As legal cannabis dispensaries slowly open across the state, the challenges in competing with those selling illegally is already impacting business, a local owner says. While police and municipalities across the state continue to crack down on the illegal sale of cannabis, they're finding it harder than ever.  

Illegal shops have forced a bipartisan call by state officials for stricter punishment of so-called “sticker shops,” which are often selling the drug through what officials say is a loophole where customers buy innocuous products and receive the item and cannabis.

For legal shop operators like Damien Cornwell, who opened his doors at Just Breathe just two months ago, the sticker shops are negatively impacting business, which he says is otherwise going well.

With products ranging from marijuana flowers to pre-rolls and edibles, the Binghamton shop is attracting customers from all over the state, he says.

“I never thought this would be the case, but we almost became a border town because in the absence of other stores, people came from all over to come to Binghamton,” said Cornwell. “And I guess it was kind of an unintended surprise. We thought when we opened up, we would just be one of many. [It] ended up we were being we were one of only one.”

Cornwell, though, says while business has been going well, he, like many other legal dispensaries in New York, have been hampered by the illicit market.

According to Chris Alexander, executive director of the New York Office of Cannabis Management, millions of dollars of adult-use cannabis have been seized from shops across the state selling it illegally.

"We pushed to end prohibition because we thought legalization would be a better way to operate,” said Alexander. “But that requires responsible business operators. We have that. We’re bringing those folks online, but we have to get rid of those folks that are operating in an irresponsible way.”

"The threat of the illicit market doesn't just affect me, but it affects all the cultivators in the state and the fact that they are not selling their products to enough stores," Cornwell said. "On top of that, we can't sell as much because there are many, many people that still buy from illicit stores."

Cities like Binghamton, which is home to one of the first legal cannabis retailers in the state, have found it hard to crack down on these illegal sales.

"It seems like as soon as one of these places shuts down, another one crops up. And there really needs to be some material changes at the state level,” Binghamton Mayor Jared Kraham said.

In the Southern Tier, Johnson City police recently shut down a store for an alleged gifting scheme, where marijuana was illegally given out in exchange for the purchase of another product, often something as simple as a sticker.

The operators of one pop-up shop were ticketed and charged with possession after illegally operating in the village.

"It sprung up over the course of a weekend. And we just happened to notice it there all of a sudden. And so it was brought to our attention and we immediately started formulating a plan to look into it and take proper action,” said Brent Dodge, Chief, Johnson City Police Department.

From a law enforcement perspective, Dodge says they can execute search warrants or bring on undercover operations if they suspect a business is participating in the illegal gifting scheme.

His concerns lie in the uncertainty and potential danger they’re posing to the community.

"We don't know what kind of products, you know, these pop-up shops are selling. Has any kind of state authority looked into their looked into their product or federal regulatory agencies looking at the product? And what are our citizens getting from these places?” said Dodge.

The sticker shops are now popping up all over the state, taking business away from business owners like Cornwell. The illegal operations often entice customers with clever names or marijuana signage, selling them stickers and gifting them cannabis.

"In many cases, the police's hands are tied because of this gray area of the law where cannabis is been legalized, decriminalized, but the sale of it in potentially large volumes can't necessarily be enforced either. So we have to get creative,” said Kraham.

In Binghamton, that means tackling the issue from the code enforcement side.

One shop was shut down earlier in the year after failing to meet the regulations and code to operate a business.

"These stores that open are not approved as businesses to operate in the city of Binghamton. And what that does is it doesn't just enforce the law in terms of zoning against the operator of the business. It also has to do with the landlords,” said Kraham.

State officials are also concerned.

"They're definitely also selling products that are attracted to minors,” Alexander said. “They’re selling products to minors. Both of which are very concerning, against the penal law, against the cannabis law and things that we just can't stand here in New York.”

Those selling the product illegally are often charged with unlawful possession, which now carries a $100 fine. Gov. Kathy Hochul is calling for stricter penalties for those selling illegally. Violations could lead to fines up to $200,000.

For Cornwell, it’s all about holding everyone to the same standard.

"If I was a restaurant, could I sell 10-day-old meat? Absolutely not. That's not personal. That's just common sense. And that's just the law of the land,” he said. “And can I sell something that's not inspected or doesn't have a stamp of approval? Absolutely not. So why would this be any different.”