Outside, he opened a yellow pipe labeled Super Silver Haze. He pulled out a joint to smoke and offered puffs to bystanders, three of whom obliged. The store opened in 2019 and was one of the most extreme spots among the pizzerias, trendy shops and office towers on 7th Avenue between Times Square and Penn Station. But in recent months, many more tobacco shops and dispensaries have sprung up on the same strip, selling illegal cannabis products to tourists, city dwellers and commuters. The sleek dispensaries and tacky bodegas are part of an explosion of unlicensed cannabis shops that have opened in New York over the past year as part of a rush to cash in on the state’s legalization of cannabis before the rules are in place. Now, on the eve of the start of the state’s legal market, authorities are facing mounting pressure to crack down on the shops, which have created confusion for everyone from tourists to police. State regulators and some industry experts have called for the shops to be shut down for fear they are undermining the legal market. But supporters of the stores say they employ people and serve a clientele that has been waiting for legal retail locations that have been slow to launch. New York legalized cannabis for adult recreational use last year in March. In the city, the Adams administration was reluctant to deal with illegal shops with a heavy hand. Kayla Mamelak, a spokeswoman for the mayor, said the city’s sheriff’s office, a small law enforcement agency, conducted hundreds of business inspections in which deputies seized illegal products, issued fines and made arrests. “Mayor Adams has been clear that no illegal business activity should be tolerated,” he said. City officials have tried to avoid memories of the drug war with widespread arrests, said Jeffrey Hoffman, a cannabis lawyer and legalization activist. “We hit the reset button,” Mr. Hoffman said. “It was a question of how long they would let it go.” State cannabis regulators issued the first retail licenses Monday, allowing 36 businesses and nonprofits to open dispensaries that serve adults 21 and older. State officials have said they hope to have the first retail sales by the end of the year.

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Without a major change in the landscape, they will be forced into competition with unlicensed sellers who already have a foothold in the market and can offer lower prices because they don’t pay cannabis sales taxes or comply with state regulations. Since legalization, pot shops have popped up almost everywhere: two blocks from a police station in Long Island City, across an intersection from a high school in Harlem, and above a subway station in Williamsburg, for example. Regulators said they were monitoring stores across the state, but declined to count how many there are. Industry watchers say they appear to number in the hundreds. “Everybody’s doing what they have to do to get into the market,” explained Mel Rivera behind the counter at Smoker’s World, which opened in February in Midtown and sells cannabis edibles and joints, among tobacco and hookah. At Weed World, a large acrylic sign advertises strains of indicas and sativas whose strange names are written in neon colors, along with the letters “THC,” short for tetrahydrocannabinol, the intoxicating compound in cannabis. But the owner, Bilal Muhammad, maintains that his business, unlike some newcomers, has only sold products made with cannabidiol, or CBD, which comes from the same plant as THC, but doesn’t push consumers, he said. . However, CBD and THC require separate licenses to sell and Weed World had none, Mr Muhammad said. However, he criticized the authorities for stacking his company with sellers who buy strong THC products. Over the course of the summer, the city captured more than a dozen of his colorful signature trucks. But most of the vehicles were returned after he made arrangements to pay $670,000 in fines for parking and health code violations, according to Mr. Muhammad. The trucks are in storage in New Jersey, he said. Tobacco shops aren’t the only places that have popped up selling cannabis. State regulators also cited a tattoo parlor, an opera house and a beauty parlor. But tobacco shops are of particular concern, regulators said, because they give consumers the impression they are legal when in fact they operate without official oversight. New York requires all weed sold in the state to be grown, processed and tested within its borders, a supply chain known as seed-for-sale. But most weed shops in the city sell product in California-stamped packages, and some also offer illegal drugs, as well as candies and elixirs made with psychedelic mushrooms. State Sen. Brad Hoylman, D-Manhattan, wrote a letter to Mayor Eric Adams in September expressing concern after more than a dozen unlicensed stores opened on the west side of his district. “I can’t tell my constituents that these products are safe or that they’re not sold to minors or that the potency of cannabis — for example, when it comes to gum — is as advertised,” Mr. Hoylman said in an interview. In addition, he added, the stores undermine lawmakers’ intent to prioritize people with marijuana convictions for opportunities in the cannabis industry. Illegal shops also cut into taxes meant to fund addiction services, education and reinvestment in communities where enforcement was concentrated. Violence is another concern. The stores, which often hold large sums of money, have been the target of robberies and break-ins, which have sometimes escalated into shootings and stabbings. Julia Deviatkina closed Freaky Dog, a smoking lounge in Brooklyn, after the state released her name and address in a cease and desist letter. “It was unsafe,” he said. With all the problems surrounding unregulated cannabis, regulators and some lawmakers have pushed to shut down weed shops. But Paula Collins, an attorney who represents owners of tobacco and convenience stores that sell cannabis, said that would be wrong. The store closings would mean layoffs for thousands of workers, many of whom are people of color, he said. And it would unfairly penalize landlords who helped normalize cannabis and bolster the state’s struggling commercial real estate market, he added. Instead of cracking down on stores, Ms. Collins said the state should try to legalize them. “We’ve got all these stores opening, everybody’s worried, and at the same time, we’re losing all this good tax revenue,” he said. State lawmakers have said they aim to absorb the illegal market into the regulated industry. However, regulators have bluntly and repeatedly warned that all unlicensed cannabis sales are illegal, regardless of whether the cannabis product is given away after a “donation” or the exchange is made with the purchase of a membership or service. But some businesses dismissed the warnings, citing what they perceive as gray areas in the law and a lack of enforcement. The Empire Cannabis Club, a New York-based nonprofit owned by a family whose father and son have served time in prison for marijuana offenses, is described as a concierge service that buys cannabis on behalf of its members, who pay monthly fee. Steve Zissou, Empire’s attorney, said the business model is based on provisions of the legalization law that he interprets as allowing social clubs. “It’s a legal outfit created under the law as it stands,” Mr Zisou said. “Don’t you think if they could shut it down, they would have done it already?” The city said a lack of legal clarity has prevented it from going after shops selling weed and called for changes to the cannabis law. Mayor Adams, asked about the stores at an unrelated news conference last month, said the city’s hands were tied because the law had not kept up with reality. “A police officer can’t just walk in and make an arrest, or seize or seize the item,” he added. “There is a process.” The Police Department explained in an email to The Times that, in its view, the legalization law does not give officers the power to make seizures or arrests when they see cannabis being displayed for sale or to close unlicensed shops. “The law provides an enforcement mechanism only if an actual sale is observed,” the public information office said. Chris Alexander, the executive director of the Office of Cannabis Management, said it’s a common misconception among local law enforcement that has surprised him with its durability. State law makes it a crime to possess more than three ounces of cannabis, or to sell any amount of it. Penalties range from $125 fines to 15 years in prison. And some of the same municipal regulations that have allowed the city to go after trucks, such as those governing the sale of food, smoking products and worker protections, can be used against storefronts, Mr. Alexander said. “I think the training took longer than I thought it would,” he said, acknowledging that authorities needed time to adjust to such a big policy change. “For an average police officer who knows we’ve legalized, he sees things happening and says, ‘Well, I don’t know if this is regulated or not, but I know they legalized, so I think there’s less of a role for me,’” Mr. Alexander said. What we’re constantly communicating is “no, you still have to help us protect this thing that we are…