords, what does the landlord not want to do — lose their building. Really start putting pressure on the landlords, and this is going to take time. I mean, these are gonna be judicial actions. And it’s going to take time to really deal with this, but that’s why the first question (at the press conference) was appropriately, “Oh, what took you so long?” But this is clearly the way to do it. We don’t want any arrests, any convictions, or any incarcerations. You go after the landlords, you fine the landlords, and eventually take their building, if they don’t feel like paying their fines and doing what they’re supposed to do here. But it just makes sense and that’s the way you do it. And just also to be clear, we’re not talking about gifting where Jeffrey has, you know, an ounce or two of cannabis and he wants to give one of them to Eric. That’s not what we’re talking about. We’re talking about, you pay me $60 for a space your face sticker, which retails for like five bucks. And since you’re my best buddy, I give you $55 worth of cannabis as a gift. Right? I mean, that’s hilarious to me. Why we think that’s a loophole for this, but yes, we do, but it’s not. So that is what they should have done all along. It’ll be interesting to see with what alacrity they pursue.

Are dispensaries doing more net terms or COD in NYC when it comes to their payment plans with brands?

So it wouldn’t be their payment plans with brands, right now it’d be their payment plans with the processors, right? So if you want to be a brand, you have to do a deal with the processor. You become a TPI of the processor. And right now, processors can create manufactured products and sell them directly to the dispensaries. In theory, come June, that won’t be applicable anymore. And you’ll have to go through a distributor. It’s not clear to me that there will be any distributors by June. So my bet is that they will extend that through the end of the year. Currently the processors will still be able to sell to the dispensaries, but at that point, processors will have to sell to a distributor, and then it’ll be the distributor that sells to the dispensary. So the question is here, in a lot of businesses, you’re able to get terms with your vendors net 30, net 60, net 90, net never — that’s always my favorite one. The clients that never pay their vendors – their terms are net never. We love those (not). Anyway, the guidance for CAURD said you could do net 90. The regs say only net 30. And I’ve talked with Axel Bernabe about this bit and he says they wanted to do net 90 initially just to give the CAURD folks a little bit more room as they’re getting going here. I’m sure the processors are not thrilled, they want their money as quickly as possible. But as soon as OCM said you can do net 90, every dispensary gonna ask for net 90, right? So Mr. Bernabe indicated that this is what they wanted to do here at the outset. And they did put 30 in the regs, and obviously the regs are under public comment now. It’s pretty clear to me, they’re gonna make changes, I’m not betting on whether or not they’re going to make changes – I’m done betting about OCM making changes. Because whatever I bet will be wrong. But right now, you’ll mostly see dispensaries asking for the 90 because they can. Right now, the regs have 30, I believe Mr. Bernabe has said that’s going to be kind of a moving target, and they’re gonna do whatever makes most sense for the market. I think it’s pretty smart.

Out-of-state brands coming into the market. Do they need a license? If so, what type? Where in the regs does it say this?

So what’s up with brands? So brands got to do a deal with a processor and they become a TPI of the processor. That is the deal. And in the regs where they say that – do a search for brand, TPI, and processor. You’ll find that’s where it is. And in that kind of the deal, a brand can do a deal with the processor and then become a TPI of the processor. That is why a retail dispensary cannot do their own brand, because then a brand has to be a TPI of the processor. And a dispensary cannot be a brand because they cannot be a TPI of the processor, because of the 2 tier system. So this is all kind of wrapped up in there together. I’m sure there’s a tremendous amount of confusion about that among everybody. And me and my new associate look very much forward to dealing with everyone’s confusion about that.

Would you agree that it’s too soon for the OCM to be closing down all the unregulated dispensaries before the framework for the licensed dispensaries are in place?

I think for those of you that read me on LinkedIn have seen some of my comments. I want to make very clear what my position is, before you come and rail on me. So my position is I’m with the Founding Fathers, every American must grow cannabis or hemp. Take your pick one of the two. If you do not grow cannabis or hemp, it is a fine. And the fine depends on your income level declared in previous year’s tax filings and I don’t know what the break point is, but it’s zero up to some level. And then over some level, the amount increases and for millionaires and billionaires, it’s a million dollars and so they better be growing cannabis. And so you’re mandated to grow cannabis by law. If you don’t grow cannabis, it’s a fine. I told you my scheme for the fine — up to some level — and it’s well over the poverty level. It’s going to be a higher number, but over some level, we start fining you initially $1 or $10 and it’ll go up. And if you don’t want to smoke the cannabis yourself, you have to donate it to medical patients that can’t afford their medical cannabis. And that is also where the money will go. I will of course have to grow cannabis because I’m here in the United States. I will of course smoke the cannabis that I grow or give it away to people. And for the fines we collect, we put it into a fund and we use the funds money to buy cannabis for medical patients that can’t otherwise afford their medical cannabis. So, that’s my position.

So I wanted you to get where I am. Before I talk about whether or not I think it’s too soon. Like, it’s why we’re in the mess that we’re in now. Because the OCM was not really the only thing waiting, it’s because the city waited so long, right? And look, no arrests, no incarcerations, no convictions, none of that. And again, if you made me King, you’re all having to grow cannabis by law. Okay, so please don’t come screaming at me about this. But if we’re going to have a regulated industry, where we’re going to have regulated and licensed stores, you gotta make it possible for them to succeed. And you’re not going to make it possible for them to succeed if there’s unlicensed illegal stores, all around them selling the product at 75%, or 70%, or 60% of the price. So if we as a society have decided that we’re not going to elect Jeffrey king, and we’re not going to have it so that we require everybody to grow, and we have decided that we’re going to have this kind of regulated industry – again, if you don’t like it, I can’t help it, but that’s what the legislature voted on. You voted on the people in the legislature, and this is what we’re doing. So if that’s what we’re doing, let’s do it right. And so respectfully, it’s not clear to me that a lot of the stores that just blew up everywhere in the city in the last several months are truly legacy. I do think some of them are; maybe a number of them are. But generally, my experience has been that legacy don’t want you to know what legacy is doing. Right? And I just feel that if we’re going to have a regulated market and the regulated market does want you to know what the regulated market is doing. Then we’re going to need to decide as a society what we’re going to do. And so for those reasons, I don’t think it’s too soon. In fact, I think they waited too long. And again, I don’t want anybody arrested. I don’t want anybody convicted. I don’t want anybody incarcerated. And that’s why I’ve wanted for so long for them to go after the landlords, right? Because then we don’t have any arrests and any incarcerations and convictions. Yes, we come and seize the product, it’s there at the store. But then we go after the landlord, so we start fining them and it’s $1,000. And then it’s $10,000. It’s $100,000. It’s $1 million and we take your building, and that’s not exactly what they are doing right now. But that’s kind of how I think eventually they’re gonna proceed here. So again, I want to mandate that everybody grows. So that’s my position.

Why wouldn’t they allow an infinite number of cultivation licenses but limit the amount of distribution the dispensary, allowing capitalism free market to sort out the garbage from the quality? Yet it seems these companies don’t care as long as the money flows?

Well, that last comment was certainly the case. Why they wouldn’t allow an infinite amount of cultivation is because that is a way to end up with a tremendous amount of cannabis getting diverted into the illicit market, right. I mean, that’s why what’s going on from California and Oklahoma is getting everywhere in the United States, right? You got two states that did not do a very good job of limiting how much cultivation was going to happen, especially Oklahoma. I mean, in Oklahoma, you got a cultivation license if you had 50 bucks and a pulse. And frankly, I heard from some people, they took dead people over and so it’s 50 bucks and no pulse. That’s why you don’t do infinite amounts – because the market wouldn’t support it. And if you do have infinite amounts, the price will crater and growers won’t be able to make any money. So you do have to have some limits in place in order to have a healthy and functioning market.

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