Recitation as per CPLR §§ 2219(a) and/or 3212(b) of papers considered on review of this motion:

Upon review of the foregoing papers in this CPLR Article 78 proceeding, and after considering oral argument held on November 26, 2024, Petitioner moves by Order to Show Cause ("OSC") for a Temporary Restraining Order ("TRO") and preliminary injunction. Petitioner seeks to prevent Respondents from enforcing an order sealing Petitioner's business, Sunflower Glass Company Inc., located at 377 Metropolitan Avenue in Brooklyn ("the Sealing Order"), and allowing the business to reopen pending the Court's determination of the Article 78 [*2]petition. The OSC was signed on November 12, 2024, without granting the requested TRO.^[FN1]

Petitioner commenced this Article 78 proceeding challenging a sealing order issued by the New York City Sheriff following an inspection on October 1, 2024.^[FN2] That inspection resulted in the issuance of a civil summons and an immediate sealing order pursuant to Administrative Code § 7-551(a), based on alleged imminent threats to public health and safety due to the unlicensed processing of cannabis, the presence of untested and improperly labeled cannabis products, and the location's proximity to schools.^[FN3]

A hearing was conducted at the Office of Administrative Trials and Hearings ("OATH") on October 8, 2024.^[FN4] After considering the summons, sworn statements, photographic and documentary evidence, and testimony from the business owner, the OATH Hearing Officer dismissed the civil summons and recommended that the sealing order be lifted.^[FN5] The Hearing Officer found that the Sheriff's Office failed to establish, by a preponderance of the evidence, that unlicensed sales of cannabis had occurred. Further, any unlicensed activity was, at most, de minimis and did not pose an imminent threat to public health.^[FN6] The sealing order was issued following the OATH proceeding.^[FN7]

On October 15, 2024, the Sheriff issued a final decision declining to adopt the OATH recommendation and instead ordered that the business be sealed for one year.^[FN8] Petitioner now challenges the Sheriff's decision as arbitrary, capricious, unlawful, and an abuse of discretion in violative of due process under the Fourteenth Amendment.^[FN9]

• Administrative Code §§ 7-551 and 7-552 govern the City's enforcement authority regarding unlicensed cannabis activity.

• Cannabis Law § 138-b, particularly subsections (2), (3), (6), and (7), outline the procedure and scope of sealing orders by the Sheriff and mandate proper service.

Administrative Code §§ 7-551 and 7-552 authorize enforcement actions, including sealing orders, for unlicensed cannabis activity. Cannabis Law § 138-b outlines the procedures for such sealing orders, including required service, posting, and mailing (§ 138-b[2]), and specifies that such orders may issue only where there exists an imminent threat to public health, safety, or welfare (§ 138-b[3]).

Failure to properly serve the sealing order renders it unenforceable. See Matter of KSLM-Columbus Apts., Inc. v. NY State Div. of Hous. & Community Renewal, 5 NY3d 303, 312 (2005). Service must be made on the owner or a person of suitable age and discretion in control of the premises at the time of inspection, with posting and mailing as additional requirements. The sealing order must also contain instructions for requesting a hearing.

Factors contributing to an imminent threat include proximity to schools,^[FN10] while de minimis unlicensed activity is evaluated based on signage, advertisements, product volume, and variety.^[FN11] Where the City seeks to issue an immediate sealing order, the unlicensed activity must be more than de minimis.^[FN12] The order remains in effect pending a hearing and final determination of the board, or until it is vacated by the office. Sealing orders must also explicitly state the procedure to request a hearing.

AC § 7-552(b)(2) mandates that when both a civil summons and sealing order are issued, the respondent must be afforded a hearing at OATH within five business days, and the Hearing Officer must render a recommendation within four days issue a recommended decision within four business days thereafter. The Sheriff retains final discretion, but must act rationally and within legal bounds. See Matter of Pell v. Bd. of Educ., 34 NY2d 222, 231 (1974).

OATH decisions on civil summonses constitute judgments under Admin. Code § 7-551(c). While the Sheriff may accept or reject OATH's recommendation, the exercise of such discretion must have a rational basis and be supported by the administrative record. See Costco Wholesale Corp. v. NY State Liquor Auth., 125 AD3d 775 (2d Dept. 2015).

Individuals engaging in the unlicensed sale of cannabis in violation of NY Cannabis Law §125 are subject to a civil penalty under AC §7-551. OATH is responsible for adjudicating civil summonses under Chapter 6 of the Rules of the City of New York. See RCNY §§ 6-08 to 6-18. OATH decisions on civil summonses constitute judgments under AC § 7-551. See AC § 7-551(c). Under Cannabis Law § 138-b, the Sheriff's office holds authority to inspect businesses selling cannabis products and to seal businesses engaged in unlicensed activity. AC § 7-552(b)(2).

In an Article 78 proceeding, the Court's review is limited to whether the challenged determination was made in violation of lawful procedure, was arbitrary and capricious, or was affected by an error of law. An agency's determination is arbitrary and capricious if it lacks a [*3]rational basis or is not supported by the record.^[FN13]

In reviewing an administrative agency's determination, courts must ascertain whether there is a rational basis for the agency's action or whether it is arbitrary and capricious.^[FN14] Where the agency's determination is based on detailed methods derived from legislation, is within an area of the agency's expertise and is amply supported by the record, judicial deference and substantial weight must be accorded to the determination.^[FN15] The Court may not substitute its judgment for that of the decision-making agency, as it must only ascertain whether the agency's determination was rationally based.^[FN16] Additionally, an agency is to be afforded wide deference in the interpretation of its regulation and, to a lesser extent, in its construction of the governing statutory law.^[FN17] However, an agency cannot engraft additional requirements or assume additional powers not contained in the enabling legislation.^[FN18]

Here, the Court finds the Sheriff's final determination to be arbitrary and capricious. The OATH Hearing Officer, after a full evidentiary hearing, found that the Sheriff failed to establish the unlicensed sale of cannabis products, and that any presence of cannabis was de minimis. Key factual findings ^[FN19] included:

• The cannabis products were locked in a safe, accessible only by key.

• There was limited product variety and no advertising on site.

• There were no trays, scales, baggies, grinders, or other evidence of active cannabis processing or marketing.

Despite these findings, the Sheriff's final determination relied solely on the weight of cannabis products found during the inspection to justify continued closure.^[FN20] This conclusory reliance does not constitute a rational basis and disregards the Hearing Officer's specific findings.^[FN21] The record does not support the conclusion that the business posed an imminent [*4]threat justifying a one-year closure. Accordingly, the Sheriff's final decision is arbitrary, capricious, and must be vacated.

Petitioner also contends that Admin. Code §§ 7-551 and 7-552 violate the Due Process Clause of the Fourteenth Amendment.

Due process protections apply to deprivations of life, liberty, or property. See Santomero v. Town of Bedford, 204 AD3d 925 (2d Dept. 2022).^[FN22] The Court evaluates procedural due process under the Mathews v. Eldridge balancing test, 424 U.S. 319 (1976), which considers:

1. The private interest affected,

2. The risk of erroneous deprivation and value of additional safeguards,

3. The government's interest, including administrative burdens.

Petitioner has a protected property interest in operating its business. The Due Process Clause of the Fourteenth Amendment prohibits the government from depriving a person of life, liberty, or property without due process of law. Schearer v. Fitzgerald, 2177 AD3d 980 (2d Dept. 2023).^[FN23] However, the Court finds that the procedural safeguards in place, including a prompt hearing at OATH, a recommended decision by a neutral adjudicator, and post-deprivation judicial review via Article 78, adequately protect against erroneous deprivation.^[FN24] See Moon Rocket Inc. v. City of NY, 2025 U.S. Dist. LEXIS 52883, at 12—13 (S.D.NY Mar. 21, 2025). While the private interest here is substantial, so too is the City's interest in regulating unlicensed cannabis activity. Thus, the Court finds that Admin. Code §§ 7-551 and 7-552, as applied, do not violate procedural due process.

Turning to the applicable procedures and safeguards employed, the Administrative Code mandates that when both a civil summons and sealing order are issued, the respondent-business must be afforded a hearing at OATH within five business days and the Hearing Officer must render a recommendation within four days thereafter. While the Sheriff's office retains final discretion in the determination, it must act rationally and within legal bounds. If a respondent-business believes that the final determination is arbitrary and capricious and not rationally based, it may seek judicial review through an Article 78 proceeding, which "serves as additional post-deprivation process that lowers the risk of erroneous deprivation." Moon Rocket Inc., 2025 U.S. Dist. LEXIS 52883 at *13. Therefore, the court finds that these applicable procedures afford a meaningful opportunity for the respondent-businesses to challenge sealing orders that may be issued in error. See Id. at *12. Thus, the Mathews factors weigh in favor of Respondents, as the Administrative Code sections, along with the ability to bring an Article 78 proceeding, provides adequate procedural protections for Petitioner's due process rights under the Fourteenth [*5]Amendment.

Therefore, Petitioner's application is granted to the following extent:

• The Immediate Order of Closure issued by the New York City Sheriff on October 1, 2024, and the Final Decision and Sealing Order dated October 15, 2024, are vacated;

• The Sheriff is directed to remove the seal and allow Petitioner's business premises at 377 Metropolitan Avenue, Brooklyn, to reopen forthwith; and

• In light of this determination, Petitioner's request for a preliminary injunction pursuant to CPLR 6301 is deemed moot.

This constitutes the Decision and Order of the Court.