Victory for Hemp Retailers: New York Supreme Court Rebukes Overreach by State Agencies

Victory for Hemp Retailers: New York Supreme Court Rebukes Overreach by State Agencies

In a landmark ruling, the New York Supreme Court delivered a decisive victory for hemp retailers targeted by the overreach of state regulators and law enforcement. This case, Super Smoke N Save LLC et al. v. New York State Cannabis Control Board et al., has significant implications for licensed hemp businesses and underscores the importance of constitutional protections even in tightly regulated industries. Below, we unpack the court’s decision, the egregious actions that led to this ruling, and its implications for the hemp industry. Thanks to my colleague Joshua S. Bauchner of the Mandelbaum Barrett PC law firm for his good work on behalf of his clients and the hemp industry.  

What Happened?

The petitioners in this case were licensed hemp retailers operating legally under Cannabinoid Hemp Retail Licenses, namely, Super Smoke N Save LLC, Two Strains Cannnabis Company LLC, Brecken Gold Athletics NYC LLC, Breckenridge Cafe NYC LLC, and 100 North 3rd LTD dba 7 Leaf Clover. Despite their compliance with state regulations, they found themselves subject to warrantless raids, baseless product seizures, and public defamation orchestrated by the New York State Office of Cannabis Management (OCM) and the New York City Sheriff’s Office. The court’s ruling highlighted several stunning and alarming actions by the authorities:

• Warrantless Raids: Regulators and law enforcement, often accompanied by numerous armed officers, conducted unannounced inspections of licensed businesses without judicial warrants.
• Unlawful Seizures: Products worth thousands of dollars were confiscated without testing or verifying their legality. In some instances, seized products were destroyed without due process and before they were ever tested. 
• Public Defamation: Notices were affixed to storefronts, falsely labeling businesses as selling illicit cannabis. These notices severely damaged the reputation and financial stability of the targeted businesses.
• Disregard for Compliance Evidence: Certificates of Analysis (COAs) and other compliance documentation were ignored during inspections, further undermining the legitimacy of the enforcement actions.

Legal Concepts Supporting the Ruling

The court’s decision, which was broadly favorable to the hemp industry, rested on foundational constitutional principles, particularly the Fourth Amendment’s protection against unreasonable searches and seizures. Here are the key legal concepts that shaped the ruling:

1. Fourth Amendment Violations: The court emphasized that warrantless searches are “per se unreasonable” unless they meet narrowly defined exceptions. The administrative search exception relied upon by the respondents (ie, the Sheriff and OCM) requires clear statutory boundaries to limit the discretion of inspecting officers. The court found that these safeguards were glaringly absent.
2. Exceeding Statutory Authority: Notably, the court ruled that the Sheriff’s Office had no legal authority to conduct inspections of licensed hemp businesses. Under New York’s Cannabis Law, such inspections are the exclusive purview of OCM, and even OCM’s authority is subject to constitutional limitations.
3. Unreasonable Execution of Searches: The court condemned the aggressive tactics employed during inspections, including the use of armed officers, turning off surveillance cameras, and seizing products without testing. These actions were deemed excessive and inconsistent with the administrative purposes claimed by the respondents.
4. Irreparable Harm: The court recognized that the constitutional violations inflicted grave and immediate harm on the petitioners, including loss of revenue, reputational damage, and disruption of business operations. This justified the issuance of an injunction.

Key Rulings and Conclusions

The court’s decision issued several important directives and conclusions:

• Injunction Against Warrantless Searches: Both the OCM and the Sheriff’s Office are enjoined from conducting warrantless searches of businesses listed in OCM’s directory of licensed hemp retailers.
• Return of Seized Products: Authorities must return all seized products unless they can provide specific evidence that the items are illegal to possess.
• Limitations on Inspections: Future regulatory inspections must be reasonable in scope, limited to retail spaces, and conducted by no more than two unarmed inspectors unless there is documented evidence of a credible security threat.
• Removal of Defamatory Notices: Notices falsely labeling businesses as engaging in illicit activities must be removed immediately.

The ruling affirms that regulatory enforcement must adhere to constitutional protections and statutory limits, even in industries subject to intense oversight.

Implications for Hemp Businesses

This decision sets an important precedent for hemp retailers in New York and beyond. It sends a clear message to regulators: constitutional rights cannot be trampled in the name of enforcement. Additionally, it puts non-regulatory law enforcement agencies, such as the Sheriffs, on notice that warrantless raids of licensed businesses will not be tolerated. For business owners in the hemp industry, this ruling provides a roadmap to challenge overreach and hold authorities accountable. 

Key takeaways for hemp businesses include:

1. Document Compliance Meticulously: Ensure that all products have up-to-date COAs and that compliance records are readily accessible. This can provide critical evidence in the event of a dispute.
2. Know Your Rights: Familiarize yourself with state and federal laws governing inspections and seizures. Engage legal counsel to assert your rights when faced with regulatory overreach.
3. Challenge Unlawful Actions: This ruling demonstrates that courts are willing to rein in agencies that exceed their authority. Do not hesitate to seek judicial relief if your rights are violated.

A Step Forward for the Industry

This ruling is a victory not just for the petitioners but for the entire hemp industry. It underscores the need for balanced regulation that protects public safety without undermining the rights of law-abiding businesses. This is best summed up by the Petitioners’ attorney, Josh Bauchner, who told me: “We are grateful to the Court for standing up against government overreach and enforcing our client’s constitutional rights. We want nothing more than for New York to have a safe and regulated cannabis marketplace – including both marijuana and hemp – and only ask that our clients be treated with the respect afforded lawfully operating State-licensees and not targeted along with unlawful, unlicensed marijuana stores.“

As attorneys representing hemp businesses, we at Kight Law view this decision as a milestone in establishing fair and constitutional enforcement practices. For the hemp industry to thrive, regulators must act within the bounds of the law, and businesses must remain vigilant in defending their rights. Here is a copy of the ruling:

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This article was written with the assistance of AI. 

January 15, 2025

Rod Kight is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can schedule a call with him by clicking here.