The Regulators Are Watching: How New York Cannabis Licensees Should Prepare for Stricter Compliance Enforcement
By Brandon Kurtzman, Neil Willner
Mar 11, 2025
As New York's legal cannabis industry continues to develop, licensees must remain diligent in their compliance efforts to avoid regulatory scrutiny. Fines, suspensions, and revocations are on the horizon, and compliance will no longer be optional.
What is the Trade Practices Bureau?
The Office of Cannabis Management (OCM) has reinforced its commitment to maintaining a fair and transparent market with the recent creation of the Trade Practices Bureau (TPB). This division will be responsible for investigating trade practice violations, including:
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Inversion, or other importation and/or purchase and/or sale of out-of-state cannabis or other unlicensed cannabis products
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True Party of Interest (TPI) violations, including violations of regulations limiting investment types and amounts in cannabis businesses and any actions prohibited by the two-tier market, as well as impermissible loss or change of ownership and/or control of a licensed cannabis business including prohibited contractual agreements, terms, and arrangements resulting in undue influence
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Threats to ownership and control, including but not limited to predatory loan and/or service agreements with a cannabis licensee that contravene cannabis law and regulations
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License Stacking, such as the impermissible aggregation of licenses
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Fraudulent licensee reporting, including fraudulent product and transportation manifests
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Fraudulent business practices that impact the integrity of the cannabis market or cannabis licensees
TPB Leadership and Enforcement Priorities
The TPB is led by Jim Rogers, a seasoned attorney with extensive experience in corporate compliance and consumer protection. Rogers previously served as Chief of the Investor Protection Bureau in the New York Attorney General’s Office, where he oversaw high-profile financial fraud investigations. His leadership signals a rigorous enforcement approach that will target anti-competitive behaviors, improper financial relationships, and licensing misrepresentations.
The TPB will operate through investigations, collaboration, and partnerships throughout OCM regulatory units. The TPB has emphasized that businesses should expect increased enforcement actions in 2025 and beyond, particularly as the legal market continues to expand.
To accomplish its goals, the TPB has the authority to issue subpoenas, conduct formal reviews, and refer cases for further legal action before the Cannabis Control Board (CCB). These efforts are intended to ensure that all industry participants play by the same rules, aligning with the state's broader social equity goals.
Lessons Learned from the New York State Liquor Authority
Given that New York’s adult-use cannabis regulations mirror New York’s alcoholic beverage regulations, cannabis businesses should prepare for similarly aggressive enforcement. The State Liquor Authority (SLA) has enforced strict trade practice regulations in the alcohol industry for decades via its Enforcement Bureau, and we expect that the TPB will apply similar scrutiny to the cannabis industry.
A review of enforcement data from the SLA’s previous annual reports offers a clear preview of what cannabis licensees can expect from the TPB:
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2022: $5.1 million in fines and penalties collected from licensees
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2021: $8.8 million in fines issued for regulatory violations
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2020: Over $4.9 million in civil penalties assessed
The SLA’s enforcement approach focuses heavily on financial penalties, with fines often exceeding $10,000 per violation and, in severe cases, license revocations.
How New York Cannabis Licensees Can Prepare
With the formation of the TPB signaling OCM’s evolving enforcement priorities and efforts, New York cannabis licensees should use this as an opportunity to comprehensively review their operations to ensure they are fully compliant with all applicable laws and regulations.
To help navigate these challenges, here are five key strategies that licensees should use to prepare for this heightened regulatory oversight:
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Conduct Regular Internal Audits: Review all financial agreements, contracts, and ownership structures to ensure they comply with state regulations and do not create undue influence concerns
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Stay Informed on Regulatory Updates: The TPB will continue to refine its enforcement priorities, so businesses must stay updated on new compliance requirements
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Implement Comprehensive Training Programs: Educate staff on trade practice regulations, ethical business operations, and compliance best practices to reduce the risk of violations
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Review Business Relationships/Agreements: Ensure that all partnerships, financing arrangements, operational agreements, etc. are compliant with all applicable laws and regulations
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Maintain Thorough Documentation: Keep detailed records of all transactions, agreements, and compliance efforts to demonstrate good faith adherence in case of an investigation
By integrating these strategies, licensees can protect their businesses from enforcement actions and help foster a well-regulated cannabis industry in New York as regulatory oversight intensifies under the TPB.
Vicente LLP has extensive expertise in all aspects of cannabis regulatory compliance, trade practice laws, and enforcement defense, and our team is prepared to assist licensees in navigating these complexities to ensure long-term success in the New York market. Contact us today!