Update:
The language in the emergency bill that would have increased enforcement on marijuana “gifting” businesses—including a fine of up to $30,000—was removed Monday, one day ahead of the vote. The legislation would now simply extend the validity of expired medical marijuana cards until 2022, and allow the city to issue cards that are valid for two years instead of one.
Original: The D.C. Council is set to consider new legislation that would allow the city to significantly ramp up enforcement against the growing number of stores and delivery services that “gift” marijuana, potentially chilling the city’s long-running gray market.
The emergency bill introduced by Council Chairman Phil Mendelson would empower city agencies to engage in “revocation of licenses, sealing of premises, and fines for businesses purchasing, selling or exchanging marijuana,” according to a memo circulated by his office on Thursday and first noticed by The Outlaw Report, a marijuana news site. Lawmakers are set to vote on the measure on Tuesday.
It takes aim at the wide-ranging network of stores, events, and delivery services that have popped up and expanded since D.C. voters approved Initiative 71 in 2014, which legalized the possession, personal use, and home cultivation of small amounts of marijuana.
Initiative 71 does not allow marijuana to be sold, and Congress has since blocked the city from moving forward to legalize sales. But it does allow people to give it away. And that gave creative entrepreneurs an opening to sell everything from stickers and art to juice and cookies for a high price — while offering a “gift” of marijuana on the side. While the gifting economy started with pop-up events and mostly discrete delivery services, it has since evolved into a number of brick-and-mortar stores that to the unknowing consumer would seem like the licensed dispensaries operating in states like Colorado, Washington state, and Illinois.
Police, who say that Initiative 71 does not allow these types of “gifting” arrangements, have engaged in spurts of enforcement over the years, shutting down events and stores and confiscating marijuana products ranging from smokable flower to candy-like edibles. (More recently, D.C. Police Chief Robert J. Contee III linked the stores to violent incidents.)
Mendelson’s bill would expand the tools at the city’s disposal for civil enforcement, threatening fines starting at $30,000 for businesses that sell or gift marijuana, license revocations, temporary closure of stores, and even penalties for landlords that rent space to the businesses.
“If nothing else we have a real problem. We have a legit business that’s suffering because of the black market,” Mendelson said in an interview on Friday afternoon, referring to the legal medical marijuana industry. “We can try to do something more than we have been.”
But sellers in the gray market are pushing back, saying that those existing stores and services — many of which are run by Black residents — should be seen as incubators of a new and more diverse new industry, not shut down.
“For everything that I’ve built over the past two years to be taken away from me… it would be very scary, hurtful and it just reminded me that I can never escape the politics,” says Bree, the owner of two gifting stores in D.C. She asked that she only be referred to by her first name because of concerns over retaliation by police or the city.
The legislation is motivated in part by a growing tension between the gifting stores and the existing medical marijuana program, which is taxed and tightly regulated.
Jeffrey Kahn, the owner of the Takoma Wellness Center, a medical dispensary in Ward 4, says the gifting stores and licensed medical sellers generally co-existed before the pandemic hit. But once pandemic restrictions went into effect, he says patients who had trouble renewing their medical marijuana cards opted instead for the gifting businesses.
“It’s become for us a crisis because we’re all small mom-and-pop type organizations. And to lose 40% of your sales, you got to start thinking about reducing staff and all kinds of stuff that we would never want to do,” says Kahn, who also supports more enforcement against gifting stores and services. He says sell products that haven’t been tested or, in some cases, produced in the city like is required for the medical marijuana dispensaries.
Mendelson’s bill estimates that more than half of the program’s 12,000 patients saw their cards expire. The legislation would extend the validity of those expired patient cards until 2022 and to allow the city to issue new cards that are valid for two years, instead of one.
“We want the medical side of this to survive because we expect that when we are able to regulate and permit sales, chances are that medical dispensers will go into the recreational business,” he said in an interview on Friday afternoon.
But owners and operators of the gifting stores say they were caught off-guard by the legislation, and worry that the bill would snuff out a burgeoning class of entrepreneurs that could form the basis of an eventual legal marketplace in D.C. While that legal marketplace has so far been held at bay by the congressional ban, a move by Democrats to repeal it has emboldened the council to schedule a November hearing on a bill to legalize and license the sale of recreational marijuana.
“We could be the first place that actually provides some equity for Black business owners in the market that we have run for years. At first, we would get incarcerated for running a market. Now we’re able to operate within the law, but still getting harassed,” says Bree. “D.C. could be the first place that actually puts time and resources and just honestly has an open ear to change those things.”
Bree, who was born and raised in D.C., says her stores have been repeatedly raided by police, but workers have not faced charges that have stuck. She says she pays taxes and otherwise follows the same rules as other businesses, and regularly responds to customer feedback about her products. She and a group of other Black store owners are working with a lobbyist to press their case with the council; they’ve started circulating proposed amendments to Mendelson’s bill and are drawing attention to their cause under the banner of the Generational Equity Movement, a local coalition.
“It is making sure that we have a piece of the leaf,” she says. “That we have a place within this cannabis market in D.C.”
The legalization bill — which was introduced in March by Mendelson — addresses concerns around diversity and equity in legal marijuana marketplaces, giving preference to applicants living in low-income areas or with past marijuana-related offenses. It would also direct a portion of tax revenue from sales to a fund to assist Black and low-income applicants and pay for social programs in underserved neighborhoods.
Kahn says he welcomes new entrants in the market, but is still concerned that they’re not playing by the same rules he had to.
“We welcome people coming into the program the same way all of us have — by following the rules and by living with the consequences when we don’t,” he says. “That the only way that we have a successful regulated industry in D.C. We wouldn’t want unregulated restaurants or gas stations or pharmacies or or anything else.”
Mendelson’s bill is currently on the agenda for Tuesday’s legislative session. As an emergency measure, it require nine votes to pass.
