Washington, D.C., City Council members have their hands tied on regulating and taxing adult-use cannabis sales in their jurisdiction, as cannabis “gifting” continues to provide an alternative means for recreational shoppers.
But the council is now getting crafty in untangling those snafus.
The district councilmembers will consider a proposal during their April 5 legislative meeting that would allow anyone 21 and older to obtain a medical cannabis card, with or without a doctor’s recommendation, The Washington Post reported.
The city’s medical cannabis retailers have experienced “substantial erosion of their business to the illegal market,” Council Chairman Phil Mendelson told the news outlet. Mendelson said that he believes the illicit market includes “gifting,” where consumers purchase non-cannabis items or services, such as a membership in a club, and are then provided cannabis as part of the sale.
Mendelson told the Post his staff counted nearly 40 such businesses in the district, arguing that the council should take action to provide legal businesses greater accessibility to the market. He said not only do the city’s licensed medical cannabis dispensaries provide fees and tax revenue, but “there’s greater assurance of quality. Consumers know they have a safe product.”
Under current law, district residents 21 and older can possess, consume, home cultivate and gift cannabis, the latter of which has opened the door for differing interpretations of the term “gift” when it comes to charging for merchandise or memberships in exchange for “free” cannabis, which is not regulated or taxed.
Despite the district’s voters approving adult-use cannabis via Initiative 71 in the November 2014 election, a rider was introduced by Maryland U.S. Rep. Andy Harris the following year, which stripped the district’s power to regulate a retail industry within its roughly 68-square-mile borders. Commonly referred to as the Harris rider, the provision that blocks the district from taxing and regulating cannabis sales has been in place ever since.
While there were hopes among district officials and industry advocates that a Democratic-controlled U.S. Congress would strip that provision this year, that wasn’t the case. Congress retained the rider in the $1.5 trillion omnibus spending package, House Resolution 2741, which it unveiled March 9. President Joe Biden mirrored that stance in his proposed budget.
Since the Harris rider has been in place, the practice of cannabis gifting has been able grow in the absence of licensed adult-use retailers.
The measure district councilmembers plan to vote on Tuesday includes several provisions meant to put the gifting storefronts out of business, including civil penalties for the store owners as well as deterrence for landlords who host them, the Post reported.
Specifically, the bill would authorize Washington’s mayor (currently Muriel Bowser) to shut down any cannabis gifting business for four days, an action that could be prolonged following an investigation. In addition, those businesses could be faced with up to a $30,000 fine that must be paid before they reopen.
Landlords could also be fined up to $30,000 on first offenses, and more on subsequent violations.