The medical cannabis licensing race is on. At their Jan. 9 meeting, Advisory Neighborhood Commission (ANC) 6B heard an application to ABCA from UpNSmoke LLC (427 Eighth St. SE). The business, currently operating under a business license as a juice bar, seeks a Medical Retail Cannabis License.
They’re taking advantage of emergency legislation allowing them to move from the so-called “gray” market and into DC’s regulated medical dispensary program. It’s a limited window, however. The 90-day application period opened on November 1, 2023 and will close on January 29, 2024.
And it’s a big deal. Legislation prevents two cannabis retailers from operating within 400 feet of one another. And emergency legislation introduced by Councilmember Charles Allen and signed by Mayor Bowser Jan. 25 gives ABCA the teeth to go after the business –or the property owner.
Congress blocked the District from creating a legal market for cannabis in 2014. Businesses used a loophole in the law to “gift” cannabis with the sale of another product or service, creating a “gray market” outside the bounds of District regulation.
In an attempt to bring order to the market, emergency legislation passed by DC Council last December allows so-called “I-71” businesses to apply to the Alcohol Beverage and Cannabis Administration (ABCA) for a license to sell medical marijuana. The same law permits customers to certify themselves for a medical marijuana card.
Licenses are processed on a first-come, first-serve basis, ABCA said. And that matters in a real way: District legislation limits licenses within specific distances. Medical cannabis retailers must be 300 feet from schools and recreation centers. Individual businesses also must be located at least 400 feet from an existing licensee. How long is that? About the length of the 300 block of Pennsylvania Avenue SE (where the Hawk ’n’ Dove is located).
It means that a successful application could effectively freeze out another on the same block, a real possibility on several blocks of H Street NE, for instance. ANC Commissioner Chander Jayaraman (6B06) described the application process as a “hunger games situation,” noting that a new operator without a storefront who submitted paperwork would be prioritized over a current operator who has not yet done so.
Taking the Lead
But there’s a still an opportunity for some applicants to get to the front of the pack. The law says that half of all licenses issued to establishments have to be issued to social equity applicants. Those are defined as District residents who earn less than 150 percent of mean household income and/or either have themselves been convicted of —or have a family member who was convicted of— a cannabis or drug-related offense.
ABCA said the total licenses awarded by the agency during the 90-day period is actually dependent upon the number of social equity licenses awarded. If eight social equity licenses are awarded in those 90 days, ABCA can grant up to 8 standard licenses, the agency clarified.
Moving to Compliance
ANC 6B saw a bit of a rush in applications. Commissioner Chander Jayaraman said that ANC 6B currently has three applicants for a medical retailer license before them. That includes UpNSmoke as well as No Kids Allowed (637 Pennsylvania Ave. SE) and DC Dash (727 Eighth St. SE, a bit more than 1000 feet from UpNSmoke). Meanwhile, ANC 6A considered applications from another UpNSmoke location ( 712 15th Street NE) and Za Partners (1383 H St. NE) while ANC 6C heard a December application from New Leaf (416 H St. NE)
Zack Learman, legal representative for UpNSmoke, said they are a social equity applicant. The business is at least 50 percent owned by District resident Hassan Dib. As a social equity applicant, Learn said, Dib earns less than 150 percent of the median family income as set forth by US Housing and Urban Development and was previously convicted under a cannabis or drug-related offense.
UpNSmoke representatives said they would work with ANC 6B to move to full compliance. At the most recent ANC 6B meeting, commissioners voted to protest the application to maintain their standing as they negotiate a Settlement Agreement (SA), said Chair Edward Ryder. Learman noted that Dibs applied for a medical license for that location that was protested by ANC 6A for the same reasons.
Security is also a concern even with legal cannabis sales. Commissioners said they would be watching the security and monitoring on the front of the UpNSmoke storefront, which is located next door to a 7-11.
Store operators said that they employ one of the only security services approved by ABCA. Security is always on site to verify identification and sales as well as behavior after purchase, they said. Learman posited that the security presence might improve safety on the street overall.
Strategically, it makes sense for a business like UpNSmoke to initiate an application as soon as possible.
That’s because in January, DC Council passed emergency legislation introduced by Councilmember Charles Allen (Ward 6-D) designed to give ABCA the teeth to go after gifting shops, forbidding them from representing themselves as I-71 shops or from selling or “gifting” cannabis at alI.
In a press release, Allen said as the application period opened it was clear that enforcement was necessary for shops that still choose to operate illegally. “The goal is to create an enforcement scheme for cannabis that more closely mirrors how we regulate the sale of alcohol for bars and liquor stores in the District and in doing so, create safer neighborhoods for everyone,” Allen said.
The law provides for ABCA to issue a warning to businesses that violate the law, followed by escalating fines. ABCA can also go after landlords who allow illegal cannabis retailers to operate in their buildings.
Allen’s Chief of Staff Kate Mitchell said enforcement won’t apply to operators who have initiated or are already in the application process. Such operators are permitted a 90-day window.
In an interview, Allen said he was confident that more and more businesses would apply to become part of the medical cannabis program. “Across the entirety of the city, you’re going to go from eight licensed establishments, to probably 40 licensed establishments,” he said. Allen said the new enforcement strategy in the emergency legislation, if passed, could completely eliminate illegal shops.
Asked for details on enforcement, representatives for ABCA noted that Mayor Muriel Bowser had until Jan. 26, 2024, to take action on the emergency legislation. “ABCA will be prepared to enforce the legislation in the event that it becomes law,” said a representative. UPDATE: The Mayor signed the bill Jan. 25. It is now in effect until April 24, 2024.
ANC 6B has voted to send a letter in support of the legislation. But commissioners still have some concerns. They asked the DC Council to bring some regulations for cannabis licensing in alignment with requirements for alcohol licensing. For instance, the distance from which a cannabis business can operate in proximity to a school or recreation center is 300 feet for cannabis businesses and 400 for those selling alcohol. They also request future legislation planned by Allen include a process to request an extension of the protest deadline, currently absent from DC Code.
UpNSmoke representative Learman said he understood that the application is the point at which the ANC could impact their operations, and he understood why they needed to protest. But, he said, the business only wants to take the opportunity to operate in full compliance, Learman added. “We’re in the gray and we’re looking to move to the white,” he said.