D.C. Medical Marijuana Expansion Bill Eliminating Licensing Caps Becomes Law Following Congressional Review
A Washington, D.C. bill to make fundamental changes to the medical marijuana program in the nation’s capital became law on Wednesday after undergoing a congressional review period.
The measure includes reforms such as 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 also provides 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 D.C. Council passed the legislation from Chairman Phil Mendelson (D) in December, and Mayor Muriel Bowser (D) signed it in January. As is the case with all legislation passed locally in the District of Columbia, it then went before Congress for a review period during which lawmakers had the opportunity to overturn it—but the chose not to do so.
The Medical Cannabis Amendment Act further codifies that adults can self-certify as medical marijuana patients. That reform is all the more critical since congressional lawmakers passed an 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 of funding legislation.
In spite of that rider, D.C. lawmakers refiled a bill in January to legalize marijuana sales. A federal oversight agency determined last year that the congressional rider does not preclude local officials from taking procedural steps to prepare for the eventual reform, such as holding hearings.
With respect to the newly enacted medical cannabis expansion, while the as-introduced version of the legislation proposed a higher cap on dispensaries than is allowed under current law, it was revised and no longer includes 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.”
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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.
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-enacted legislation saying enforcement action can’t be taken for at least 315 days after the bill’s enactment.
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.
The law as signed 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 last year, medical marijuana patient registrations have continued to surge.
The legislation 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 measure 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 as enacted into law, 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.
Existing medical cannabis cultivation centers and dispensaries will be permitted to be vertically integrated under one provision of an amendment from Mendelson.
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).
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 failed for the 2023 Fiscal Year, with congressional lawmakers passing a final spending deal before the new session that keeps the rider, even though both the House and Senate had omitted it in their respective versions last 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 three 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.
Also this month, Congress allowed the enactment of another D.C. measure that contains an amendment to automatically expunge marijuana possession records for offenses that took place before the District enacted a limited cannabis legalization law in 2014.
That’s despite federal lawmakers’ and Biden’s separate move to overrule a different local measure to significantly revise the jurisdiction’s criminal code—an action that generated criticism from statehood advocates.
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