Background
Petitioners are licensed retailers of cannabinoid hemp products — items containing less than 0.3% delta-9 THC, the psychoactive compound in cannabis — that are lawfully sold under New York’s regulatory scheme. They brought this CPLR Article 78 proceeding to challenge New York’s Cannabis Law inspection regime, which authorizes the Cannabis Control Board (CCB), the Office of Cannabis Management (OCM), and — following 2024 budget legislation — local enforcement agencies including the New York City Sheriff’s Office to conduct warrantless inspections of cannabis and hemp retailers.
Petitioners argued that these warrantless inspections violated the Fourth Amendment’s warrant requirement, both facially and as applied to their licensed businesses. The Supreme Court, Albany County agreed, granted a preliminary injunction prohibiting the inspections, ordered removal of notices of violation, and required the return of seized property. Both the state respondents (CCB, OCM) and the city respondents (NYC Sheriff’s Office) appealed. This Court temporarily stayed portions of the injunction pending appeal.
The Court’s Holding
The Third Department reversed the preliminary injunction, holding that Supreme Court abused its discretion in granting it because petitioners failed to demonstrate a likelihood of success on the merits of their facial constitutional challenge.
The court analyzed New York’s cannabis inspection scheme under the three-part test from New York v. Burger (482 US 691 [1987]), which governs administrative searches of closely regulated industries. The court assumed, as petitioners conceded, that (1) the state has a substantial interest in regulating cannabis, and (2) warrantless inspections are necessary to further the regulatory scheme. The contested issue was whether the scheme provides “a constitutionally adequate substitute for a warrant” — the third Burger prong.
The Third Department held that the Cannabis Law and its implementing regulations, taken together, satisfy the third prong. Key features: (1) as a condition of licensure, applicants must consent in advance to regulatory inspections; (2) the statute notifies licensees their business premises and associated vehicles are subject to inspection; (3) inspections beyond defined parameters require probable cause; (4) the regulations identify specific categories of items subject to examination; (5) OCM cannot break into locked spaces — only administrative penalties follow non-cooperation; and (6) local-law inspections are limited to business hours and to businesses lacking proper OCM licensing.
The court also rejected petitioners’ argument that the inspections were a pretext for criminal enforcement. A lawful administrative search does not become unconstitutional merely because law enforcement participates or because the search uncovers evidence of criminal activity. Finally, as-applied challenges were premature because petitioners had not yet exhausted available administrative remedies before seeking judicial review.
Key Takeaways
- New York’s cannabis regulatory inspection scheme satisfies the Fourth Amendment’s administrative search exception — cannabis is a closely regulated industry and the Cannabis Law plus 9 NYCRR provide a constitutionally adequate substitute for a warrant under New York v. Burger.
- Licensed cannabis and hemp retailers consented to regulatory inspections as a condition of obtaining their license; they cannot challenge the facial validity of that scheme through a preliminary injunction without overcoming the strong presumption of constitutionality.
- Police participation in an administrative inspection, or the discovery of criminal evidence during one, does not render the search unconstitutional.
- As-applied Fourth Amendment challenges to cannabis inspections are premature before administrative review is exhausted.
Why It Matters
New York’s legalization of adult-use cannabis in 2021 (the Marihuana Regulation and Taxation Act) created a large licensed retail sector that is still maturing — and a parallel enforcement challenge against unlicensed sellers. This decision substantially strengthens the state’s hand in that enforcement effort by confirming that warrantless administrative inspections of licensed cannabis and hemp retailers are constitutionally permissible, both by OCM and by local authorities like the NYC Sheriff.
For cannabis retailers and their counsel, the ruling means that refusing an administrative inspection creates administrative — not constitutional — remedies. Operators cannot count on the Fourth Amendment to block routine inspections. The practical path for operators who believe an inspection is being conducted improperly is to challenge the manner of the search through administrative review, not to seek a preliminary injunction in court. For the broader New York regulated-industry bar, the decision also confirms the continuing vitality of the administrative search exception for the state’s growing cannabis industry, which will now be subject to routine regulatory oversight without the warrant requirement.