Correction and update (October 9, 2026): An earlier version of this article said Governor Kathy Hochul had signed the anti-inversion bill. That was wrong. The New York Legislature passed the Cannabis Supply Chain Integrity and Anti-Inversion Act on June 1–2, 2026, but as of October 31 the official bill record still shows it as passed by both houses and not yet signed. The article has been rewritten to reflect the bill's actual status and its final text.
What the bill would do
The legislation, carried by Assemblymember Landon Dais (A10698B) and Senator Jeremy Cooney (S8951B), would write the concept of cannabis "inversion" into state law for the first time. Inversion is the movement of illicit cannabis into the licensed, tested and taxed supply chain, where it can be sold on a legal shelf as if it were compliant product.
According to the bill text and summary posted by the state Senate, the measure would:
- Broaden the definition of illicit cannabis to include product sourced from unlicensed entities or brought into New York in violation of state law.
- Bar licensees and testing labs from inversion, including using fraudulent certificates of analysis, falsifying inventory or tracking records, possessing cannabis without documented chain of custody, and selling illicit product.
- Hold labs to a stricter standard, with a presumption of license revocation for a lab that submits fraudulent test certifications.
- Let OCM seek suspension orders against a licensee pending investigation, capped at 30 days.
- Add whistleblower protections for people who report violations.
- Take effect 180 days after it becomes law.
The penalties, as passed
The final (B) version sets a civil penalty of up to $10,000 for each day a violation continues. On top of that, regulators could seek an additional penalty of up to five times the revenue from prohibited sales of illicit cannabis, or up to three times the projected revenue of illicit cannabis found in a licensee's possession. Product can be seized and forfeited, and violations can trigger license discipline.
Our earlier version described the add-on penalty as the greater of three times revenue or three times fair market value. That did not match the version that passed; the five-times-revenue figure is confirmed in both the bill and Senator Cooney's June 17 release.
The bill passed the Senate 60–1. Cooney argued that the legal market "can only continue to grow if New Yorkers can trust the source and safety of their products."
Why New York wrote it now
Inversion was already against New York's cannabis rules. What changed is that the state's attempt to punish it under the old framework collapsed in public. In October 2025, OCM brought a compliance action against licensed processor Omnium Health over alleged inversion, seeking a $1 million fine and license revocation. In December the state withdrew the case, and Hochul asked interim OCM Executive Director Felicia A.B. Reid and deputy counsel James Rogers, who led the agency's investigative unit, to step down, Spectrum News reported.
Supporters of the bill say a clear statutory definition and penalty schedule would make future cases easier to bring and defend. Trade coverage has pointed to oversupplied markets such as Oregon, Washington and Oklahoma as likely sources of out-of-state product, which would not have gone through New York's lab testing (MJBizDaily).
The bill also leans on the state's new seed-to-sale system. OCM has moved licensees onto Metrc, and in September it launched a market dashboard built on Metrc data. Tracking every package from plant to sale is the main way regulators can spot product that appears in inventory without a legitimate origin.
Update: October 2026
- Still unsigned. The Assembly and Senate bill pages list the bill as passed by both houses, with no delivery to the governor or signature recorded as of October 31. In New York, the governor acts on a bill only after the Legislature formally sends it to her; bills passed in this second year of the 2025–26 session are generally sent and acted on before the year ends.
- Industry pressure. Curaleaf, which operates dispensaries in the state, ran a full-page newspaper ad on September 23 urging Hochul to sign it, according to Mugglehead and other trade outlets.
- Regulators are already investigating. At its October 1 meeting, the Cannabis Control Board heard about four open OCM investigations, including alleged cultivation or processing at unapproved locations and a possible transfer of cannabis to an unlicensed entity. OCM stressed the allegations are not final findings, and the board asked for reports at its next meeting (OCM release).
- Tracking tightens. OCM is shifting supplier payment-delinquency reporting into Metrc; the old reporting platform's delinquency function shuts off October 23.
If Hochul signs the bill, the 180-day clock means the new penalties would not apply until about six months later, likely spring or summer 2027 depending on the signing date. She can also veto it or negotiate changes with the Legislature, which New York governors often do for year-end bills.
What it means if you shop legally
For consumers, the issue is whether the product on a licensed shelf is what its label and test results say it is. Licensed products carry lab results and tracking data; inverted product may not have been tested in New York at all. Our guide to reading a New York dispensary label explains what to look for, and our coverage of OCM's leadership shake-up and turnaround covers the Omnium fallout in more depth. Enforcement against unlicensed storefronts is a separate track, covered in our story on the state's illegal-shop closures.
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