D.C. Medical Marijuana Bill To Eliminate License Caps, Provide Tax Relief And More Heads To Mayor’s Desk
The Washington, D.C. Council has unanimously passed a bill to make sweeping changes to the medical marijuana program in the nation’s capital. That includes eliminating cannabis business licensing caps, providing tax relief to operators, further promoting social equity and creating new regulated business categories such as on-site consumption facilities and cannabis cooking classes.
It would also provide a pathway for current “gifting” operators that sell non-cannabis items in exchange for “free” marijuana products to enter the licensed market, while empowering officials to crack down on those who continue to operate illegally.
The Council first approved a multi-part amendment from the sponsor, Chairman Phil Mendelson (D), before passing the legislation in a 13-0 vote on Tuesday. This comes about two weeks after the full Council approved an earlier version in a first reading. The bill now heads to Mayor Muriel Bowser’s (D) desk for her signature.
The Medical Cannabis Amendment Act would also codify that adults can self-certify as medical marijuana patients. That reform is all the more critical now that congressional lawmakers have released a final appropriations package that maintains a controversial rider blocking the District from implementing a system of regulated, adult-use cannabis commerce, despite the House and Senate having excluded it in their earlier versions.
Lawmakers have gone back and forth over how to most effectively revise D.C.’s licensing rules, with the as-introduced version of the legislation proposing a higher cap on dispensaries than is allowed under current law. The revised version approved on Tuesday doesn’t include a cap, though it does create a process for regulators to set caps or moratoriums “on the issuance of cultivation center, retailer or internet retailer licenses.”
Another amendment that was adopted prior to passage concerns enforcement actions that regulators will be authorized to take against unlicensed marijuana operators, including those that have leveraged the District’s “gifting” policy to circumvent regulations.
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The timeline for when enforcement action can be taken has shifted back and forth as the bill has moved through Council committees, with the original version requiring regulators to wait 180 days, the last version significantly narrowing the window to 30 days and the now-passed legislation saying enforcement action can’t be taken for at least 315 days after the bill’s enactment.
“What what we are doing here is really giving a path for full business recognition for many of our [unlicensed] shops who, to their credit, found a loophole in the law and jumped on it, as many have in many different industries over time,” Mendelson said on Tuesday. “But it is left them in legal limbo.”
“By adding this regulation, we’ve further pushed the shops in this industry to challenge each other—and so with respect to product safety and product quality, with a fully legitimate path to full legalization for these businesses, they are now fully in the free market and competing and pushing each other” to improve, he said.
The application period for unlicensed businesses to seek a license was extended from 60 to 90 days, and unlicensed businesses can also now apply to for cultivation center licenses. The bill was additionally amended to create a process for applicants to appeal license rejections.
Notably, the legislation also contains language that says marijuana businesses can deduct taxes under local statute that they’re prohibited from making under the federal Internal Revenue Services (IRS) code known as 280E.
A separate provision that would have allowed medical cannabis dispensaries to make deductions for losses due to reduced patient fees was eliminated under the amendment that was adopted on Tuesday.
As noted, the bill makes permanent a temporary self-certification policy that’s been in effect, allowing adults 21 and older to become medical cannabis patients who can buy marijuana from dispensaries without receiving a doctor’s recommendation. Under the current short-term law that the mayor signed this year, medical marijuana patient registrations have continued to surge—with the program adding about 1,500 more patients in September alone.
The bill aims to promote social equity in the industry by prioritizing business licenses for people who’ve been disproportionately impacted by the drug war. But the relevant provisions have been similarly revised throughout its legislative journey.
Initially, the legislation stipulated that 50 percent of certain licenses needed to be set aside for equity applicants and existing medical cannabis operators in perpetuity. The previously amended version required 100 percent to be set aside for those groups for a certain number of years, depending on the license type.
Now it’s gone back to the 50 percent requirement, with “all new retailer, internet retailer, courier, cultivation center, and manufacturer” licenses being reserved for social equity applicants. Regulators must make applications available for new licensees no later than May 1, 2023.
“It’s crucial that we embed racial equity and economic equity in this bill from the very start—and that would be aligned with the realities of our actual cannabis market,” Councilman Kenyan McDuffie (D), who carried the amendment alongside Mendelson, said at Tuesday’s hearing.
Today, Councilmember McDuffie co-introduced an amendment with Chairman Mendelson to further embed racial and economic equity in the Medical Cannabis Amendment Act of 2022.
Many thanks to all of the advocates who helped us get this measure across the finish line. pic.twitter.com/YlJ7HuhZjv
— CM McDuffie's Office (@CM_McDuffie) December 20, 2022
Existing medical cannabis cultivation centers and dispensaries will be permitted to be vertically integrated under one provision of Mendelson’s amendment.
The proposal further calls for the creation of a new license category for internet retailers that would be able to sell marijuana without having a physical storefront.
The legislation also renames the key regulatory agency from the Alcoholic Beverage Regulation Administration (ABRA) to Alcoholic Beverage and Cannabis Administration (ABC).
The i-71 Committee, which has been critical of past iterations of the legislation and played an active role in promoting certain changes, said in a statement following Tuesday’s vote that it “supports today’s passage of the new, amended version of the Medical Cannabis Amendment Act of 2022.”
“We believe it is a great improvement over the previous draft and consider it a step in the right direction for the local cannabis marketplace,” the organizations said. However, the committee said that “the bill does not go far enough to answer the myriad questions that exist about the future of cultivation in the District, a crucial component in the success of the expanded marketplace that this legislation creates.”
“We look forward to continued collaboration with the D.C. Council and Executive Branch to ensure that the District has equal opportunities as surrounding states to participate in the cannabis industry, and we believe the Medical Cannabis Amendment Act of 2022 is a step forward,” it said.
While many advocates have welcomed the legislative efforts to expand cannabis access in the District, they’ve also continued to push for an end to the federal blockade that’s prevented D.C. from establishing a regulated market, despite voters approving an initiative to legalize possession and personal cultivation in 2014.
But that effort seems to have failed for the 2023 Fiscal Year, with congressional lawmakers unveiling a final spending deal early Tuesday morning that keeps the rider, even though both the House and Senate had omitted it in their respective versions earlier this year.
After President Joe Biden issued a proclamation in October pardoning Americans who’ve committed federal marijuana possession offenses, as well as people who’ve violated the law in D.C., U.S. Rep. Eleanor Holmes Norton (D-DC) called on the president to go further by federally legalizing cannabis and letting the District establish a commercial cannabis market and grant clemency on its own.
The congresswoman said the ongoing local ban, which was maintained in Biden’s first two budget proposals, represents a “shocking violation of D.C. home rule by a Democratic administration.”
A coalition of local, state and national advocacy organizations recently asked the U.S. attorney general to formally adopt a policy of non-enforcement to allow the District to legalize marijuana sales even in light of the ongoing congressional ban.
A poll released in September found that D.C. voters strongly support marijuana legalization and oppose a crackdown on the cannabis “gifting” market that’s emerged in the absence of regulated sales.
Bowser, Norton and other elected officials in the city have routinely criticized Congress for singling out the District and depriving it of the ability to do what a growing number of states have done without federal interference.
Norton told Marijuana Moment in a phone interview in July that she was “fairly optimistic” that the rider would not be included in the final spending package. She added that the D.C. self-certification policy is an “effective workaround” until then.
Meanwhile, the mayor signed a bill in July that bans most workplaces from firing or otherwise punishing employees for marijuana use.
The reform is designed to build upon on a previous measure lawmakers approved to protect local government employees against workplace discrimination due to their use of medical cannabis.
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