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Lawmakers look to weed out illegal NYC smoke shops with possible ties to Middle East terror funding

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New York lawmakers fret that fast-growing chains of marijuana shops across the city could be a source of cash for Middle East terror groups — and they’re pressing for legislation to help root out rogue financiers, The Post has learned.

Owners of the illegal smoke shops — which according to some city officials now number in the thousands, versus just 11 state-licensed shops across the Big Apple — have stayed under the radar with the help of local laws that govern so-called LLCs, or limited-liability companies.

LLCs are legitimately used by businesses to reap tax benefits and secure liability protections. But they are also subject to abuse by tax cheats, money launderers and other criminals — and backers of terrorism could be among them, state Sen. Brad Hoylman-Sigal told The Post.

“We know LLCs are used to hide and funnel money to unsavory causes and could be used to fund terrorist activities,” said Hoylman-Sigal, who is the lead sponsor of the LLC Transparency Act. “It wouldn’t surprise me if there were individuals or groups of individuals who are financing these shops in a comprehensive manner, but we won’t know until we get to the heart of their ownership.”

Passed by the New York legislature in June, the bill would require LLCs to report their owners’ true identities, including names, addresses and birth year, to a public database.

The bill needs Gov. Kathy Hochul’s signature by year’s end to become law.

A spokesperson for Hochul said she is reviewing the bill, but it faces stiff opposition from her deep-pocketed supporters, including business and real estate lobbyists.

Insiders say that’s partly because secretive shell companies have been a massive force propping up the New York real estate market.

A study last month found that 37% of Manhattan properties are owned by LLCs.

“Russian oligarchs, narco traffickers, terrorists and money laundering dirtbags the world over use New York’s LLC secrecy laws to hide their money,” said John Kaehny, executive director of watchdog group Reinvent Albany, which published the study.

Meanwhile, the explosion of illegal smoke shops across the city has become a political hot potato, with New York mayor Eric Adams claiming there are now 1,500 of them — and the city council saying in an August press release the number is closer to 8,000.

“Russian oligarchs, narco traffickers, terrorists and money laundering dirtbags the world over use New York’s LLC secrecy laws to hide their money,” said John Kaehny, executive director of watchdog group Reinvent Albany, which published the study.

State Sen. Liz Krueger — who sponsored the bill that regulates and taxes marijuana after it was legalized for recreational use in 2021 — said the growth of illegal pot shops citywide has far outstripped anything she expected. Accordingly, Krueger said she’s backing greater disclosure laws around their ownership.

“I think there are people with big money that are fronting these illegal shops,” Kreuger told The Post. “I am absolutely concerned that LLCs might be used to fund terrorist groups.”

An illegal New York City pot shop can rake in tens of thousands of dollars a day – despite the city’s spotty efforts to fine business owners and landlords since the botched rollout.

While intel around ownership remains murky and speculative, weed that ends up at some of the illegal smoke shops has been linked to Chinese criminal networks which are among the biggest cannabis growers in the US, according to Chris Urben, a retired DEA agent who is the managing director for the global investigative firm Nardello & Co.

The Chinese rogue financiers, in turn, have also historically done business with Lebanese money-laundering networks, according to Urben. When the latter are involved, there is likely a connection with Iran-backed terror group Hezbollah, he adds.

Lebanon-based Hezbollah has been lobbing missiles into neighboring Israel since the Jewish state began bombing Gaza following the Hamas terror attack, which killed more than 1,400 Israelis.

“We have seen links with the Chinese money launderers dealing with the Lebanese money launderers, so we believe there is some sort of money-laundering connection” to marijuana sold at some illegal shops, said Urben, who worked for the federal Drug Enforcement Administration for 25 years.

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