D.C.’s new era of cannabis regulation is here, and that means the days are numbered for a retail market that has operated in a gray area for the past decade.
After opening up the regulated cannabis market last year — lifting the cap on medical licenses and allowing anyone over 21 to self-certify for a medical card — city officials are moving ahead to deal with the nearly 100 unlicensed cannabis retailers that remain open.
And if their landlords don’t take action to remove the illegal shops, they may be held accountable.
Following legislation the D.C. Council passed in January, the Alcoholic Beverage and Cannabis Administration can now issue fines of more than $10K to property owners with unlicensed cannabis tenants.
The agency has ramped up its enforcement of cannabis retailers and their landlords after the council passed emergency legislation in July clarifying ABCA’s authority to conduct inspections and gave the agency “clear statutory authority” to close businesses and seize contraband cannabis.
On Tuesday, the council unanimously voted to make both those pieces of legislation permanent.
“To be able to look at what is going to motivate people to follow the law and get into compliance and get into licensure, you’ve got to understand that the landlords have skin in this game too,” Ward 6 Councilmember Charles Allen, who introduced the January bill, told Bisnow.
Allen said the city’s crackdown is part of an effort to support the growing number of cannabis businesses that are playing by the rules and paying taxes. Legal operators told Bisnow they are anxious for swift enforcement of the unlicensed shops, which they say pose unfair competition.
“Their sales continue to grow and ours continue to shrink,” said Grace Hyde, director of commercial and production operations at District Cannabis, a licensed medical dispensary in Union Market.
The crackdown is also a matter of safety. With the unregulated market, there is no oversight determining where the product comes from or what is in it.
“We’ve had cannabis seized laced with fentanyl. Like, this is dangerous stuff,” Allen said. “And so for people who do want to consume, we’ve got a tested and a trusted marketplace in the legal cannabis businesses, and that’s where people should be going.”
But the practice of putting liability on landlords is a departure — ABCA doesn’t fine landlords in its enforcement of the city’s liquor license laws.
“I don’t think they’ve ever done this before,” said ArentFox Schiff partner David Grosso, a former D.C. councilmember who led previous cannabis legislative efforts and now represents a medical dispensary in Takoma. “Usually they go after the alcohol license operator. Whoever owns that alcohol license is the one that gets in trouble.”
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