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The Empire Cannabis Club, known for its bold fight to keep open an unlicensed cannabis operation in New York City, has filed for bankruptcy. The Elfand Organization, also known as Empire Cannabis Clubs, filed for Chapter 11 in the Southern District of New York on Dec. 2.
Empire listed six addresses for the company and claimed its assets were in the $1 million to $10 million range. The debts totaled over $3.4 million and were outlined as follows:
424 Broadway lease $584,155
BNN Fulton Flushing lease $327,642
833 Manhattan Ave. lease $201,108
268 Metropolitan lease $65,850
NYSIF Workers Comp policy $95,369
ADT security contract $8,152
Spectrum $4,652
ConEd $271
Iakovos Inc. lease $12,000
172 Allen Realty lease $60,000
Vlasic Labs products $4,137.50
IRS Treasury Dept. taxes $5,058.83
NY State taxes $250,157.78, $1,514,356.08 & $290,315.05
Empire’s legal state of mind
Source: Google Maps
Green Market Report previously wrote that Empire Cannabis Clubs was suing New York closing its unlicensed cannabis stores which had operated since 2021. Empire’s five locations in New York City were raided on Aug. 29, with law enforcement officials entering each shop within the same 30-minute timeframe, owner Jonathan Elfand told Green Market Report. The New York Sheriff’s Department ordered all five stores closed as part of New York City’s Operation Padlock.
The Empire stores have remained closed since the raids, but the chain is still doing business via delivery for its roughly 196,000 members, Elfand said at the time. Elfand and Empire have never shied away from the fact that the five clubs have been providing members with high-quality marijuana goods, but the legal argument they’re relying on is that the business model is fully compliant under the 2021 state law that legalized recreational cannabis, the Marihuana Regulation and Taxation Act (MRTA).
“As long as you’re not profiting, you don’t need a license,” Elfand said. Empire has always operated as a not-for-profit organized under New York state law. “So at my club, all I do is I facilitate members to be able to acquire (cannabis goods).”
Details of how the club works are outlined on Empire’s website, but the basic business model revolves around a simple membership fee of $24.99 per month. With that monthly payment, Empire members can acquire cannabis from any of the clubs with zero markup. That, Elfand said, is the key to Empire’s legality.
Elfand also said that since its founding, it has paid “millions” in taxes to the state and city, the suit asserts and had a payroll of $3.2 million last year for roughly 75 employees. Gross sales at Empire reached $2.5 million in the second quarter of 2024, according to court records.
Operation padlock
Since that case was filed in September, a judge declared Operation Padlock unconstitutional in October for one dispensary called Cloud Corner. Cloud Corner was allowed to reopen but it wasn’t clear if that ruling applied to other unlicensed operations. This week, New York’s cannabis czar Dasheeda Dawson told Green Market Report that most of the unlicensed shops closed down by the New York City sheriff have remained shuttered, which has been a boon to the legal dispensaries.
“Operation Padlock continues. We meet on a regular basis … with the enforcement agencies. We’re at a point now where we’ve had success in really shutting down a good amount of the stores,” Dawson said. “Mostly, we’re not seeing those reopen.”
Elfand Organization LLC 2024Chapter 11 Petition“}]] [[{“value”:”The unlicensed cannabis operator was suing the city for its Operation Padlock that closed the membership operation.
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