NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10248
SPONSOR: Rules (Zaccaro) TITLE OF BILL:
An act to amend the state finance law and the cannabis law, in relation
to authorizing a qui tam proceeding for civil violations of the cannabis
law
PURPOSE OR GENERAL IDEA OF BILL:
This bill would permit a person, known as a qui tam plaintiff, to bring
a civil action under the New York False Claims Act for violations of
general prohibitions and restrictions of cannabis law.
SUMMARY OF PROVISIONS:
Section 1. Subdivision 1 of § 189 of the state finance law is amended to
include new paragraph (i) for violations of any civil provisions of §
125 of the cannabis law. Paragraph (h) of subdivision 1 is further
amended to provide, however, that the civil penalty for violations of
the cannabis law shall be as set forth in § 132 of the cannabis law.
Section 2. Subdivision 5 of § 138-a is amended to allow for an action or
proceeding authorized under § 189 of the state finance law.
Section 3. Effective date.
JUSTIFICATION:
The New York False Claims Act permits civil actions to be brought by the
government for certain fraudulent acts. These acts include, but are not
limited to, knowingly present false or fraudulent claims for payment or
approval, knowingly make a false record or statement material to an
obligation to pay or transmit money or property to the state or local
government and concealing and improperly avoiding or decreasing an obli-
gation to pay or transmit money or property to the state or a local
government.
If the government declines to participate in the civil action based on a
violation of § 189 of the state finance law or declines to authorize a
local government to participate in the civil action then a person, known
as a qui tam plaintiff, may bring a civil action for a violation of §
189 of the state finance law on behalf of the person and the people of
New York or a local government.
This bill will allow a qui tam plaintiff to bring a civil action for
violations of any civil provision that are included within the general
prohibitions and restrictions of § 125 of the cannabis law. Empowering
everyday New Yorkers with tools against illegal cannabis operators,
whose conduct is both unlawful and inundates our communities with
untested, unregulated and potentially deadly cannabis, is vital as we
continue our enforcement efforts to combat illegal cannabis. Illegal
cannabis operators undermine the legal cannabis industry in New York,
whose cannabis processors, cultivators, distributors and retail dispen-
sary licensees followed the rules only see their hard work damaged by
those who violate the cannabis law. New York must lead when legitimate
business is compromised by the conduct of bad actors.
The bill expands the ability for the government to bring an action or
proceeding authorized under § 189 of the state finance law for action
for unlawful business practices relating to cannabis under § 138-a of
the cannabis law. Authorizing a qui tam plaintiff to bring a civil
action for violations of cannabis law under the New York False Claims
Act adds another layer of legal protection for everyday New Yorkers.
PRIOR LEGISLATIVE HISTORY:
New bill
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
10248
IN ASSEMBLY
May 15, 2024
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Zaccaro) --
read once and referred to the Committee on Judiciary
AN ACT to amend the state finance law and the cannabis law, in relation
to authorizing a qui tam proceeding for civil violations of the canna-
bis law
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph (h) of subdivision 1 of section 189 of the state
2 finance law, as amended by section 1 of part J of chapter 57 of the laws
3 of 2018, is amended to read as follows:
4 (h) knowingly conceals or knowingly and improperly avoids or decreases
5 an obligation to pay or transmit money or property to the state or a
6 local government, or conspires to do the same; or
7 (i) violates any civil provisions of section one hundred twenty-five
8 of the cannabis law;
9 shall be liable to the state or a local government, as applicable, for
10 a civil penalty of not less than six thousand dollars and not more than
11 twelve thousand dollars, as adjusted to be equal to the civil penalty
12 allowed under the federal False Claims Act, 31 U.S.C. sec. 3729, et
13 seq., as amended, as adjusted for inflation by the Federal Civil Penal-
14 ties Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note;
15 Pub. L. No. 101-410), plus three times the amount of all damages,
16 including consequential damages, which the state or local government
17 sustains because of the act of that person; provided, however, that the
18 civil penalty for violations of the cannabis law shall be as set forth
19 in section one hundred thirty-two of such chapter.
20 § 2. Subdivision 5 of section 138-a of the cannabis law, as amended by
21 section 14 of part G of chapter 55 of the laws of 2024, is amended to
22 read as follows:
23 5. request that the attorney general obtain judicial enforcement of an
24 order issued under subdivision one of this section or bring an action or
25 proceeding for any relief otherwise authorized under this chapter for a
26 violation of this chapter or bring an action or proceeding authorized
27 under section one hundred eighty-nine of the state finance law, includ-
28 ing the recovery of any applicable civil penalties;
29 § 3. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15512-01-4
