New Bill Would Fine Landlords for Renting to Illegal Dispensaries

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A new bill introduced would hit landlords who rent to shops selling illegal marijuana with fines up to $10,000.

The bill, introduced in the New York City Council on Thursday by Queens Councilmember Lynn Schulman, would send inspectors to retail stores suspected of selling weed illegally and impose fines on landlords of $5,000 to $10,000 if a retail tenant is still selling weed on second inspection of the property, a penalty Schulman believes will get property owners on board with enforcement of unregulated cannabis sales.

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To avoid the fine, landlords would need to provide proof that eviction proceedings have started since the first inspection, according to the bill.

“Our hope is that this legislation will incentivize landlords to do the right thing and keep our community safe by only leasing commercial space to legal, licensed businesses,” Schulman said in a press conference. “Right now there are approximately 1,600 illegal weed shops throughout the city, so hopefully landlords will get the message.”

Schulman said she believes illegal dispensaries create neighborhood nuisances and often sell products to minors. Eventually, Schulman believes legal weed shops will take their place.

Schulman’s bill comes days after a medical marijuana trade group released a report finding New York’s tax revenue was well behind the amount collected by other states during their first years of legal marijuana sales. The group blamed the low tax collections on the “anemic pace” of granting licenses to open dispensaries, leading to a thriving black market to take its place.

Another bill was introduced Thursday that could impact landlords across the city.

Councilmember Chi Ossé officially submitted his legislation known as the Fairness in Apartment Rental Expenses Act, which he asserts will not cap broker fees but will instead ensure that whoever hires the broker will be the one to foot the bill.

“If a tenant hires a broker to help them find a new home, the tenant will pay for the service. If a landlord hires a broker to help them fill an apartment, the landlord will pay for the service,” a spokesperson for Ossé said in an email. “Additionally, some individuals have approached our office with the concern that this law will simply result in the landlord’s broker costs being passed through to tenants in the form of higher rents.”

But that is still better than tenants having to pay the broker fee in lump sum, the Council member believes.

“While it is possible that tenants will see some percentage of the broker fee realized in their rent, these pass-through costs would necessarily be distributed over the course of their 12- or 24-month lease,” the spokesperson said. “This would alleviate the prohibitively expensive upfront cost that too often prevents New Yorkers from entering a new lease and moving into a new home.”

Mark Hallum can be reached at mhallum@commercialobserver.com.