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Does Gray-Market Cannabis Breed Robberies?

“I got [my son] a cellphone literally like a week ago,” a distraught father told the October 2022 meeting of Advisory Neighborhood Commission 6C. “One of the first uses of his phone was to call 911 to report a shooting [outside] his window. It was across the street from our property.”

Violence and property crimes on the H Street NE corridor have increased significantly since marijuana retailers began proliferating, residents say. These “I-71 stores,” as the retailers are called from the 2014 public referendum that decriminalized possession of marijuana in the District, pair the sale of an item with a “gift” of weed. Many have set up shop without the required business licenses and registration. Many appear to be evading payment of DC sales taxes. (See: www.hillrag.com/2022/09/02/the-wild-west-of-unregulated-of-cannabis-retailers/.)

While I-71 stores have popped up across all eight wards, they cluster in some of the city’s busiest commercial nightlife corridors. Examination of crime statistics appears to validate residents’ complaints.

In the second part of its investigation of the District’s cannabis retail gray market, funded by Spotlight DC, Capital Community News analyzed Metropolitan Police Department (MPD) crime statistics for three concentrations of I-71 businesses: H Street NE (14 shops), 14th and U streets NW (13 shops) and 18th Street/Adams Morgan NW (10 shops). This investigation found violent crime immediately surrounding these clusters has significantly increased in recent years when compared to other sections of the same corridors lacking cannabis retailers. Large amounts of cash and weed, combined with DC’s emergence as a regional cannabis destination, fueled this increase, the investigation revealed.

Given the federal banking regulations regarding cannabis revenues as the fruits of felony transactions, I-71 retailers operate mostly on a cash basis. They also maintain significant inventories of weed. The combination makes them convenient targets for the criminally minded. Reflecting this threat, I-71s many maintain armed security on their thresholds and limit entry. At prime commercial times, I-71 security arrangements create exterior customer lines. Street dealers benefit, working the concentrations of waiting customers.

DC offers a nightlife center with lax regulatory enforcement nestled between Maryland and Virginia, both of which have yet to legalize the sale of recreational cannabis. The District has become a magnet for DMV weed “tourists,” who consult the Gentleman Toker (www.gentlemantoker.com) and other online guides to the I-71 merchants. Supercharged by the publicity, H Street NE, 14th & U streets NW and 18th Street NW have become regional cannabis destinations, whose growth has resulted in a significant deterioration of the quality of neighborhood life.

“I can tell you that marijuana, undoubtedly, is connected to violent crimes that we’re seeing in our community,” stated Robert Contee in 2021, chief of the Metropolitan Police Department (MPD). He blamed I-71 storefronts for the rise in violence and property crimes along nightlife corridors.

Were Contee’s concerns well founded? To ascertain the impact of I-71 shops on public safety, CCN gathered crime statistics for robberies and assaults with a dangerous weapon for three nightlife destinations: H Street NE, the intersection of 14th and U streets NW and 18th Street/Adams Morgan NW.

On each corridor, CCN reporters identified an area where at least four I-71 retail storefronts formed a cluster, and compared the cluster area with an adjacent control area that lacked such establishments. Reporters then examined the DC Crime Map (www.crimecards.dc.gov). Selecting an address in the center of each cluster and control area, they mapped the crime incidence in a 1,000-foot radius of the address. Here are the addresses selected:

  • H Street cluster – 510 H St. NE
  • H Street control – 99 H St. NE
  • U & 14th cluster – 2000 14th NW
  • U & 14th control – 1726 U St. NW
  • 18th Street cluster – 2420 18th NW
  • 18th Street control – 1630 Columbia Rd. NW

Reporters gathered statistics from both cluster and control areas, beginning two years before the opening of each cluster’s first I-71 business, based on the issuance date of its certificate of occupancy through October 2022. The results appear to confirm Contee’s contention and neighbors’ concerns.

H Street NE
Red ropes, bouncers, security guards, bright lights and long lines are customary components of DC’s nightlife. But the early birds at 3 p.m. on a Friday afternoon on the 500 block of H Street NE are not waiting to be the first into a concert. They are in line for cannabis. Home to one of the largest clusters of cannabis businesses in the city, H Street NE draws significant crowds even between 9 a.m. and 5 p.m. on weekdays.

The H Street cluster houses five I-71 retailers: Luxury Soil (775 H St. NE), Street Lawyer Services (409 H St. NE), Up in Smoke LLC (508 H St. NE), Relva (311 H St. NE) and New Leaf (416 H St. NE).

The first I-71 shop opened in January 2018. Between 2018 and October 2022, the H Street cluster saw a total of 74 robberies and 21 assaults with a dangerous weapon (ADWs), as well as a single homicide. In contrast, the H Street control experienced a total of 28 robberies, 25 ADWs and three homicides. So, on its face, the cluster had more than double the robberies, while ADWs were about the same.

Annual comparisons of robberies between the H Street cluster and the control provide a more nuanced view of the impact of I-71 expansion. In 2016 and 2017, the two years before the first cannabis store appeared, both blocks experienced a similar number of robberies.

In 2018, after the first I-71 store opened, the robbery numbers began to diverge. There were four more robberies in the cluster than the control. By 2019, the difference had risen to 10. For the remaining period under consideration, the difference remained 9 or above, peaking at 13 in 2021. Since the opening of the first I-71 establishment, the cluster has experienced 164% more robberies than the control area.

Residents on the tree-lined streets of single-family homes in the blocks north of H Street NE report frequently hearing gunshots. They have awakened to find naked or disoriented men sleeping in their yards. They walk past intimidating sidewalk gatherings of people smoking pot on their way home at night. They discourage their children from playing outside because of the increasing number of strangers on the streets. Their neighborhood has more car break-ins, violent fights, vandalism and property crimes.

“I have lived in this neighborhood [H Street NE] since 2000. And I think this year has probably been the worst year for deterioration of quality of life,” declared Advisory Neighborhood Commissioner Joel Kelty (6C05) at the commission’s October 2022 meeting.

Maryland attorney and owner of Street Lawyer Services Lonny Bramzon counters these dismal assessments. According to him, H Street’s I-71s offer a peaceful environment where a diverse community can gather and associate. “I see lots of lonely people opening up on a personal level,” says Bramzon. “They come in and thank us for helping them get what they need.”

Outside on the street, it’s a different world.

“There’s a lot more loitering and it attracts the wrong element,’’ says the owner of a childcare center, referring to an I-71 shop that opened one door away from her long-established business. The owner requested anonymity out of fear of retaliation, a common reaction encountered during interviews for this series.

DC laws would bar a liquor store operating in close proximity to a school or daycare center. Weed stores, on the other hand, have been able to set up wherever they wish and operate with no such restrictions.

The childcare business owner has lost 30% of her customers since the I-71 store opened. “It’s pretty bad,” she says. “Parents are being heckled when they drop off or pick up their children. People are trying to sell them marijuana or whatever drugs they might have. It has really had a very negative effect on our population at the center.”

Advisory Neighborhood Commission 6C, which is responsible for the western portion of the H Street NE corridor, at its October 2022 meeting unanimously approved a letter to Mayor Muriel Bowser (D) on the subject.

“The recent increase in both property and violent crime … is having an unacceptable impact on quality of life,” the letter stated. The city’s inaction regarding the public safety problems posed by the proliferation of I-71 stores could have dire economic consequences for the District, it warned, and it urged the mayor to “take concrete and immediate action to address a rise in crime in general and firearms and drug-related crimes in particular.”

Some residents attending the October meeting threatened to relocate their families out of the District if the public safety issues were not resolved.

14th and U Streets NW
At the intersection of 14th and U streets NW, the hovering cloud of cannabis smoke is omnipresent. Groups of eager customers gather outside Legacy (1937 14th St. NW) and Flight Pass (1338 U St. NW), smoking and chatting while commuters, families and children pass by on the way to the street’s many restaurants, fitness studios and public schools and playgrounds.

The U Street cluster is home to four I-71 retailers: Flight Pass, Legacy DC, Dreamland Smoke Boutique (2001 14th St. NW) and Doobie District (1526 U St. NW). The first I-71 retailer opened in August 2016.

Between 2016 and October 2022, the U Street cluster saw a total of 186 robberies, 95 ADWs and six homicides. In contrast, the U Street control area experienced a total of 60 robberies, 21 ADWs and no homicides. On its face, the U Street cluster had more than three times the robberies, three and a half times the ADWs and six homicides versus none for the control.

Annual comparisons of robberies between the U Street cluster and the control provide a more nuanced view. In 2014, both blocks experienced a similar number of robberies. In 2015, the cluster experienced 12 more robberies than the control. The difference in robberies between the two continued to grow, reaching a high of 48 in 2019.

During the COVID pandemic, when overall crime in the District declined, the control area experienced half the number of robberies as the cluster. Similarly, ADW numbers in the control, except for an anomalous spike in in 2015, have been significantly lower than in the cluster area. In 2019, for example, the control saw five ADWs versus 15 in the cluster. During COVID, the control saw only two assaults in 2021 versus 14 in the cluster. The difference between the control and the cluster consistently exceeded 150% between 2016 and 2022.

Residents worry about being mugged near the cluster of shops, says Advisory Neighborhood Commissioner Alan Kensak (1B05), who represents a portion of the 14th and U streets NW neighborhood.

18th Street NW
The 18th Street corridor, stretching from Dupont Circle to Adams Morgan, features bright lights, large store windows, airy spaces filled with art and an extensive menu of weed and cannabis-infused items.

The 18th Street cluster is home to four I-71 retailers: All American Gallery (2206 18th St. NW), Funky Piece (2116 18th St. NW), Dreamland Smoke Boutique (2408 18th St. NW) and Gifted Curators (2469 18th St. NW).

The first I-71 store opened in April 2016. Between 2016 and October 2022, the 18th Street cluster saw a total of 103 robberies, 95 ADWs and six homicides. In contrast, the 18th Street control experienced a total of 80 robberies, 21 ADWs and zero homicides. At first glance, the 18th Street cluster had 23 more robberies, four-and-a-half times the ADWs and six homicides versus none for the control.

Maps by Jason Yen, CCN

Again, annual comparisons of robberies provide a more nuanced view. In 2014, two years before the first store opened, both areas experienced a similar number of robberies. In 2015, the cluster saw twice as many robberies as the control. In 2016, the cluster experienced seven more robberies than the control. The situation reversed in 2018 and 2019, when the control saw more robberies. In 2020, the numbers were even. In 2021 and 2022, during COVID, the cluster had over twice as many robberies.

ADWs had a more consistent pattern. Starting in 2016, there were at least twice as many ADWs in the 18th Street cluster as in its control. This pattern persisted through 2022.

“Adams Morgan has a long-standing problem of too many ABC establishments crammed into a small area,” explains a long-time resident. “It has become a destination for partygoers, which has had negative effects on residents, such as over-service of alcohol, rowdy behavior fueled by booze, including much violence, parking problems as visitors search for an open spot, late-night disturbances from visitors returning to their vehicles where they play loud music and have loud conversations, as well as the phenomenon of illegal off-road vehicles, such as dirt bikes, loudly cruising neighborhood streets into the wee hours.”

As the resident notes, there are three “smoke shops” on 18th Street close to Belmont, as well as others in Adams Morgan. “I routinely see customers park in front of fire hydrants, driveways and block public alleys to run into these shops and return within 10 or 15 minutes with marijuana, which is often smoked in their vehicles, on the public sidewalk or in alleys,” he continues. “Added to the alcohol-driven nightlife scene, the availability of illegal marijuana in the commercial areas further fuels the party scene, which disturbs residents, particularly those who live close by.”

However, other residents have a more positive impression of their I-71 neighbors. “What I have heard is that people would rather not see more of these shops in the neighborhood,” says Advisory Neighborhood Commissioner Pete Wood (1C03), who represents a portion of 18th Street. “But given the choice of having vacant stores or more shops, they are willing to accept more smoke shops,”’ he adds.

Wood lives half a block off 18th Street, near a cluster of four or five shops. “There are more around the corner on Columbia Road and one or two more are just about to open up. I don’t know when it reaches the point where it becomes a problem. Right now, it is neutral or positive,” Wood says. “I haven’t seen people congregate in front of these stores. They go in, make their purchases and come back out in a few minutes, and are gone.”

While their customers may have earned the ire of some neighbors, according to Kristen Barden, executive director of the Adams Morgan Business Improvement District, the impact of these storefronts has been a positive one. The businesses along 18th Street NW have been “good corporate neighbors and many have contributed through educational programs and event sponsorship,” she says.

“These stores have brought a lot of foot traffic to the neighborhood and those same people spend money in other stores and restaurants,” Barden adds. “The I-71 stores in Adams Morgan also promote the neighborhood through their social media channels, host events and are very collegial towards the greater community.”

Commissioner Jake Faleschini (1C07) definitely had some concerns about public safety overall in the neighborhood. However, he does not find them to be “in any way associated” with the I-71 storefronts. Faleschini also echoed Barden’s comments.

“Several of these businesses have sponsored community events like our pedestrian zones over the past year and have been fantastic neighbors,” Faleschini says. “The demonization of these businesses feels kind of racist to me and to trying to attach them to some larger issue that may or may not be happening statistically also feels very racist,” he adds.

There is not publicly available data on the individual ownership of I-71 businesses. CCN’s earlier survey of corporate registrations, certificates of occupancy and basic business licenses (www.hillrag.com/2022/09/02/the-wild-west-of-unregulated-of-cannabis-retailers/) found I-71 ownership difficult to ascertain. However, reporters did identify a number of such businesses owned by out of state residents, two of whom were identified through social media as White.

While the causation may be a matter of debate, CCN’s analysis of the crime statistics found that the proliferation of I-71 shops is associated with significant increases in crime over the measured time periods compared to neighboring areas that contain no such businesses. This conclusion is buttressed by the testimony of many neighbors. The root of the problem may lie in the explosive growth of an industry that attracts lots of “green.”

It’s a Green, Green World
Cannabis is big money. One estimate put the gross sales of the District’s grey-market cannabis at close to $650 million. This is not an exaggeration.

An email from the DC Office of Tax and Revenue to one gray-market retailer obtained by CCN reporters confirms the payment of approximately $47,000 in sales tax for the second quarter of 2022. The sales tax rate in DC is 6%. Simple math indicates that the establishment’s reported taxable quarterly sales totaled $783,333 or $261,111 per month. If this is typical, it would indicate the store reports $3,133,333 annually, quite a lot of revenue for a single retail storefront.

Entrepreneurs have taken notice. A Google map search paired with a consultation of the Gentleman Toker reveals over 200 I-71 businesses scattered throughout the District’s commercial corridors. These include storefronts, delivery services and tour companies.

The results of a police raid on a large gray-market retailer provide further insight. On August 20, 2021, MPD searched two locations of Mr. Nice Guy, a chain of gray-market storefronts. At the first site, on the second floor of 1922 Ninth St. NW, officers found 22.46 pounds of weed, 56 marijuana cigarettes, 285 vape cartridges, a half-pound of kief and over $68,000 in cash. At the second store, at 408 Eighth St. NW, police found $6,289 of cash and 15 pounds of weed.

The amounts of cash and cannabis are no surprise. A typical medical cannabis dispensary, the CCN reporters found, maintains an inventory of at least 16 pounds of weed and weed products. Medical dispensaries also routinely keep large amounts of cash on hand, since federal restrictions confine them to debit card transactions or cash. The situation in I-71 establishments is analogous.

The combination of a mostly cash business with substantial amounts of cannabis inventory is explosive. Walk along H Street NE or step into one of the I-71s there and you may encounter burly, intimidating security guards wearing a shirt blazoned with “Police’’ and sporting what looks like tactical gear. Many of the guards are likely armed. The 2021 raid on 408 Eighth St. NW, for example, resulted in the seizure of a loaded Glock-style semiautomatic handgun equipped with a high-capacity magazine.

Landlords are succumbing to offers to pay two or three times the going rent, states Anwar Saleem, executive director of H Street Main Street. “These businesses have more cash and they can pay higher rents,” he says. “We are losing our H Street vibe.”

Chief Contee concurred at a 2021 news conference. “When you have something where people get high reward ‒ they can make a lot of money by selling illegal marijuana ‒ and the risk is low, the risk for accountability is very low, that creates a very, very, bad situation because those individuals get robbed, those individuals get shot at, those individuals get involved in disputes all across our city.”

Local elected officials agree.

“Realistically, these things start to add up where people from the tristate area start coming in [to purchase cannabis],” says Commissioner Kensak about the situation on 14th and U streets NW. “Typically, there are guns and violence included. They bring in a whole slew of things that can happen here in DC.’’

The New Weed Mecca
“This place is awesome, I come here from Maryland often,” wrote one customer in an online review of an I-71 establishment in DC. “Great service and gifts.” His words are typical of the over 1,000 online reviews on the Gentleman Toker (https://gentlemantoker.com/). They point to the District’s emergence as the DMV’s mecca of cannabis.

“Let Gentleman Toker be your guide to cannabis in Washington, DC!” crows the site’s landing page. “I’ve spent the last five years hunting through the wide selection of marijuana available in our nation’s capital following the passage of Initiative 71 to help you find the very best.”

According to the landing page of 420DC.com (https://420dc.com/), another guide to DC’s cannabis market, “Marijuana is perfectly legal for adult use in Washington, DC, the nation’s capital, but it can still be pretty challenging to find it if you don’t know where to look. Without recreational access to dispensaries, figuring out how to buy safe, reputable weed can be extremely confusing.”

The Gentleman Toker advises that tourists can “absolutely” buy weed from I-71 smoke shops and delivery services while visiting the city’s historic monuments and acclaimed museums. “Many” of the District’s 24,000 annual cannabis tourists take advantage of the city’s lax cannabis laws, the website claims.

“DC cannabis stores are the closest you’ll get to a recreational marijuana DC dispensary without a medical card,” continues the Toker. “It’s no surprise they’re so popular ‒ this is what the city thought it was voting for when it legalized marijuana in DC.” The site assures readers that the brick-and-mortar retailers “typically make a great effort to remain I-71 compliant, too. They don’t require an appointment, so you may encounter a line, but you’ll have time to peruse the marijuana gift displays and ask questions.”

As the Toker explains, recreational DC weed stores operate through the “gifting loophole” in Initiative 71, which enables customers to buy a non-weed item and receive weed as a gift from the retailer.

The Gentleman Toker and 420DC.com provide FAQs that explain how to navigate the gray market. Touching on everything from avoiding fake cartridges and bad marijuana to sorting through DC’s many weed delivery services, they advise on choosing strains, rolling joints and cooking edibles. They review both legal medical marijuana and I-71 dispensaries.

Both the Gentleman Toker and 420DC.com are supported by advertising. In 2017, The Washingtonian reported the Toker site earned $3,000 a month in advertising revenue. (www.washingtonian.com/2017/08/22/meet-the-local-weed-crusader-helping-washingtonians-navigate-the-marijuana-industry/.) By 2019, the site produced enough income to fully employ its founder.

Publicity continues to fuel the District’s I-71 retailers. “I see all of these cars with Maryland and Virginia tags come off the highway, go down H Street and then go right back out again,” says former Councilmember Elissa Silverman, who lives two blocks south of H Street NE.

Saleem, H Street Mainstreet’s executive director, confirms Silverman’s observation. The popular nightlife corridor has turned into DC’s version of Amsterdam. More than 15 smoke shops currently operate on H Street. They attract street drug dealers, Saleem says, who peddle their illicit wares or prey on patrons headed to the I-71s or to legitimate bars, restaurants and other businesses.

Where Is Enforcement?
Many District government agencies are responsible for regulating businesses to ensure they operate legally, pay their taxes and do not become public nuisances. The Alcohol Beverage Regulation Administration (ABRA) regulates liquor and medical cannabis sales. The Office of Tax and Revenue (OTR) collects sales and real estate taxes. The Department of Licensing and Consumer Protection (DLCP) oversees business operations and enforces zoning restrictions. The Department of Health (DOH) monitors food safety.

Agency inspectors are backed by MPD officers, who can bring complaints to the US Attorney for criminal prosecution. In addition, the Office of the Attorney General (OAG) can sue to enforce regulations, particularly in matters of consumer protection. MPD has raided I-71 retailers in the past, seizing cash and weed. However, there have been no major actions since August 2021.

“The police stopped the raids after the US Attorney’s Office said it would not prosecute these cases because it didn’t believe DC juries would convict,” a local business person involved with the District’s licensed industry commented on background.

The decision to cease enforcement resulted in an explosion of illegal cannabis businesses across the District, confirms Lisa Scott, president of the DC Cannabis Business Association. “Many more have opened up since then because they don’t think there’s going to be enforcement,” she says.

In early August 2022, however, ABRA Director Fred Mosally announced the creation of an eight-agency task force to inspect the shops for compliance, supported by MPD. Just a few days before the inspections were scheduled to begin, the mayor’s office pulled the plug. (www.hillrag.com/2022/10/06/i-71-enforcement-halted/). The presence of police officers during inspections had sparked resistance both from those strenuously opposing the inspections and those pushing for them. The pro-enforcement forces expressed concerns about possible clashes between police officers and armed I-71 employees.

“This is why we don’t trust you, because they wanted to involve the police for a business compliance situation,” Scott told Mosally in a November meeting with cannabis advocates. “If they ever bring up the police again, we need you to say, ‘Do not do that!’”

Mosally said that his agency “doesn’t have any enforcement authority,” an answer that appeared to perplex and irritate some in the November meeting, since he was the coordinator of the shelved task force.

CCN reporters reached out to city regulatory agencies and MPD for comment on I-71 enforcement. Agency officials tossed questions about enforcement back and forth like hot potatoes. Queries to ABRA were deflected to business regulators at the DLCP, which passed the potatoes to the tax collectors at OTR, who referred reporters to Mayor Muriel Bowser’s communications office, which remained silent. The DC police refused to make any comment on the public-safety impact of the gray-market establishments. This is particularly ironic given Chief Contee’s 2021 public statements.

New Legislation
After struggling for more than a year to find a solution, the DC Council approved legislation at the end of 2022 to provide a “transition’’ for the I-71s to become legally licensed medical dispensaries and growers. Councilmembers designated ABRA as the regulatory agency, providing it with new enforcement authority.

Enforcement, however, remains at least 12 to 18 months away, say those watching this new phase take shape. ABRA first has to write the regulations. Then the agency must develop a process for I-71 retailers to become medical dispensaries and growers. Once the agency opens applications, later this year, these I-71 businesses will have time to come into compliance.

It remains to be seen whether ABRA’s regulations will curb the clustering of I-71 businesses in nightlife corridors or limit their financial support of the online marketers, who are stoking regional cannabis tourism. DC liquor stores holding Class A Off-Premises Retailer licenses, for example, cannot locate within 400 feet of each other. ABRA and DOH also tightly regulate the marketing campaigns of medical dispensaries and growers. The development of legal recreational sales in neighboring Maryland and Virginia may ultimately redirect consumers away from the District.

In the interim, residents living near clusters of I-71 retailers will continue to be wary as they go about their daily business, darting through clouds of cannabis-scented smoke and the lines of patrons waiting to purchase weed.

Kenneth V. Cummins has been reporting on DC politics and issues for nearly 40 years.
Sarah Payne is a general assignment reporter for Capital Community News.
Andrew Lightman is the Managing Editor of Capital Community News.

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