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Empire Cannabis Club is the target of stepped-up state efforts to crack down on unlicensed shops.
By Ashley Southall and Michael D. Regan
State tax agents moved in on Empire Cannabis Club’s locations in New York on Tuesday.
New York Police Department officers and state tax agents raided one Manhattan dispensary and were thwarted from raiding another on Tuesday in an exercise of their newly expanded powers to crack down on unlicensed cannabis shops.
The enforcement teams descended late Tuesday morning on the Chelsea and Lower East Side locations of the Empire Cannabis Club — one of the city’s biggest operators of unlicensed dispensaries — to conduct what an official at the Chelsea site described as a routine inspection. After a standoff that lasted several hours, tax agents were seen taking seized products out of the dispensary on Eighth Avenue in Chelsea and loading them into a red van.
Jonathan Elfand, one of the four owners of Empire’s five outlets, said the police had pushed their way behind him into the Chelsea store after he arrived in the afternoon, then briefly detained him.
At the Lower East Side store on Allen Street, his sister, Lenore Elfand, a co-owner, said the authorities refrained from raiding her store after she recorded a video saying she would not consent to a warrantless search. But she said tax agents gave her and the store manager tickets ordering them to appear in court on a charge of obstruction.
The Police Department said tax officials summoned officers to the Allen Street dispensary, but they left without conducting any enforcement.
The Police Department raided the Empire Cannabis Club in Chelsea and confiscated bags of products from the unlicensed dispensary.
The state’s decision to go after Empire marked a significant escalation in its efforts to clamp down on the unlicensed dispensaries that have popped up by the hundreds since lawmakers legalized cannabis in 2021. The raid also sets up what is likely to be a closely watched court battle over whether businesses like Empire have legal standing under the cannabis law.
“We’ve known this was coming for a long time, and we’ve been waiting for it,” Ms. Elfand said.
The state has been slow to issue regulations and licenses for legal dispensaries, and there are only 19 operating statewide.
Empire, whose patrons pay a membership fee to access its cannabis supply, had rebuffed warnings from regulators that its business model was not legal, arguing that it was a concierge service and not a seller.
But state lawmakers disagreed and passed legislation this year saying paid membership for access to cannabis still amounted to illegal sales. The measure, which Gov. Kathy Hochul signed into law in June, also stiffened fines for violators and allowed tax regulators to bring criminal tax fraud charges. In the first two weeks after the law went into effect, regulators inspected 31 businesses and seized 1,000 pounds of smokable flower, edibles and vapes worth between $9 million and $11 million, the governor said at a news conference last month. Steve Zissou, Empire’s lawyer, denounced the enforcement actions on Tuesday and maintained that Empire was doing nothing wrong. He said the agents were refused entry after they arrived “without warning and without a warrant.” The agents resorted to force to get inside the Chelsea store, Mr. Elfand said, and cleared shelves of smokable flower and infused edibles like gummy bears. Within moments of their departure, the outlet was back up and running; a steady stream of customers had lined up at the locked door. A spokesman for the governor did not respond to calls seeking comment on Tuesday, and a spokesman for the Department of Taxation and Finance did not provide comment.
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