As Washington, D.C.'s regulatory landscape surrounding cannabis continues to evolve, the district's “cannabis gift” economy faces an uncertain future.
Benzinga Cannabis spoke with Grace Hyde, director of commercial and production operations at District Cannabis and co-chair of the Washington DC Regulated Cannabis Association. Hyde shared his perspective on recent efforts to crack down on this complete cannabis economy and its broader implications.
Loophole on the verge of closure
The gift situation arose as a result of the district's regulatory situation. D.C. is not a state, so Congress has oversight of its laws. So even though voters legalized recreational marijuana under Initiative 71 in 2014, Congress has persistently blocked the creation of a regulated retail market with every vote. Thus, a loophole existed where merchants began gifting marijuana as part of a transaction. Items related to other products or services.
This workaround has been successful over the years, allowing hundreds of businesses to sell marijuana products without directly violating the law. Now, a wave of enforcement threatens to end that.
The previous bill, which would require store owners who gave away marijuana to transition to licensed medical marijuana dispensaries, would have “opened up a lot of licenses so that all of these illegal stores could get licensed and become legal.” It has taken a while for the enforcement section to get going. Many people have applied for a license, but not many have actually gone through the application process,” explains Hyde. .
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Impact of enforcement
Earlier this year, the D.C. Council approved new legislation that would give the Alcoholic Beverage and Cannabis Authority (ABCA) the authority to shut down unlicensed cannabis stores. After a grace period, authorities began padlocking it.
Hyde said four of the estimated 200 stores have closed so far, with many operating in secret. Hyde admits he was initially skeptical that the crackdown would be successful.
“I didn't really believe the store was going to close until the first one happened, because there were so many things in the way. We've been advocating for this for almost 10 years, so until we closed, “I had a hard time believing that it actually happened,” she told Benzinga.
Despite the slow start, Hyde remains hopeful that the closure will return the business to a regulated market and ultimately improve the balance sheet of the medical cannabis business, which is barely making ends meet. He admits that he is. A similar thing happened recently in New York.
“We are yet to see the benefits of the crackdown. It's only been three weeks, but we will soon see a shift of revenue from the illegal market to the legal market,” Hyde said.
Unregulated products and public safety
One of the main concerns driving the crackdown is the lack of regulation of products sold in gift shops. Hyde said many of these stores purchase marijuana from other states, leading to safety and traceability risks.
“This is not home-grown cannabis. They buy cannabis from all over the country, from California to Oregon to Maine to Michigan. The products sold in these facilities are extremely dangerous. They are not tested or tested. It's not safe, it's not regulated, and the public has no idea.”
She also stressed that these operations actually violate Initiative 71, which only allows gifting of homegrown cannabis. Initiative 71 is a worst-kept secret, part of the permissive gray area that has characterized D.C.'s cannabis economy to date.
Related article: House Republican committee lifts ban on DC cannabis sales, adds federal bank safeguards in 2025 spending bill
Time is running out for licensed operators
Licensed operators like District Cannabis are pushing for increased enforcement not only to curb illegal competition but also to protect the medical marijuana market.
Hyde says time is running out for many legal businesses.
“The public and some city officials recognize that if we don't act quickly, all businesses trying to enter the health care market will fail because the health care market doesn't exist,” she said. . These licenses could fail before they're even granted if the city doesn't act quickly. ”
As the situation in Washington DC changes, the cannabis gift economy may soon become another chapter in the How to Regulate Cannabis Handbook. Perhaps the chapter is about “Lessons Learned.”
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