Business, News, Politics

Washington D.C.’s Cannabis Gifting Culture Narrowly Escapes Demise

November 29, 2021 08:30 am ET
Washington D.C.’s Cannabis Gifting Culture Narrowly Escapes Demise

Washington D.C., the capital of the United States, has a unique situation when it comes to cannabis legalization. The cannabis gifting culture that developed in the city as a result of cannabis laws rife with ambiguity was recently threatened with new legislation, but a last-minute change to the bill preserved the popular practice.

Because D.C.—which sits on the land between Virginia and Maryland—is not a state, the district’s citizens are often at a disadvantage when it comes to many of the benefits of statehood. Residents of Washington D.C. can be called for jury duty and serve in the military; they also pay taxes and vote, yet they have no official representation in Congress. This creates a lot of gray areas in the law, making room for operations like the cannabis gifting “gray market” that erupted from loopholes in a cannabis legalization initiative passed in 2014.

Cannabis and Washington D.C. have set the stage for a one-of-a-kind performance. On one side of the curtain, inventive entrepreneurs embrace the cannabis business while cleverly adhering to the district’s rules and regulations. On the other side, authorities and local lawmakers continue to spin a web of confusion regarding the accessibility of cannabis for citizens. Luckily, the charades have recently taken a positive turn.

The Legal Loophole of Cannabis Gifting

Medical cannabis has not caused nearly as much contention among D.C. stakeholders as recreational. The Washington D.C. Council passed a bill in 2010 that legalized medical cannabis, and the law went into effect on Jan. 1, 2011. Then, in March 2014, D.C.’s city council approved a decriminalization bill that reduced the penalties for cannabis possession for all residents. D.C.’s residents weren’t satisfied with that, however, and Initiative 71—a proposal submitted by the D.C. Cannabis Campaign to legalize recreational cannabis cultivation and possession—was approved by a majority of voters on Election Day 2014.

Initiative 71 did not legalize cannabis sales or establish a retail recreational market, but that didn’t stop those who think outside the box. To foster a cannabis market out of the loose language of Initiative 71, ganjapreneurs developed small businesses that involved “gifting” cannabis to customers alongside the sale of other items, from stickers to socks. For example, a customer will purchase a $10 pair of socks for $200 in order to receive a nice stash of cannabis on the side. Technically, no one bought or sold the cannabis—but it was legally transferred from one set of hands to another. Unfortunately, law enforcement hasn’t always seen it that way, and efforts to disrupt the district’s gray market soon emerged.

Lawmakers’ Attempt to Crack Down on Gifting 

Since Initiative 71 went into effect, D.C. police have frequently maintained that gifting arrangements are not allowed under the initiative’s language, leading to crackdowns on gifting operations around the city. Nonetheless, D.C.’s gifting culture continued to thrive—and it saw a whole new level of popularity once the COVID-19 pandemic hit in early 2020. As a result of the public health emergency, thousands of residents with medical marijuana (MMJ) cards were unable to renew them properly, forcing many to turn to recreational cannabis businesses for their goods. Naturally, gifting business sales skyrocketed.

This year, D.C. Council Chairman Phil Mendelson introduced an emergency bill that enhanced protections for medical cannabis patients but threatened the future of the gifting businesses. Put simply, language in the proposed legislation extended the validity of expired MMJ cards and allowed the city to offer 2-year cards, but it also introduced strict penalties for gifting cannabis, including fines of up to $30,000. Mendelson viewed his bill as a way to help the MMJ industry survive by eliminating the illegal market that was impeding on it.

On the opposite side of the arena, district residents depending on these cannabis gifting businesses for survival viewed Mendelson’s bill as a death sentence. According to DCist, these entrepreneurs hold the view that “existing stores and services—many of which are run by Black residents—should be seen as incubators of a new and more diverse new industry, not shut down.” They advocated heavily for allowing the continuation of gifting stores that were forming the foundation for an eventual legal marketplace for all adult residents.

In an attempt to fight the legislation that would destroy their businesses, a group of Black gifting-business owners began circulating amendments to Mendelson’s bill and bringing attention to the cause with the formation of a coalition called the Generational Equity Movement. Their efforts paid off. On Nov. 1, 2021, just a day before the D.C. Council was set to vote on the emergency bill, the language about gifting business penalities was removed, leaving only the protections for D.C.’s MMJ industry. The council approved the amended bill unanimously.

The Future of D.C.’s Blossoming Cannabis Industry

Cannabis legalization and regulation is a relatively new phenomenon that the country is learning how to navigate one step at a time, and markets like Washington D.C. that fall into legal gray zones don’t make progress any easier. With the passing of Mendelson’s bill, which included an increase to the amount of cannabis medical patients can purchase, the district’s MMJ industry is on track to recover from the hiccups it experienced because of the pandemic.

As for D.C.’s gifting sector, it’s safe…for now. After the vote, Mendelson noted that the issue of gray market cannabis businesses would have to be addressed eventually. As DCist reports, the councilman fears that unregulated gifting businesses will continue to threaten the success of medical dispensaries. “After all, how can you compete with someone who is not playing by the same rules you are bound to, such as ensuring quality, paying sales taxes, and following other regulatory requirements?” he said about the matter.

Nonetheless, the delay in enacting any kind of penalizing legislation gives the district’s lawmakers and residents more time to carefully consider the implications of such measures—including the harm they could do to Black-owned businesses. “I think the process really matters here, especially given that the criminalization of marijuana has disproportionately harmed Black Americans nationwide, and now we have a unique opportunity to use this product to empower Black Washingtonians,” said Councilmember Janeese Lewis George.

On Nov. 19, the city held a public hearing that allowed stakeholders to give their two cents on how recreational legalization should be handled. However, no form of recreational legalization will be able to take effect until a provision known as the Harris Rider that has prohibited the city from developing a recreational market since Initiative 71 went into effect in 2015 is lifted. How do you think Washington D.C. should move forward with its unique cannabis industry? Let us know in the comments.

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