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The Office of Cannabis Management has mistakenly accused a decades-old event and catering business as “engaging in unlicensed cannabis sales,” and the agency is refusing to acknowledge or retract its error.
“I’m just a small business,” said Nicole Reynolds, who runs the Ithaca-based LakeWatch Inn and has spent the past six days calling and emailing the OCM to provide evidence that LakeWatch is not selling cannabis, nor is it associated with anyone selling cannabis.
“They’re unwilling to listen to anything,” she said. “I have yet to be put in touch with a supervisor or any member of enforcement.”
LakeWatch’s name was blasted across more than a dozen news outlets over the past week after the OCM made public 66 cease and desist letters it sent months ago – with LakeWatch being on the list. The agency said it sent these letters to businesses it determined were operating illegally and undermining the legal market.
“I’ve had to calm down two brides and two corporate hosts since Friday,” Reynolds told NY Cannabis Insider. “I’m being accused of doing something illegal, and I’m getting no response back from the organization who’s labeled me that way.”
Reynolds has also reached out proactively to the New York State Liquor Authority to make sure she’s not at risk of losing her liquor license, which she said is coveted.
To be clear, LakeWatch is not selling marijuana: Reynolds briefly entertained the idea of hosting a cannabis-centric farmer’s market in February, but canceled the event once she discovered the host’s intent to sell.
Social media posts, news articles and a letter from the Tompkins County Sheriff sent to the OCM on Friday back up Reynolds’ claim, but the agency doesn’t appear to be listening.
In fact, Reynolds said she knew nothing about the cease and desist letters until contacted by NY Cannabis Insider last week. It turns out the OCM sent the letter to the wrong address – and never attempted to contact Reynolds separately.
“I’m tired of the ineptitude of this government organization that didn’t fact-check,” she said.
The OCM based its “investigation” into LakeWatch entirely on inaccurate social media posts and an outdated news article.
“This is horrific,” said Frederika Easley, the director of strategic initiatives at The People’s Ecosystem, a BIPOC cannabis company that advocates for social and economic equity, and sustainable cannabis policies.
“We understand that the OCM and CCB is comprised of people, and people make mistakes,” said Easley, who also co-chairs the New York City and Hudson Valley Cannabis Industry Association’s social equity committee.
“However, when those mistakes are pointed out, there has to be humility and there has to be an intention to right wrongs — and this is one of the wrongs that needs to be righted.”
NY Cannabis Insider sent OCM a list of questions about its investigation into LakeWatch on Monday: What legwork went into verifying the catering company was guilty of illegally selling cannabis? How did the agency conduct all of its investigations? Does the OCM now believe it was mistaken in naming LakeWatch, and does it plan to rectify the situation in any way?
The OCM did not answer any of the questions.
Instead, a spokesperson sent a brief statement that said, “We deeply appreciate all recipients of these letters who ceased to participate in any unlicensed cannabis sales. OCM’s intent is to discourage any unlicensed sale of cannabis and we are thankful to those who cooperated.”
What actually happened
Reynolds said she was approached in December to host an “informative gathering” for people to learn about the safe usage of medicinal and recreational cannabis. She said she asked whether there would be cannabis samples or sales at the event, and was assured that neither would happen.
“What I was remiss in my knowledge is that you can apparently purchase a sticker, which is then redeemable, or gifted, with product – and that was the intention of this group,” Reynolds said.
“As soon as that was brought to my attention by the Tompkins County Sheriff and the District Attorney, we cut ties with them immediately,” she said.
A LakeWatch Facebook post in February backs this up, where Reynolds wrote, “contrary to what is still being promoted, we will not be teaming with the Canna Market for the Cannabis Expo set for 2.26.22. There were a number of licensing concerns brought to our attention that make this an event that we just CANNOT partake in.”
The market eventually took place at the Cherry Arts space in Ithaca – a recipient of state grant funding.
That was the end of the ordeal – until last week, when Reynolds learned from NY Cannabis Insider that she was included on the OCM’s cease and desist campaign.
Since then, she has made multiple phone calls to OCM and talked to several customer service representatives. Tompkins County Sheriff Derek Osborne also sent a letter to OCM on Reynolds’ behalf, stating “The LakeWatch Inn is a constant and respected business in our community and I have no concerns of impropriety.”
To date, Reynolds has not received a call back from an OCM supervisor or any acknowledgement of the agency’s error.
“When something like this goes to press, and I’m included with businesses who are doing something illegal, I’m going to be gossiped about, I’m going to have clients call me and suggest that they shouldn’t do business with me,” Reynolds said.
“And then the potential fallout with Taxation and Finance and the State Liquor Authority: If they too believe that my business is involved in illegal behavior, then it’s just going to trickle down to me,” she said.
The larger issue
In a press release last Thursday, OCM leadership made clear these letters were directed at businesses that “falsely depict their operations as legal cannabis dispensaries,” and cited health, safety, and lost tax revenues as reasons for going after the establishments.
The strategy, however, has some experts concerned it may not be the right tactic.
David Holland is a partner in the Massachusetts and New York-based law firm of Prince Lobel & Tye and executive and legal director of Empire State NORML. He told NY Cannabis Insider that OCM’s rationale for enforcement doesn’t hold water.
“These alleged unlawful sales do not actually present any greater public health threat than the gifting of the very same cannabis between individuals, which is specifically allowed under the MRTA and the Penal Law,” Holland said.
“Further, it is not readily clear how such alleged unlawful sales of unregulated cannabis could undermine a legal market that has yet to launch. To the extent that there are disguised unlawful sales, many of these gray market operators are paying local and state sales tax on the goods and items sold.
“So the perceived harms seem obtuse in the greater picture of things.”
Easley, who also serves on the Council for Federal Cannabis Regulation’s DEI committee, agrees, and questions the enforcement approach.
“If the priority is to protect New Yorkers from known risks and to strengthen the budding legal market, the question is, is the stick approach that is being employed through cease-and-desist issuances appropriate?” she told NY Cannabis Insider. “Is fear and punitive threats the way to go?”
She continued:
“The goal must be to successfully transition legacy and gray market operators into the regulated industry by minimizing process and financial entry barriers and perhaps by providing ongoing support services for social equity and/or small business owners,” she said.
“The growth and sustainability of the regulated market depends on it.”
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