27 unlicensed cannabis businesses that received shutdowns in recent weeks are suing the City of New York. In a complaint filed on Wednesday, June 11th, the companies are joining together in a class-action lawsuit claiming that “Operation Padlock to Protect,” the enforcement initiative taken by Mayor Eric Adams’ administration, is unconstitutional. 

What Is Moon Rocket Inc. v City of New York? The Lawsuit Against Operation Padlock

Moon Rocket Inc. et al v City of New York et al alleges that Operation Padlock violates the businesses’ right to due process, because the policy triggers an automatic shuttering of any entity deemed to be selling illicit cannabis. Mayor Adams announced the operation on May 7th, following Governor Kathy Hochul’s enactment of the SMOKEOUT Act, which authorized local municipalities to use multiple agencies in enforcement against unlicensed cannabis shops. 

Notably, the response in New York City has been prolific, given that the Big Apple has housed nearly 3000 illicit retailers at various points in the past few years. The New York Times reported that between May 7th and June 3rd, inspection teams led by the City Sheriff’s Office closed 311 stores, seized $10.4 million worth of products and issued $23.4 million in fines. 

Why Can Operation Padlock And The NYC Sheriff's Office Immediately Shut Down Unlicensed Cannabis Businesses?

In Moon Rocket’s 71-page complaint, plaintiffs’ attorney Lance Lazzaro details how Operation Padlock allows the Sheriff’s Office and New York City Police Department to seal businesses immediately upon discovery of any suspected illegal cannabis. 

“Upon issuing a summons to a business, charging New York City Administrative Code § 7-551(a), the Sheriff’s Office makes an unilateral decision, with no prior judicial review or even administrative oversight, as to whether the business poses an imminent threat to the public’s health, safety, or welfare,” Lazzaro writes. “Upon making such a finding, that a business is an imminent threat to the public’s health, safety, or welfare, New York City Administrative Code § 7-552(b) permits the Sheriff’s Office, again, without any prior judicial finding, assessment, or determination, to issue a sealing order that forces the business to immediately close. After receiving such a summons and sealing order, the business is entitled to a hearing, within five business days, to determine the merits of the summons and the validity of the sealing order; however, the promised hearing is solely administrative, before a hearing officer with OATH, and not a judge presiding in an actual court.”

What Is New York's OATH Agency, And Why Don't Administrative Hearings Work For Unlicensed Cannabis Businesses?

“OATH” refers to the City’s Office of Administrative Trials and Hearings, the agency tasked with handling administrative hearings to determine whether a business has the right to reopen after an enforced shutdown. However, as the complaint describes, under the SMOKEOUT Act and Operation Padlock, the Sheriff’s Office is still the final arbiter regardless of what OATH’s eventual decision may be. Lazzaro notes that representatives from the Sheriff’s Office are generally not present during the hearings.  Even when such agents are notified with a request to appear, this generally delays the process and causes the business to remain closed for another week or more. And if the presiding OATH officer decides that a business closure could reasonably be overturned, the Sheriff can ignore the directive.

The latter situation has occurred for several of the plaintiffs who joined the class-action suit, according to the attorney. Interestingly, the Sheriff’s Office has not yet made any of its final determinations on sealed cannabis shops public, and has in fact declined requests to do so.

In a statement to Gothamist, Lazzaro asserted, “The locking of stores should never be allowed without a hearing being conducted, and the hearing shouldn't be done at OATH, which is controlled by the mayor's office. It should be done in a court of law where you have an impartial judge.”

New York City's Next-Generation War On Drugs?

Several state-licensed cannabis retailers have reported that the enforcement actions taken by Operation Padlock have helped their business, allowing them to reach consumers without the distraction of illicit neighbors. But other industry stakeholders and community advocates are concerned that the moves are far too reminiscent of the damaging criminalization policies during the War on Drugs. Meanwhile many attorneys, including Lazzaro, continue to raise the alarm about infringements about constitutional rights, believing that Operation Padlock blurs the lines between unlawful search and seizure. 

This story is ongoing. Tell us your thoughts about Operation Padlock and New York City's illicit cannabis businesses by reaching out at @honeysucklemagazine on Instagram.


Featured image: An illicit cannabis notice on a shuttered business. Screengrab via CBS News.