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 on December 11, 2024, the Court addresses the Order to Show Cause ("OSC") by which Petitioner seeks a Temporary Restraining Order ("TRO") and a preliminary injunction. Petitioner requests that the Court stay enforcement of an administrative sealing Order and permit the reopening of Petitioner's business, Gift Shop and Flowers Inc., located at 1498 Sheepshead Bay Road, Brooklyn, pending a final decision on the petition. The Court [*2]signed the OSC on November 27, 2024, without granting the requested TRO.^[FN1]

Petitioner commenced this Article 78 proceeding to challenge a sealing order issued by the New York City Sheriff following a determination by the Office of Administrative Trials and Hearings ("OATH") dated October 16, 2024.^[FN2] The order resulted in the padlocking of Petitioner's business due to alleged violations of New York City Administrative Code ("AC") § 7-551, specifically illegal sales of cannabis.

The summons stemmed from a Sheriff's inspection of the business on July 24, 2024,^[FN3] which resulted in the issuance of a sealing order under AC § 7-551(a), citing imminent threats to public health, safety, and welfare due to unlicensed processing of cannabis and cannabis products not tested or labelled lawfully.^[FN4] Following the October 15, 2024 OATH hearing, the OATH Hearing Officer sustained the civil summons for unlicensed cannabis activity, the decision recommended lifting the sealing order on the grounds that the quantity and nature of cannabis items found were insufficient to justify continued closure.^[FN5] This finding was based on the summons' affirmed statement, photographic and documentary evidence, and testimony from an employee present at the time of inspection.^[FN6] Nevertheless, the Sheriff issued a final determination on October 21, 2024, rejecting the recommendation and ordering the business sealed for one year.^[FN7]

Petitioner challenges the sealing order ^[FN8] and part of the OATH judgment sustaining the issuance of a civil summons ^[FN9] . Petitioner argues that the sealing order is invalid due to improper service, and both the sealing order and OATH determination are arbitrary and capricious,^[FN10] not [*3]supported by substantial evidence,^[FN11] and violate due process under the Fourteenth Amendment.^[FN12] Respondents oppose, asserting the actions were lawful, rational, and procedurally adequate.^[FN13]

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

• Cannabis Law §§ 138-b (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 empower the City to issue civil penalties and sealing orders in response to unlicensed cannabis activity. Cannabis Law § 138-b governs the issuance of sealing orders by the Sheriff and mandates specific procedural safeguards, including personal service, conspicuous posting, and mailing. A failure to comply with these procedural requirements invalidates the enforcement action. See Matter of KSLM-Columbus Apts., Inc. v. New York State Div. of Hous. & Community Renewal, 5 NY3d 303, 312 (2005) (failure to comply with procedural due process requirements invalidates administrative action).

Further, AC § 7-552(b)(2) provides that when both a civil summons and sealing order are issued, the respondent is entitled to a hearing before OATH within five business days, with a recommended decision to follow within four days. The Sheriff retains final decision-making authority but must act within the bounds of reasonableness. See Matter of Pell v. Board of Educ., 34 NY2d 222, 231 (1974).

Where unlicensed cannabis activity is more than de minimis, and particularly where it presents an imminent threat to public health or safety, a sealing order may be upheld. Cannabis Law § 138-b(3). However, proper service under Cannabis Law § 138-b(2) is a jurisdictional prerequisite and must be strictly followed and must comply with procedural safeguards, including personal service, posting, and mailing under § 138-b(2). Factors contributing to an imminent threat include proximity to schools,^[FN14] while de minimis unlicensed activity is evaluated based on signage, advertisements, product volume, and variety.^[FN15] Where the City seeks to issue an immediate sealing order, the unlicensed activity must be more than de minimis.^[FN16]

Individuals engaging in the unlicensed sale of cannabis in violation of NY Cannabis Law [*4]§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).

A proceeding under CPLR Article 78 must be transferred to the Appellate Division ^[FN17] if it raises a question of whether a determination made after a hearing held pursuant to law is supported by substantial evidence. See CPLR §§ 7803(4), 7804(g); Halperin v. City of New Rochelle, 24 AD3d 768 (2d Dept. 2005). This petition raises such a question.^[FN18] Because the petition challenges the sufficiency of that evidence under CPLR § 7803(4), and no threshold objections such as jurisdiction or limitations bar the claim, transfer is appropriate. See Bott v. Inc. Vil. of Freeport, 29 AD3d 592 (2d Dept. 2006); Doran v. Town of Babylon, 219 AD3d 832 (2d Dept. 2023).

A petition will not be transferred where the Supreme Court can "first dispose of such other objections as could terminate the proceeding, including but not limited to lack of jurisdiction, statute of limitations and res judicata, without reaching the substantial evidence issue." Doran v. Town of Babylon, 219 AD3d 832 (2d Dept. 2023).

However, claims seeking declaratory relief regarding the constitutionality of AC §§ 7-551 and 7-552 must be severed, as such claims are not reviewable under CPLR § 7804(g). See MVM Const., LLC v. Westchester County Solid Waste Com'n, 112 AD3d 637 (2d Dept. 2013); see also Applegate v. Heath, 88 AD3d 699 (2d Dept. 2011).

Pursuant to the Administrative Code, the OATH Hearing Officer makes a determination regarding the summons after a hearing is held pursuant to law. See AC § 7-552(b)(2). Thus, the court must now determine whether evidence, taken and considered at said hearing, on the [*5]direction of law, was supported by substantial evidence.^[FN19] See CPLR § 7803(4). The court recognizes that the Petitioner also contests the Sheriff's final determination, which is an issue that would be analyzed under the arbitrary and capricious standard because it is an administrative decision made without a hearing, but this is not an objection that could terminate the proceeding within the meaning of CPLR § 7804(g).

However, claims seeking declaratory relief regarding the constitutionality of AC §§ 7-551 and 7-552, pursuant to the Due Process Clause of the 14th Amendment, must be severed as such claims are not reviewable under CPLR § 7804(g). See Coleman v. Town of Eastchester, 70 AD3d 940 (2d Dept. 2010).

Petitioner asserts the sealing order provisions in AC §§ 7-551 and 7-552 violate procedural due process under the Fourteenth Amendment.^[FN20] Courts examine such claims under a three-part test articulated in Mathews v. Eldridge, 424 U.S. 319 (1976): (1) the private interest affected; (2) the risk of erroneous deprivation; and (3) the governmental interest and burden of additional procedures.

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). Petitioner has a protected property interest in operating its business. Santomero v. Town of Bedford, 204 AD3d 925 (2d Dept. 2022). However, the Court finds the existing statutory framework, including prompt hearings at OATH, final review by the Sheriff, and judicial oversight via Article 78, provides meaningful procedural safeguards. See Moon Rocket Inc. v. City of NY, 2025 U.S. Dist. LEXIS 52883, *at *12—13 (S.D.NY Mar. 21, 2025).

Accordingly, Petitioner's due process challenge fails. The City's interest in regulating unlicensed cannabis sales and protecting public safety is substantial and outweighs any minimal risk of erroneous deprivation under the procedures in place.^[FN21] The risk of erroneous deprivation through the applicable procedures is low and the government interest in closing unlicensed cannabis shops that pose an immediate risk to the public is substantial.^[FN22] It is clear that the government has a substantial interest in regulating the sale of cannabis and protecting the public. Moon Rocket Inc. v. City of NY, 2025 U.S. Dist. LEXIS 52883 (SDNY Mar. 21, 2025, No. 24-CV-4519 [JPO]).

Petitioner's application for a preliminary injunction is denied. The branch of the petition asserting a declaratory judgment under the Due Process Clause of the Fourteenth Amendment is severed and retained by this Court. The remainder of the petition, raising substantial evidence questions under CPLR Article 78, is hereby transferred to the Appellate Division, Second Department, pursuant to CPLR § 7804(g).

Petitioner shall serve a copy of this Decision and Order with Notice of Entry upon the Clerk of the Kings County Supreme Court, who is directed to transfer the case file to the Appellate Division, Second Department.

This constitutes the Decision and Order of the Court.