D.C. Promised a Crackdown on Illegal Pot Shops. Have they Delivered?
By • August 5, 2024 0 1028
By Paulina Inglima
On July 16, 2024, D.C. medical cannabis retailers were given reason to hope that D.C.’s Alcohol Beverage and Cannabis Association was taking long-awaited action on unlicensed marijuana shops.
Mayor Bowser signed emergency legislation allowing the ABCA to padlock and confiscate merchandise from stores that had not complied with cease and desist orders. At press time, 12 unlicensed shops have been issued cease and desists and fifty-five have been issued formal warnings.
However, despite the Mayor and Council’s permission, zero stores have yet been padlocked.
According to a statement to The Georgetowner from ABCA Director Fred Moosaly: “ABCA follows a tiered enforcement schedule.”
This means that when an unlicensed store is first investigated, they receive a written warning. If they do not comply, the ABC board can issue a cease and desist order to immediately cease all illegal cannabis operations at the risk of “civil and criminal penalties.”
Although medical cannabis is legal, the selling of recreational or adult use cannabis is illegal in D.C. due to continued legislative riders employed by Congress. However, store operators are able to maneuver around the restrictions through Initiative 71, commonly called I-71, which allows the gifting of cannabis under one ounce to those over 21 years old. So called gifting stores sell a token item with a “gift” of cannabis.
Grace Hyde, director of commercial and production operations for the medical cannabis establishment District Cannabis, told the Georgetowner that five medical cannabis stores have closed in the last year.
“It’s impossible to compete with the I-71s where you don’t have to pay for a medical card, they can offer a lot of products that we can’t offer, things that we are not legally allowed to sell,” Hyde said.
D.C.’s medical cannabis market is valued at roughly $38 million, while the illegal market is worth around $600 million.
In 2022, the ABCA announced that I-71 stores would be allowed to transition into licensed medical cannabis stores, to shrink the number of illegal operators. After multiple rounds of applications, including a Social Equity round, about 76 out of 200 have applied for the transitioning process. Transitioning involves restrictions on what products the stores can sell, who they sell it to, and an increase in taxes and fees. One store that successfully transitioned is Green Theory, owned by Caroline Crandall, Jonathan Crandall and Ian Tseng.
Crandall told The Georgetowner that the transition has not been as smooth as ABCA originally had them believe. “We, as I-71 operators, were basically promised by ABCA that by transitioning we would be operating in the only available market in D.C.,” Crandall said. “However, that obviously isn’t happening because enforcement has been a little bit lacking.”
Store operators may request an expedited hearing to challenge the order, which is held within 10 days of the request. So far, four businesses have requested expedited hearings.. After the expedited hearing, the board must issue a decision within 30 days after the hearing. Operators that continue business but don’t request a hearing in a timely manner are at risk of being padlocked.
Eight businesses given the orders have not requested a hearing, putting into question the time limit to a timely request, given that for three of them almost a month has passed, and for one more than a month. While they await a hearing, store owners continue business as usual.
The board has so far only issued one decision regarding All The Buzz, on Georgia Avenue NW, has had their cease and desist lifted on the grounds that they stop all cannabis sales.
According to Hyde, All The Buzz is still advertising the products on their website.
“After yesterday’s [July 22] hearing where they canceled the cease and desist without doing any due diligence into looking at their online menu, I don’t have a lot of confidence that the board is really up to the task of holding people accountable,” Hyde said.
Crandall said that many I-71 operators are hesitant to switch to medical cannabis because there are only six marijuana cultivators approved by ABCA for use. They worry that there will not be enough product to go around if a large number of stores transition to the medical market.
“The market is in really bad shape,” Hyde said. “If things don’t change in the next few days, I think we’re going to continue to see business closures, and there’s not that many licensees left so the future of the market is really in jeopardy.”
