New York Investigations and Enforcement Actions Ramp Up with OCM and TPB

OG Article By Michael McQueeny, Jeffrey Schultz Watch Today's LIVE Episode on YouTube, X, and Rumble

July 18, 2025

The New York Office of Cannabis Management (“OCM”) recently took enforcement action against a retailer and manufacturer, resulting in a fine and heightened monitoring for the licensed operators. However, what is most notable is the role played by OCM’s Trade Practices Bureau (“TPB”), its power and scope of investigations, and the prospect of closer regulatory scrutiny and greater enforcement action resulting from similar investigations. 

Trade Practices Bureau

By way of brief background, the TPB was formed for the purposes of investigating the ethical standards, competition policies, and regulatory compliance of licensed cannabis businesses in New York. Operating within OCM’s Office of General Counsel, TPB focuses on uncovering complex or covert actions that purport to undermine New York’s cannabis market structure and social equity priorities. TPB relies heavily on interviews (sworn and unsworn), investigatory hearings, and depositions, and looks beyond surface-level noncompliance issues to find deeper wrongdoing. TPB is staffed with a dedicated team of investigator attorneys, investigator-inspections, and data analysists tasked with: (a) conducting in-depth investigations into potential violations of Cannabis Law and regulations; (b) utilizing the agency’s authority to subpoena witnesses and administer oaths; and (c) analyzing data and market trends to proactively identify threats to industry integrity. 

Recent Investigations and Enforcement

On July 16, 2025, OCM announced a settlement with a dispensary and processor that resulted in the imposition of a $50,000 civil penalty (per operator), along with 12 months of enhanced compliance monitoring including additional unannounced inspections, new standard operating procedures and enterprise-wide training on New York State prohibitions against cross-tier operations and arrangements. This settlement resulted from an investigation that purportedly found that the licensees engaged in prohibited cross-tier conduct, including unauthorized branding and promotion of cannabis products under a proprietary dispensary brand, a violation of cannabis laws, and regulations. Importantly, both licensees had admitted that sufficient evidence exists to sustain OCM’s finding of violations. 

Importantly, the recent settlement is not the first such public evidence of increased investigations. For instance, OCM has commenced investigations into larger cannabis brands working with licensed processors in the marketplace. In particular, on April 7, 2025, surprise audits were conducted at a licensed processor on Long Island. This investigation remains ongoing. OCM has also issued broad sweeping requests for quarantine, including as recently as April 23, 2025, wherein approximately $10 million worth of vaporizers, pre-rolls and other products were ordered quarantined. Allegations include that OCM is investigating the source of cannabis oil and whether it originated from outside legal channels.

Key Takeaways for Brands, License Holders, and TPIs

For licensed operators, awareness of both OCM and TPB’s increase in investigations and enforcement against license holders is just as important as the underlying fines and penalties imposed. TPB’s investigatory aims are not limited to cross-tier violations, but also, fraudulent activity, assessment of predatory agreements, as well as other regulatory violations. Given OCM’s relatively hands-off approach to enforcement during the first several years of the program – including, but not limited to, OCM’s Interim Guidance Regarding Changes to TPIs dated August 27, 2024 – recent enforcement suggests that OCM and TPB are finally turning back to the task of reviewing and assessing contracts and agreements between and among license holders, as well as among individual license holder’s true parties of interests. 

While the prospect of investigation by the TPB exists for any licensed businesses in New York, it is also important to bear and mind the rights and remedies available to licensed businesses. Indeed, Part 133 of OCM’s regulations identifies the nature and scope of investigatory powers of OCM (as well as corresponding limits), as well as license holders’ individual rights and remedies. For instance, Part 133 identifies the time and manner within which license holders may respond to allegations of regulatory violations, the ability to request adjudicatory hearings, as well as the manner and fashion that those adjudicatory hearings may be carried out. Again, understanding the context of OCM and TPB enforcement as important as understanding a license holder’s rights and remedies once those investigations and/or notice of violations have commenced. 

In any regulated industry, the prospect of regulatory enforcement, violations, and challenges is always present, and, in many instances, a business structuring transactions appropriately under the law in the first instance and preparing in advance for such questions and inquiries are the best defense. However, understanding the scope of any investigation and responding appropriately (and timely) is critical to any license holder subject to additional and/or heightened scrutiny, as well as working with knowledgeable and seasoned professionals in responding to such inquiries. 

As the most recent settlement indicates, while the cost of compliance is always high, so are the corresponding costs and risks of non-compliance and regulatory enforcement.