Time has run out for I-71 gift shops that use a liberally interpreted amendment in the District’s constitution to gift weed to adults over 21 without medical cannabis cards.
As of last Friday The Alcohol Beverage and Cannabis Administration (ABCA) delivered a total of 13 warnings to unlicensed cannabis businesses in the city, according to a spokesperson. Some gifting shops have closed voluntarily, however, hundreds of shops remain open in the city.
Since 2015, after the I-71 amendment passed, cannabis shops have popped up in hundreds across D.C., offering overpriced non-cannabis goods for purchase with a free gift of cannabis. This loophole allowed a gray adult-use market to thrive, but shops still were raided and shut down for not complying with the District’s two ounce per person limit and more.
Many of the shops would simply close and pop up around the corner from their last location. Local weed dealers set up some of the shops, but as time evolved, more out of state people came into D.C. to set up shop, sometimes partnering with locals or just setting up their own business.
In later years, some shops abandoned the veil of gifting and just went full send to sell weed recreationally. These shops often filed taxes as retail businesses but others didn’t. Estimates put annual gray market cannabis sales at over $600 million in the district. Maryland and Virginia still had only medical markets up until Maryland’s adult-use legalization in 2023.
People poured into the District to shop at these stores which filled their shelves with weed brought in through illicit channels from California and also Oklahoma in more recent years. Residents complained about shops causing crime or taking over neighborhoods.
In 2022, the District passed its solution to the gray market: the Medical Cannabis Amendment Act of 2022. The law expanded the current medical market and set up a transition process to bring gray market gifting shops into a legal medical market.
D.C. will be unable to implement a legal recreational cannabis market until a Harris Rider in the federal spending bill is lifted. Any legalization of adult-use would still need the stamp of approval from Congress.
Part of the transition implemented a safe harbor law that allowed gifting shops to operate without enforcement from District authorities until the end of January 2024. Unlicensed operators had 90 days to apply to transition to the legal market starting in November 2023.
Less than 80 applied with many notable shops missing, leaving hundreds of shops in the city operating without licenses and a safe harbor to protect them.
ABCA promised that it would not enforce against shops that applied during the 90-day period. However, a shop in the midst of the application process was raided at the beginning of March by the police department and The D.C. Department of Licensing and Consumer Protection: six employees were arrested and face felony distribution charges. ABCA said it was not involved in the raid, but it still shook the trust between the unlicensed applicants and the agency.
But since that raid, no other business working through the application process has faced enforcement by D.C. agencies. However, an ABCA spokesperson made clear that “District Government agencies can independently conduct inspections of businesses related to their regulatory purview such as the selling of flavored tobacco which is illegal in DC.”
DLCP, the Department of Health, MPD and the Mayor’s office did not respond to emails asking them to verify ABCA’s statement that unlicensed I-71 applicants will not face enforcement.
The current medical market in D.C. goes through less than 400 lbs of cannabis monthly. A medical cannabis self-certification for visitors and residents hopes to increase the number of active registered patients which has dropped below 10,000 monthly. Registered patients hovered just above 25,000 in February.
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The medical business community and I-71 shops who transitioned are counting on enforcement to quell the competition of the gifting market.
“Without enforcement the new and old cannabis businesses are up against an unfair competitive market, and therefore, enforcement is vitally important for the new cannabis market to survive,” Rabbi Jeffrey Kahn, owner of Takoma Wellness Center (the District’s first medical cannabis dispensary), said in D.C. council testimony in early March.
ABCA delivered two warning letters the last week of February. They issued six warning letters in Georgetown on Mar. 20 in joint agency inspections that included the District’s Departments of Buildings, Licensing and Consumer Protection, Department of Health and the Metropolitan Police Department. Last Wednesday, they delivered another five written warnings as part of joint agency inspections conducted on Georgia Avenue NW and Upshur Street NW.
ABCA has not responded to requests to provide the warning letters or names of businesses that received warnings.
ABCA has previously said that enforcement starts with a warning letter, fines and then a cease and desist before referring business to law enforcement or other agencies. Fred Moosally, the Director of ABCA, asked council to pass legislation giving the agency more power to collect fines and seize cannabis products in early March.
The first three unlicensed I-71 operators who successfully transitioned to the legal medical market will likely open this month.
