Enforcement and Penalties
MRTA (Cannabis Law), Article 6, Sections 125, 132, 133, 136, 137, 138-A
Article 6 establishes how New York defines illegal cannabis activity and how enforcement works when rules are violated.
These sections govern civil penalties, license suspension and revocation, prohibited ownership, and the definition of illicit cannabis. Operators encounter these rules any time compliance breaks down, ownership is questioned, or products fall outside the regulated system.
What This Covers
- Activities that are illegal without a license
- How civil penalties are calculated and applied
- When licenses can be suspended or revoked
- What qualifies as illicit cannabis
- Who is prohibited from owning or participating in cannabis businesses
General Prohibitions
General Prohibitions and Restrictions (Section 125)
It is unlawful to cultivate, process, distribute, sell, or deliver cannabis in New York without the specific license, registration, or permit required by law.
Key rules include:
- There is no allowance for test runs or soft openings
- Temporary sales without an active license are prohibited
- Pop-ups, off-premises sales, and unregistered inventory movement are violations
If an activity is not explicitly authorized under your license, it is prohibited under this section.
Operating even once outside your license scope can trigger seizures and enforcement action.
Civil Penalties
Penalties for Violation of This Chapter (Section 132)
Civil penalties may be assessed:
- Per violation
- Per day the violation continues
This means a single unresolved issue can generate multiple penalties over time.
Penalties escalate based on:
- Severity
- Repeat violations
- Failure to correct issues after notice
OCM may impose penalties alongside product seizures, suspensions, or other enforcement actions.
License Suspension and Revocation
Revocation of Registrations, Licenses, and Permits (Section 133)
The State may suspend or revoke any cannabis-related authorization for cause.
Grounds include:
- Fraud or false statements
- Unsafe or noncompliant conditions
- Missing, falsified, or incomplete records
- Repeated violations
- Operating outside license scope
Operators are entitled to:
- Notice
- An opportunity to respond
- A final determination
Revocation immediately halts operations and commonly results in:
- Lease defaults
- Loss of sellable inventory
- Termination of vendor and supplier contracts
Illicit Cannabis
Illicit Cannabis (Section 136)
Cannabis is considered illicit if it is:
- Unlicensed
- Untested
- Untracked
- Untaxed
- Otherwise outside the regulated system
If an operator cannot prove lawful origin, testing, and tracking, the product is treated as illicit regardless of appearance.
Illicit cannabis is subject to:
- Seizure
- Destruction
- Civil enforcement penalties
This section is the statutory basis for enforcement actions against unlicensed retailers and distributors.
Prohibited Ownership and Participation
Persons Forbidden to Traffic; Certain Officials Not to Be Interested (Section 137)
Certain individuals are prohibited from:
- Owning
- Managing
- Financing
- Participating in cannabis operations
Specific public officials are also barred from holding direct or indirect interests.
For operators, this means:
- A single prohibited owner can invalidate an application
- Discovery of a prohibited owner after licensing creates revocation risk
- Ownership disclosures must be accurate and complete
Civil Enforcement Actions
Action for Unlawful Business Practices Relating to Cannabis (Section 138-A)
The Attorney General and OCM may bring civil actions against unlawful cannabis businesses.
Available remedies include:
- Court injunctions
- Fines
- Product seizure
- Seizure of proceeds
- Shut-down orders
This authority is used to rapidly close repeat violators, including illicit retailers and unlicensed manufacturers.
What Operators Usually Miss
- Penalties accrue per day, not per incident
- One prohibited owner can collapse an otherwise valid license
- Illicit status applies even if product appears compliant
- Enforcement can combine fines, seizures, and license action
When This Comes Up
- Inspections and audits
- Ownership reviews
- Product traceability checks
- Complaints or enforcement sweeps
- License renewal or transfer
What Happens If You Ignore This
- Civil fines
- Product seizure and destruction
- License suspension or revocation
- Forced shutdowns
- Long-term ineligibility for future licenses
Related MRTA Article 6 Section Pages
Source Material
