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Empire Cannabis Club one of many marijuana businesses getting cease and desist letters from the state

New York sending cease-and-desist letters to retail marijuana businesses 02:34

NEW YORK - Since marijuana was legalized last year, unlicensed vendors have opened for business. 

Now the state is saying "not so fast" by sending dozens of cease and desist letters to operators. 

CBS2's Aundrea Cline-Thomas takes a look inside a booming membership club that has no plans of slowing down. 

Nestled among the row of businesses on Eighth Avenue in Chelsea, you can find the busy Empire Cannabis Club. For owner Lenore Elfand and her family, it's redemption. 

"In the '60s, my uncle was killed in the Bronx buying weed. Went on to my brother, spent 10 years in federal prison for growing," she said. 

Empire's customers pay daily or monthly memberships for access. Then what they call "budtenders" help them select from an array of products, including edibles. Delivery is also available. 

Despite cannabis being legalized last year, the state has not issued any licenses for retail sale. Which means technically the only lawful way to buy it is through a medical dispensary that requires certification from a doctor. 

Now, Empire is among more than two dozen businesses that received a cease and desist letter from the state, firmly declaring the "unlicensed sale of cannabis is illegal," threatening to bar future licensure, fines, and prosecution. 

Attorney Steve Zissou maintains Empire is operating legally, emphasizing it makes a profit on selling memberships, not cannabis. 

"While there are costs involved for running it, there are no compensation for the cannabis that's distributed," Zissou said. 

Other businesses the state is targeting are citing part of the law that allows people to have or gift up to three ounces of cannabis. 

"People have come up with ideas that if they do a third party type transaction, like 'I'll buy a t-shirt for $400 and I'll give you a free bag of cannabis with that.' It's a disguised transaction," said David Holland, president and cofounder of the New York City Cannabis Industry Association. 

Elfand is willing to get a license when available. Until then, she's ready to fight to keep her doors open. 

"What they are actually doing is making the medical market the recreational market before people like us even get a chance to get into it," Elfand said. 

A David and Goliath matchup against the more established medical dispensaries as the race for profits is underway. 

Despite the warning from the state, Empire Cannabis Club is not only remaining open, it's planning an expansion to its third location in the city. 

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