One of the more than two dozen alleged violators whom the New York Office of Cannabis Management (OCM) sent cease-and-desist letters to earlier this month is carrying on with business as usual.

Empire Cannabis Club, on Eighth Avenue in Chelsea, was one of the establishments OCM regulators warned Feb. 8 that “gifting,” where customers purchase non-cannabis items or services such as a club membership and then are provided cannabis as part of that sale, is illegal under current state law.

RELATED: New York Cannabis Regulators Send Cease and Desist Letters to Unlicensed Businesses

In the letter, OCM officials claimed to have the law on their side under the state’s Marijuana Regulation and Taxation Act (MRTA), signed by former Gov. Ander Cuomo in March 2021.

But Empire Cannabis Club owner Lenore Elfand doesn’t see it that way, CBS News reported.

“What they are actually doing is making the medical market the recreational market before people like us even get a chance to get into it,” she said. Elfand also told the news station that not only is Empire Cannabis Club going to remain open, but the business plans to expand to a third location in New York City.

Those indications come after OCM officials said alleged violators who fail to cease and desist current operations would threaten their ability to legally participate in the state’s forthcoming adult-use market.

Under MRTA, legal, licensed and taxed sales of adult-use cannabis can begin only after the state approves regulations set forth by OCM’s five-member Cannabis Control Board (CCB). The unlicensed sale of cannabis is illegal and subjects violators to substantial fines and possible criminal penalties, the warning letter stated.

Tremaine Wright, who was appointed the CCB chair by Gov. Kathy Hochul in September 2021, said in a statement earlier this month that the alleged violators “must stop their activity immediately, or face the consequences.”

As written in the legislation, MRTA originally laid out an April 1, 2022, timeline for a possible launch date for the adult-use market. However, with the former governor’s inaction on nominating regulatory heads, Wright said four months ago that New York’s first adult-use cannabis licenses likely won’t be issued until 2023.

Empire doesn’t intend to wait.

The club’s customers pay daily or monthly memberships for access, and then they are “gifted” cannabis products. New Yorkers can possess up to 3 ounces of cannabis per MRTA.

David Holland, president and co-founder of the New York City Cannabis Industry Association, called it a dressed-up operation, CBS reported.  

“People have come up with ideas that if they do a third-party-type transaction, like ‘I’ll [sell] a T-shirt for $400, and I’ll give you a free bag of cannabis with that,’” he said. “It’s a disguised transaction.”

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