D.C. Medical Cannabis Reforms Promise Big Changes for Local Market

This article was written by Gaspard Le Dem (@GLD_Live on Twitter) and originally published by Outlaw Report.

The D.C. Council last week gave its unanimous and final approval to a bill that makes sweeping changes to the District’s medical cannabis program, capping a long and obstacle-ridden journey for the legislation, which was introduced nearly two years ago. It now heads to Mayor Muriel Bowser’s desk for a signature, and then to Congress for review.

In its final form, the 78-page Medical Cannabis Amendment Act loosens a slew of restrictions on dispensaries and cultivators, lifts a cap on the number of licenses regulators can issue, and gives unregulated weed businesses a path to legality while cracking down on those that don’t fall in line. It also takes new steps to prioritize entrepreneurs harmed by the so-called War on Drugs, and renames the D.C. agency charged with regulating weed from the Alcoholic Beverage Regulation Administration (ABRA) to the Alcoholic Beverage and Cannabis Administration (ABCA).

“There has been a lot of work that’s gone into this bill, and I appreciate where we have landed despite how long and extensive this bill is,” said Ward 5 Councilmember Kenyan McDuffie on Tuesday.

Leading up to the final vote, the legislation faced significant pushback from industry groups that argued it would unduly punish unregulated weed storefronts without giving them a fair chance to comply with new regulations. The measure extends an olive branch to unregulated storefronts — familiarly known as weed “gifting” shops — by allowing them to apply for “conditional” licenses. However, gifting businesses that don’t apply or are denied a conditional license would eventually face fines and penalties. Landlords who rent commercial property to unlicensed weed shops could also face fines up to $10,000.

Advocates for the gifting industry had expressed concerns that unregulated shops wouldn’t have enough time to apply for conditional licenses and to subsequently get up to code. The council on Tuesday amended the bill to extend the application window for conditional licenses to 90 days, and extended the grace period before enforcement begins to 315 days. The amendment, proposed by McDuffie and Council Chairman Phil Mendelson, also allows licensed medical weed businesses to become “vertically integrated” — meaning they could operate as both cultivators and retailers. It also removes a provision authorizing businesses to deduct revenue losses from their taxes.

The I-71 Committee, a group that lobbies the council on behalf of gifting shops, issued a statement on Tuesday praising the revisions and thanking McDuffie and Mendelson for their work on the bill.

“We believe it is a great improvement over the previous draft and consider it a step in the right direction for the local cannabis marketplace,” the statement said.

But the group said it remains concerned a rapid expansion of D.C.’s cannabis program could lead to supply shortages for gifting shops transitioning to the legal marketplace. McDuffie acknowledged those lingering worries before the vote.

“I don’t think everybody got what they wanted,” he said. “Usually that’s a sign of the process playing out in a way that gets you somewhere in the middle, and in this case I think it benefits the city.”

He insisted the legislation’s purpose is to bring gifting shops into the regulated cannabis economy, rather than to punish them. “The focus of the bill shouldn’t be enforcement, it should be the pathway that it creates for people to operate legitimately,” McDuffie said.

Mendelson echoed that sentiment, though he reiterated that gifting shops would need to apply for conditional licenses and become compliant to avoid fines and penalties.

“It’s a safe harbor for those who apply — if you don’t apply, you don’t have a safe harbor,” he said, adding that D.C. is “creating an on-ramp for existing businesses that don’t have a license to get a license.”

Ward 4 Councilmember Janeese Lewis George praised the latest amendments and called the bill “monumental.”

“We are setting up all cannabis businesses both licensed and unlicensed for success and for a thoughtful transition to a market where everyone has a meaningful opportunity to thrive by playing by the same rules,” Lewis George said.

At-Large Councilmember Robert White said the measure gives people formerly incarcerated for cannabis offenses an opportunity to participate in D.C.’s legal weed industry. A previous statute barred people with felony records from owning or working at licensed D.C. weed businesses, which advocates argued was unfair for those convicted of weed-related crimes.

The legislation permanently reverses that statute and sets aside 50% of all new cannabis licenses for entrepreneurs who qualify as “social equity applicants” — which includes people formerly incarcerated for weed offenses and their family members. Other provisions aimed at repairing the damage of The War on Drugs include grants and loans to help social equity applicants get weed businesses off the ground.

Furthermore, D.C.’s cannabis licensing structure would be expanded to include two new business categories: internet retailers that sell weed without a physical storefront, and couriers that facilitate the delivery of cannabis products to registered patients. Additionally, licensed dispensaries would be eligible to host tastings and classes where patients could consume weed on-site.

The bill’s passage on Tuesday came just hours after budget leaders in Congress unveiled a new spending package that maintains a ban on retail cannabis in the District. Though D.C. voters approved a ballot measure to legalize recreational cannabis in 2014, Republicans in Congress have since barred District officials from using local funds to launch a regulated market for adult-use pot.

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This week Congress again told D.C. that it can’t legalize recreational sales of marijuana. On the same day, the D.C. Council passed a sweeping bill to expand medical marijuana sales — and let existing marijuana gifters apply for licenses. https://t.co/mACYvsNGDO

— Martin Austermuhle (@maustermuhle) December 21, 2022

The ban could present a major hurdle for the bill next month when it enters the 30-day congressional review period required for D.C. bills to become law. That’s because the measure quietly transforms D.C.’s medical weed market into a recreational one by making permanent a rule that allows adults 21 and older to purchase weed at dispensaries without a doctor’s note. The crafty rule, which was temporarily enacted in October by way of emergency legislation, simply requires patients to “self-certify” they use cannabis for medical purposes.

Legalization proponents say the ban has pushed many D.C. weed businesses to the gray market in the absence of a regulatory structure for recreational cannabis.

“It has left them in a legal limbo,” said At-Large Councilmember Robert White.

At-Large Councilmember Christina Henderson said the ban “continues to hamstring our economy, and reminds us of our lack of statehood more generally.”

“There’s still more time for Congress to remove the rider, and so I’ll put that plug in here,” she added.