Not So Fast, Court Tells New York City Sheriff’s Office – Court Issues Injunction Ordering Immediate STOP to “Unconstitutional” Warrantless Searches of Licensed Hemp Retailers

By: Dana Walsh Sivak, Esq. and Terran Cooper

Earlier this week, New York State Supreme Court Justice Thomas Marcelle ordered an immediate halt to warrantless searches of licensed hemp retailers. These searches had been conducted in connection with raids targeting smoke shops and cannabinoid hemp retailers as part of recent efforts to crack down on illicit cannabis.

In issuing its order in Super Smoke N Save LLC et al. v. New York State Cannabis Control Board et al., (Index No.: 908421-24, Sup. Ct., Albany Cty.), on January 13, 2025, the Court took swift and immediate action to stop the New York City Sheriff’s Office from conducting warrantless searches of licensed hemp stores, purportedly under the guise of enforcing the state’s cannabis laws, finding – at least preliminarily - that these searches and seizures performed by the New York City Sheriff’s Office are unreasonable and violate the Fourth Amendment of the Constitution. 

Licensed Hemp Retailers Describe Searches and Seizures by Authorities “Armed with Weaponry but Not a Warrant”

In this case, five Petitioners – all of whom operate hemp retail stores, and are properly licensed by the State’s Office of Cannabis Management – have sued the state, arguing that their Constitutional rights were violated by unreasonable search of their business premises and seizure of their products. 

Each of the searches described in the decision includes the arrival of a contingency of armed law enforcement officers (some from the Department of Taxation and Finance (“DTF”), and some from police agencies such as the NYPD, New York State Police, and the NYC Sheriff’s Office), typically alongside representatives of the Office of Cannabis Management (“OCM”), without warning, and without a warrant, to conduct what were claimed to be “administrative” or “regulatory” inspections of the premises.  The rationale for these unannounced, warrantless searches of the businesses included complaints that these retailers were “possibly selling illicit cannabis” in their stores.  OCM representatives were present during some, but not all, of the inspections. 

The inspections, themselves, included OCM and law enforcement directing the retail shop staff to permit them access into various locations outside of the retail floor of the business, including locked safes, basements, employees’ personal lockers, and locked cabinets holding online inventory below a display case stating, “not for New York sale”.   

Many thousands of dollars of products were then seized in these searches, but none of the products seized ever tested positive for any prohibited substances or ingredients – and the vast majority were never tested, at all.  Rather, in one case, the determination that the seized products contained cannabinoid ingredients beyond the scope of the retailer’s hemp license was based upon “the OCM investigator’s training” alone.  In that case, the products “believed to be cannabis concentrate and cannabis edibles” were seized by a Department of Taxation and Finance officer – not OCM – and the violations issued against the retailer were subsequently dismissed.  Following that hearing, however, the same hemp retailer was subjected to a second warrantless search – this time, by the NYC Sheriff’s Office and the NYPD, without OCM present – during which the officers searched the premises and seized various products, performed no testing to confirm whether there were any prohibited ingredients in them, and disposed of the products, throwing them away and even pouring them down a toilet. 

In another raid, a retailer’s mushroom products were tested on-site for psilocybin, and despite the test revealing no evidence of psilocybin, the New York City Sheriff’s Office seized $35,000 in mushroom products, and the store manager was arrested for misdemeanor drug possession crimes. (While the New York City Sheriff’s Office maintains that some of these products tested positive for psilocybin during a subsequent off-site test, no documentation has been provided to support this claim, and the charges against the store manager were dismissed for lack of evidence).  Another hemp retailer noted that its products were seized based on an OCM inspector’s visual observation of the product’s packaging and labeling, without examination of the certificates located directly behind the products on display, which, the retailer claims, proved that they were lawful hemp products.   

In addition to the loss of valuable products seized by these agencies (which was not returned, and in some cases, destroyed), the hemp retailers complained of official “Notices” and “Orders” issued by the inspectors and, often, affixed to the outside of the retail location, containing language such as, “Order to Cease Unlicensed Activity and Seizure Notice,” and conveying to the public that illegal cannabis produced had been seized.  The impacted hemp retailers blame these “stickers” and violation notices conspicuously affixed to their premises for a significant decrease in customer traffic and overall sales, potentially jeopardizing their ability to remain operational in the future. 

An Early Victory for Petitioners, Another Cannabis-Related Injunction Against the State 

While the underlying issues raised by the hemp retailers in their suit against the state and these various agencies will be determined more fully as the case moves forward, these Petitioners secured an initial victory in their case through the Court’s granting of an injunction against the continuation of these warrantless searches, pending the outcome of the case.  This brings immediate relief to the aggrieved hemp retailers, and bodes well for these Petitioners with respect to the Court’s ultimate determination of their claims. 

As such, while the litigation unfolds, the Court, as it has in numerous other actions commenced against the State and its various agencies following the roll-out of New York’s recreational cannabis retail market, has issued this injunctive relief as a provisional remedy which will have a sweeping effect across the state for similarly-situated retailers, and for the State and its enforcement efforts.  

Examining The Court’s Rationale for Its Injunction 

In order to prevail on a request for an injunction, a party must demonstrate a probability of success on the merits of the argument, a danger of irreparable harm in the absence of the injunction, and a balance of equities in the moving party’s favor (see, Camp Bearberry, LLC v Khanna, 212 AD3d 897, 898 [3d Dept 2023]).  Based upon the Court’s analysis of these factors, the Court found that the Petitioners had, in fact, demonstrated that they were likely to succeed in proving the merits of their case, that they would likely suffer irreparable injury if the Court did not intervene by issuing the injunction, and that the balance of equities tipped in the Petitioners’ favor as it relates to the ongoing threat of warrantless searches and seizures in this manner.   

In determining that the Petitioners sufficiently demonstrated the likelihood of success on the merits of their claims, the Court was particularly persuaded by Petitioners’ argument that the warrantless searches of the licensed hemp retailers’ business premises constituted a violation of their Constitutional rights against unlawful search and seizure.   

While the Fourth Amendment of the U.S. Constitution provides protection against unreasonable search and seizure, searches are permissible when authorized by a warrant, or by legislative authority.  The New York State legislature conferred certain authority, under the amended Marihuana Regulation and Taxation Act (“MRTA”), to administrative agencies “to regulate the production, manufacturing and transactions of marijuana – to safeguard its consumption and ensure that the state receives its cut from the sales (MRTA §§ 7, 10, 13 [2]; Cannabis Law §§ 2; 9; 11 [5]; 138-a).” Super Smoke N Save LLC et al. v. New York State Cannabis Control Board (supra). 

The legislature further empowered local municipalities, upon adoption of a local law, “to conduct regulatory inspections of any place of business located within [the municipality]” to ensure that no unlicensed person unlawfully sells cannabis products – which include both hemp products and marijuana products (Cannabis Law § 131 [3] [a] & [c]). The City of New York adopted such a local law under this enabling statute, which empowers the New York City Sheriff’s Office to “conduct regulatory inspections of any place of business . . . where cannabis, [or] cannabis product . . . are sold [and] where no [license] has been issued pursuant to the cannabis law” (Administrative Code of City of NY § 7-552 [a]).  The NYC Sheriff’s Office claims its authority to conduct regulatory inspections, and carry out these warrantless hemp retail store raids, is pursuant to this law. 

Importantly, however, the legislature limited these inspections, in further enacting that “[n]o municipality can conduct regulatory inspections of businesses that appear in the OCM’s statutorily mandated directory of licensees” (Cannabis Law § 131 [3] [b]). The directory of licensees must include all businesses “licensed or registered [by OCM] to engage in retail sales” (Cannabis Law § 11 [13]).  Here, each of the impacted retailers is a duly licensed and registered hemp retail sales operator, whose information appears in OCM’s directory of licensees. 

In light of this limitation of legislative authority, then, the Petitioners’ argument that the New York City law, from which the NYC Sheriff’s Office derives their purported authority to carry out these searches, limits their authority to inspect only those retailers to whom no such license has been issued, and, therefore, only unlicensed individuals or businesses (i.e., not the licensed hemp retailers who incurred these searches and seizures complained of here) may be lawfully subjected to the NYC Sheriff’s Office’s warrantless searches and seizures, appears to have a sound basis in law.  

The Court agreed on this point, rejecting the NYC Sheriff’s Office’s argument that they had the legal authority to conduct these searches under the MRTA, and that the “directory of licenses” referenced only related to adult-use cannabis licenses, excluding hemp licensees from this provision. The Court dismissed this argument as contrary to the plain language of the statute, which contains no distinction between hemp licensees and adult-use cannabis licensees. Consequently, the Court found that businesses that have obtained licenses (whether for hemp or cannabis) are subject to regulatory inspections by OCM, but only OCM.   

Accordingly, the Court determined that the NYC Sheriff’s Office exceeded the scope of their legislative authority in conducting the warrantless searches and seizures of the Petitioners’ licensed hemp retail businesses, and as such, the Petitioners’ Fourth Amendment rights were likely violated by these unreasonable searches and seizures.  By extension, then, the Court’s determination, and its issuance of the injunction, signals that the NYC Sheriff’s Office similarly lacks any lawful authority to conduct such warrantless searches of any business that possesses either a hemp or marijuana license appearing on OCM’s directory of licensees. 

Court Further Finds Manner of Searches’ Execution as Problematic and “Damning”  

The Court addressed directly the problematic nature of the execution of the searches at issue, noting that, qualifying OCM’s statutory authority with the caveat that, “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.”  Even if the court were inclined to believe that the State and relevant agencies named as respondents had the requisite power to conduct warrantless searches, the Court made clear that the search itself, and how it is performed, must still comply with the Fourth Amendment (in that it must be reasonable in its scope and manner of execution).     

The Court questioned OCM’s authority to conduct these searches, in the first instance, noting that the basis upon which the government may circumvent the Fourth Amendment and conduct searches and/or seizures without a warrant, requires that, “(1) there must be a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made; (2) the warrantless inspections must be necessary to further the regulatory scheme; and (3) the statute’s inspection program, in terms of the certainty and regularity of its application, must provide a constitutionally adequate substitute for a warrant”” (City of Los Angeles v Patel, 576 US 409, 432 [2015] [Scalia, J. dissenting, quoting the test set forth in New York v Burger, 482 US 691, 702–703 [1987]).” 

In view of these requirements, Justice Marcelle identified what the Court deemed the “real conflict” of this case as, “whether OCM’s searches of petitioners’ businesses and products aligns with the third prong of the warrantless administrative search test” – that is, the “constitutionally adequate substitute” for a warrant in the “certainty and regularity” of the application of the state’s inspection program, noting the “glaring problem” of a lack of any statutory boundaries.  Indeed, according to the Court, Cannabis Law § 138-1(1) & (2) place none of the required constitutional safeguards on OCM in order to comply with these requirements.  

The Court similarly dispensed with the respondents’ defense of their use of warrantless searches as purportedly permissible under the law, noting that the actual purpose of the searches at issue, purportedly carried out for “regulatory” or “administrative” purposes, appeared to be related not to compliance with licensure, but to the potential discovery of contraband.  Illustrating this point further, the Court highlighted what the respondents failed to do in their “regulatory inspection” – actually inspect the products. Many products seized contained the OCM’s mandated “Certificates of Analysis” (“COA”), which, if examined, would show that the products were presumptively lawful. Inexplicably, the respondents never used the QR codes to check for compliance, performed no on-site testing (except for certain testing for psilocybin, which yielded results showing no evidence of the substance in the tested products), and destroyed the products upon seizure, so that no testing could ever be conducted. The Court found that the searches of the petitioners’ stores, and the seizure of their products, no matter the justification, to be unreasonable, regardless of whether there was a statutory basis for same. 

Moreover, the Court took exception to the “damning” manner in which the searches were executed, particularly in reference to the reports of heavily armed law enforcement presence during these searches, without any evidence of any type of endangerment that would have substantiated the need for such a presence.  Rather, the Court inferred that the presence of so many armed law enforcement officers was intended to intimidate and compel employees and customers into compliance. The Court to further issue with the turning off of surveillance cameras prior to search entry, searches of locations in the premises outside of the sales floor areas (including personal lockers and basements), and the seizure of obviously lawful products. 

Determination of Irreparable Injury and Balance of Equities Supports Granting Injunction 

Following the Court’s determination that Petitioners are likely to succeed on the merits of this argument that these searches violated their Constitutional rights when the issues are more fully litigated, the Court’s consideration of the proposed injunctive relief required that the Court determine that, if not for the issuance of the injunction, the Petitioners may suffer irreparable injury, and, further, that the balance of equities tip in favor of the Petitioners. See Camp Bearberry, LLC v Khanna, 212 AD3d 897 (supra). 

As a Constitutional violation constitutes such an “irreparable injury” under the law – since “a presumption of irreparable injury flows from a violation of constitutional rights” (Agudath Isr. of Am. v Cuomo, 983 F3d 620, 636 [2d Cir 2020]), this “prong” of the analysis was satisfied.   

Further, turning to the third and final “prong” of this analysis, to determine the “balance of equities”, according to the Court, requires a finding that the granting of the requested relief would not interfere with enforcement of the law.  Here, where the impact of the injunction would merely require the respondents to proceed in their enforcement activities with due regard for the Constitution, and not through unreasonable warrantless searches, the Court was similarly satisfied that the balance of the equities tipped in favor of the Petitioners’ prayer for injunctive relief. 

Effect of the Injunction 

As a result of the Court’s Order, an immediate injunction is in effect, as follows: 

The New York City Sheriff’s Office is (1) enjoined from conducting warrantless searches of businesses that appear on the New York State Office of Cannabis Management directory of Cannabinoid Hemp Retail Licenses; (2) required to immediately remove all Notice of Violation signs that it placed on certain petitioners’ businesses; and (3) required to return any and all items seized from certain petitioners, unless illegal to possess by any person (and the New York City Sheriff’s Office timely file a sworn affidavit as to such a claim, including the grounds upon which such item(s) are allegedly illegal to possess). 

The New York State Cannabis Control Board (“CCB”) and New York State Office of Cannabis Management (“OCM”) are: (1) enjoined from conducting warrantless searches of petitioners’ businesses; (2) enjoined from seizing petitioners’ products, or any item, unless a particular product contains unlawful levels of intoxicants verified by testing, or as shown by a certificate of analysis, or if a particular product has no certificate of analysis whatsoever, or the item or product is unlawful for any person to possess under any circumstance; (3) directed that they may conduct reasonable regulatory inspections of retail store space, with no more than two inspectors whom shall not be armed (unless the CCB or OCM have a specific credible documented security concern associated with the business being inspected); (4) directed to immediately remove all Notice of Violation signs that it placed on premises belonging to certain petitioners; and (5) directed to return any and all items seized from certain petitioners unless illegal to possess by any person (and OCM and/or CCB timely files a sworn affidavit as to such claim, including the grounds upon which such item(s) are allegedly illegal to possess). 

Limited Scope of Order – No Protection from Warrantless Searches of Non-Licensed Entities 

Notably, this order is only applicable to licensed entities - the legislature’s ability to authorize “regulatory inspections” of persons and businesses who do not possess licenses issued by OCM is not at issue in this case, and is not addressed in this injunction.  As such, the injunction will have no impact on, and will not impede, the New York City Sheriff’s Office’s ability to carry out its enforcement activities within the parameters of Cannabis Law §131(3)(b), including its authority to search establishments without any licenses, whatsoever.  Nothing in the Court’s Decision and Order will prevent the New York City Sheriff’s Office from conducting raids of businesses without existing hemp or cannabis licenses, as they are not within the purview of this Order. 

This case is ongoing, and the injunction may be modified in the future.  For further information, the Decision and Order in the matter of Super Smoke N Save LLC et al. v. New York State Cannabis Control Board et al., Index No.: 908421-24 (Sup. Ct. of New York, Albany Cty.) is available for viewing in its entirety here.