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D.C. goes after gray market cannabis shops, over 30 shops warned

This article was updated on May 14, 2024 to include the total number of enforcements by ABCA. 

The District of Columbia is unable to set up a recreational medical market due to its lack of statehood, but it’s still trying its best to provide medical cannabis to anyone who self-registers as a patient. 

But the biggest sticking point has been closing down the gray market I-71 gifting shops that proliferated in the hundreds across the city. Gifting shops provide steep competition to the medical cannabis market. They often offer cheaper, more accessible but unregulated products to consumers. 

The Alcohol Beverage and Cannabis Administration tasked with the enforcement of the medical cannabis market received new power in April to go after unlicensed shops. And it hasn’t wasted any time in racking up a total of  38 warnings to unlicensed businesses as of May 14, 2024. 

However with hundreds of unlicensed shops operating across the city, this enforcement could represent a mere 19% of the brick and mortar I-71 stores open in the city. The enforcement and therefore closure of the gray market is critical to D.C.’s legal cannabis program success. 

The medical market has struggled to maintain sales since Maryland’s adult-use launch last summer, and the number of new medical retail locations is set to outpace the amount of legal cannabis available to sell in District dispensaries. Continued steep competition from unregulated stores could drag D.C.’s medical market to even lower sales.

ABCA’s working with the Department of Licensing and Consumer Protection to shutdown stores illegally selling cannabis. Fred Moosally, the director of ABCA, testified in a budget hearing a few weeks ago that his agency has not collected fines from these businesses. He said DLCP has fined shops during joint enforcement with ABCA for failure to have a basic business license or certificate of occupancy. 

ABCA can follow warning letters delivered to unlicensed establishments with fines, a cease and desist letter then referral to other law enforcement agencies. They can also close businesses and seize products with newly granted power. 

It is unclear how successful enforcement thus far has been at closing shops down. Greenfield Garden and Safe House both appeared to still be open as of last week. Greenfield Garden was raided at the end of February and Safe House received a warning letter in mid-March. New York struggled within the last year to effectively shut down its gray market with little success. 

Moosally testified in the budget hearing that the agency will soon be returning to further enforce against shops that were warned, but he did not give a concrete date or timeline. 

The only businesses exempt from enforcement by ABCA are gifting shops’ with pending applications submitted by Jan. 29, 2024. Other gifting shops that applied in the social equity period that recently ended, had an application denied or who intended to apply this summer during the standard retail application period are not exempt, according to an ABCA spokesperson. 

Warnings have been issued for shops on Georgia Ave NW, U Street NW, H St NE  and in Chinatown and Georgetown. Moosally said ABCA is looking to hire more cannabis compliance officers to help cover enforcement needs. Below are the locations of every shop that has received a warning through April according to documents released to The Outlaw Report from ABCA via open records requests.


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