A New York court has ruled that a deli engaged in the illegal sale of cannabis products, leading to the voiding of its lease and allowing for eviction. This decision affects 34 Green Olive Deli Corp., which was found to be selling cannabis without the necessary licenses. The ruling underscores the ongoing legal challenges surrounding cannabis sales in New York, especially as the state navigates its new cannabis laws.

The case, 51 E. 34th St. LLC v. 34 Green Olive Deli Corp. (Index No. LT-303808-24/NY), was decided on February 13, 2026, by Judge Jeffrey S. Zellan in the Civil Court of the City of New York, New York County. The court's decision is significant as it sets a precedent for how illegal cannabis sales are treated under New York's landlord-tenant laws.

Background

The petitioner in this case, 51 E. 34th St. LLC, filed a commercial holdover action against the tenant, 34 Green Olive Deli Corp., on February 24, 2024. The petitioner sought possession of the premises located at 51 East 34th Street, Ground Floor, New York, NY 10016. The dispute arose from allegations that the deli was using the premises for illegal activities, specifically the unlicensed sale of cannabis and cannabis products.

According to the petitioner, the lease was void under Real Property Law §231(1) and Real Property Actions and Proceedings Law §711(5) and §715 due to the illegal trade being conducted at the deli. In such cases, the burden of proof lies with the petitioner to demonstrate that the premises were used for an illegal purpose.

The Ruling

The court ruled in favor of the petitioner, stating that the evidence presented clearly showed that the deli was engaged in the habitual sale of illegal cannabis products. Judge Zellan noted, "the evidence at trial overwhelmingly supports the conclusion that respondent was engaged in the unlicensed sale of cannabis products, and that such sales were customary and habitual."

The ruling was based on credible testimony from two undercover NYPD officers who purchased cannabis products from the deli on separate occasions. The officers testified about the products they bought, which were clearly labeled as containing cannabis. The court found that these purchases, along with additional evidence such as photographs of cannabis products displayed in the store, were sufficient to demonstrate illegal use of the premises.

Furthermore, the court emphasized that the petitioner could introduce evidence of illegal use that occurred after the petition was filed, which is not typically allowed in holdover proceedings. Judge Zellan stated, "there is credible and compelling evidence of illegal use pre- and post-petition, and respondent's continuing conduct post-petition is relevant and admissible evidence of respondent's customary and habitual acquiescence to the illegal use of the subject premises."

Impact

This ruling has significant implications for the cannabis industry in New York, particularly for businesses operating in a legal gray area. The court's decision reinforces the importance of compliance with state laws regarding cannabis sales. It sends a clear message that landlords can take action against tenants who violate these laws, potentially leading to eviction and loss of business.

As New York continues to develop its cannabis regulations, this case may serve as a precedent for future disputes between landlords and tenants involved in cannabis sales. It highlights the necessity for businesses to ensure they are operating within the legal framework to avoid similar legal challenges.

What's Next

The respondents have the option to appeal the decision. However, the ruling allows for eviction to proceed, with the earliest eviction date set for February 27, 2026. There are no indications of related cases pending in the opinion text.