The D.C. Council will be considering legislation on Nov. 2 to help providers and consumers of medical marijuana affected by the COVID-19 pandemic. The legislation may also cripple the city’s gray market of retail and delivery services that provide marijuana as “gifts.”
Ahead of an open hearing on recreational marijuana on Nov. 19, Council Chairman Phil Mendelson introduced an emergency bill for the Nov. 2 session. That bill would enable city agencies and law enforcement to impose fines, revoke licenses, and shut the doors of nonauthorized businesses engaging in buying, selling, or otherwise “exchanging” marijuana to its customers.
The bill is also expected to aid customers of medical marijuana and legal dispensaries that provide it.
When COVID-19 hit, many medical marijuana customers were unable to renew their registration with D.C.’s Alcoholic Beverage Regulation Administration (ABRA) due to limited government services. As a result, Mendelson claims, over half of the District’s medical marijuana participants saw their registrations expire.
Mendelson’s bill said D.C. should “allow qualifying patients and caregivers whose registration cards expired or will expire between March 1, 2020 to Jan. 31, 2022 to continue purchasing, possessing and administering cannabis until Jan. 31, 2022.”
Under the current law, customers seeking medical marijuana have to first get approval from medical practitioners registered with ABRA, some of whom charge up to $200 a visit.
After getting approval, the customer then needs to register with ABRA for an additional $100. That registration has to be renewed annually at a cost of $100.
The high cost of renewal has likely cost the legal medical marijuana economy to suffer. Mendelson’s bill states the number of registered patients in the program has dropped from nearly 12,000 to approximately 5,000. Mendelson believes many of those customers just shifted to D.C.’s gray market.
What is the Grey Market?
Since the approval of Initiative 71 in 2014 by D.C. voters, the possession, personal use, home cultivation, and gifting of small amounts of marijuana are all legal within the borders of the District.
The initiative does not, however, permit the sale of marijuana for anything other than medicinal purposes, which is currently regulated by ABRA.
But since 2014, entrepreneurs who claim to follow the letter of the law have created a new industry economy, selling everything from cheap stickers and cookies, to bouts of advice for a high priced premium — and gifting their customers specific amounts of marijuana as a thank you “gift.”
What began with pop-up stores and delivery services, has now expanded to physical storefronts and licensed businesses.
According to data from New Frontier in 2019, the known ad-hock gray market for marijuana in D.C. is roughly 17 times larger than the legal market for medical marijuana.
Mendel doesn’t believe the status quo is either safe or sustainable:
“The products sold by illegal storefronts and delivery services are not traced or tested, putting patients who cannot afford to possess medical cannabis from a licensed dispensary at risk of ingesting contaminated products.
Additionally, cannabis pop-ups have been associated with incidents of violence, including armed robberies and shootings, that endanger residents of the District. ” said Mendel in the emergency bill.
D.C. police have previously expressed frustration with the vagueness of Initiative 71, and dispute the legality of the marijuana “gift” economy. As a result, law enforcement on marijuana sales has been sporadic over the years as the gray market has continued to grow leaps and bounds.
The new bill from Mendel would also expand the city’s tool chest for civil enforcement, with fines starting at $30,000 for businesses that sell or gift marijuana, license revocations, temporary cloture of stores, and stark penalties for landlords who knowingly rent space to the businesses.
But for anyone believing Mendel wants to eliminate marijuana from being a part of D.C.’s new economy, the council has also set an open hearing for Nov. 19 to hear his other major proposal: legalizing and taxing the sale of recreational marijuana.