D.C. ‘gifting’ shops undergo mass transition to medical marijuana


Normally on 4/20, Charles Newsome would be throwing a party. Lots of pot. Lots of customers, streaming into his marijuana retail storefront like shoppers on Black Friday.

But this year, Newsome is keeping it low-key at MetroLeaf, his shop in the Petworth area of Northwest D.C., saving the money that would typically go to festivities for a more practical use: licensing.

Now, after years of illegal weed on D.C. streets during the War on Drugs and growing pains with a limited medical marijuana market, for Newsome it was finally within grasp: a fully legitimate dispensary licensed by the D.C. government — not a licensed clothing store that also gifts people marijuana, as his shop operates now.

MetroLeaf is one of the dozens of “gifting” shops that has applied to become a licensed medical marijuana dispensary since last fall. The transition, playing out quietly in shops across D.C., marks the beginning of a seismic shift in D.C.’s marijuana landscape, which has for years been handicapped by restrictions passed in Congress that prohibit a true commercial market for recreational pot. That prohibition led to the proliferation of the “gifting” market, in which businesses sell posters, T-shirts or knickknacks — and give customers marijuana as a gift.

“We’re like right at the finish line for the license,” Newsome said on a slow Thursday evening, just after a welder he hired to help with renovations left, in preparation for a D.C. inspector’s visit. Newsome couldn’t wait to do away with those “gifts” — tired of placing orders for T-shirts and socks he had no interest in selling. “If you talk to any of my employees, they’ll tell you: I hate this, what we’re doing now,” he said.

The new law, enacted last spring with a long ramp-up period, aims to eliminate the gifting market and bring all marijuana shops into the much more regulated medical cannabis framework. It also reserves 50 percent of all new medical cannabis business licenses for “social equity applicants,” including the disproportionately Black D.C. residents who were formerly incarcerated or impacted by the War on Drugs. That includes Newsome, who was arrested on a marijuana charge in 1999, losing his job.

Of D.C.’s more than 200 I-71 gifting shops named after the initiative that legalized marijuana in D.C.76 have applied for a medical marijuana license from the Alcoholic Beverage and Cannabis Administration since last November, according to ABCA. Others are seeking to transition into other sectors of the industry, such as cultivation. Starting this month, after the D.C. Council passed an additional enforcement law, ABCA began ramping up its inspections, searching for marijuana businesses that failed to comply with the new rules and threatening to shut them down if they do not intend to apply as a medical cannabis business.

The major transition of so many retailers at once has not been without hiccups. Some parents have protested cannabis shops who have applied for a license near charter schools. Others have fears about how the dense, 68-square-mile District will handle cultivating enough marijuana to service dozens more shops, compared with just seven medical marijuana dispensaries that were licensed in D.C. before the transition.

But, broadly, those in the marijuana gray market have welcomed the new regulations, even the enforcement.

“People who are trying to do it right, we have to have some survival,” said Terrence White, who runs Monko — a high-end shop resembling a luxury boutique in Mount Vernon Triangle — and chairs the I-71 Committee, which advocates for D.C.’s marijuana entrepreneurs.

The District’s marijuana “gifting” market was borne almost entirely out of the congressional handcuffs Republicans slapped on D.C. following the vote to legalize the drug in 2014. That gray market for years rankled lawmakers, who at times sought to crack down harder on it, drawing outcry from the entrepreneurs, including White. “These stores are considered safe for a lot of people versus going on the streets and getting robbed,” he said.

But the new law created a new workaround: expanding medical marijuana access, which is exempt from the congressional prohibition. Under the law, people interested in purchasing medical cannabis only need to self-certify they need it for health reasons, which they can do at the shop. Meanwhile, the gifting shops would have to transition to and comply with all the regulations of the medical cannabis world, which lawmakers argued makes it safer as well.

White said he advocated particularly hard for the social-equity aspect of the licensing process. “The War on Drugs affected my community more than any other community,” said White, a social-equity applicant who served time for mail fraud. “If given the opportunity, the recidivism rate drops.”

But White said the advocacy was far from over. After Maryland legalized recreational marijuana, White said business at Monko dropped 11 percent, cranking up the competition while Congress still creates barriers for D.C. “Just because you get a license and your social equity, you still have an uphill battle,” he said.

A spokeswoman for ABCA said the agency is still in the process of reviewing all of the applications from unlicensed operators and could not provide a count on how many had been approved and rejected, or how many were social-equity applicants, since those applications are ongoing. So far, ABCA has issued 18 warnings to unlicensed cannabis businesses that did not apply for a license.

One of the businesses that received one was flowerz on Capitol Hill, which befuddled its owners, Chad Frey and Kaitlin Murphy: They say they only sell hemp-derived products and have nothing to do with the marijuana “gifting” shop model. Federal legislation in 2018 legalized interstate sales of hemp. Last week, they said, ABCA inspectors and D.C. police surprised them with an inspection, closing down the shop and seizing products for testing. “They’re looping us in with these unlicensed shops,” Murphy said, adding that while they intend to comply with ABCA’s directives, they are now lobbying for an exemption for hemp shops under D.C. law.

John McGowan and Meredith Kinner, attorneys representing many D.C. cannabis businesses, said flowerz’s predicament illustrates some of the challenges of the drastic and rapid expansion in the regulated marijuana industry. They said ABCA has been “pleasant to work with,” and has a committed director, Fred Moosally, who wants the new medical cannabis program to succeed. “But they’re largely building the plane as they fly it,” Kinner said. “I don’t fault ABCA — they were given a pretty big pile of dog doo to figure out.”

Medical marijuana sales have been up and running in D.C. since 2013 — but have “never been expanded to this capacity,” McGowan said. “It’s crazy. You go from under 10 licensed retailers to 76 on the ABCA list that applied — that’s crazy expansion for this market.”

Some of the hurdles for shops that want a medical marijuana license include that they can’t be within 400 feet of each other, requiring a number of them to move, and can’t be within 300 feet of a school — unless the school is in a commercially or industrially zoned area. The school proximity rules — the most lax in the nation — have caused some friction. One of the attorneys’ clients, the owner of DC Smoke, decided to relocate his H Street shop because it was too close to another weed shop. The new proposed location is in Penn Quarter — less than 300 feet from BASIS DC charter school. Parents recently protested the proposed license at a six-hour Advisory Neighborhood Commission meeting, and now DC Smoke is awaiting its fate.

Earlier this month, Green Theory — run by married couple Caroline and Jonathan Crandall, and partner Ian Tsang — said they became the first D.C. gifting shop to complete the transition to legal medical retail sales. But it was not without a fight from parents whose kids attend nearby schools.

In the exclusive Palisades neighborhood of Northwest Washington — more known for million-dollar views of the Potomac River than weed shops — the cannabis retailer is nestled on a modest retail strip below a consignment shop and above a Taiwanese restaurant. Here, after being admitted to a small lobby by a security guard and having identification scanned, D.C. residents 21 years and older can self-certify that they are using cannabis products for medical purposes — then immediately buy some.

“The fact that we are bringing cannabis into a regulated market makes it harder for any children or anybody that doesn’t meet the requirements to actually get their hands on cannabis,” Jonathan Crandall said. “We are trying to make things safer and less accessible.”

Still, some residents of the Palisades have pushed back.

Though the Advisory Neighborhood Commission voted to approve Green Theory’s application 6-1, the shop came into the crosshairs of 1000 Feet — a “coalition of educational, child health and parent groups across Washington D.C. fighting to keep schools and day-care centers a safe distance away from the sale of marijuana,” according to its website. A petition circulated by the group that garnered about 600 signatures noted that Green Theory is near three schools.

Jackie Puente of 1000 Feet said her children attend Our Lady of Victory — a pre-K through eighth grade school 319 feet from Green Theory. Though supportive of the cannabis industry in general, Puente criticized D.C.’s licensing process, saying it deliberately excludes the community.

“There’s zero regard for those who say, ‘Not next to our children’s school,’” Puente said, adding: “This is happening all over the city.”

Caroline Crandall said she respected the concerns of a “vocal minority.” However, Green Theory wasn’t going anywhere. “This is a retail-zoned location,” she said. “We do have the right to be here.”

Newsome, the chief operating officer at MetroLeaf, said that since he and his business partners relocated their shop to 14th Street late last year, they’ve sought to create an image as a valued neighbor. Newsome enforces a strict no-loitering policy, even for employees on a break. And no smoking outside the shop, “not even a cigarette,” he said.

With the official medical marijuana license hopefully on its way, he said he wants the shop to feel like a wellness hub. It’s the whole reason he said he was drawn to marijuana to begin with, having previously served as general manager at Takoma Wellness Center, one of the few licensed medical cannabis shops. Now, he said, it felt like he was finally on the brink of arriving where he wanted to be.

“We’ve built a nice clientele here. And I know when we go to medical, I’m going to lose some. But I’ll also gain some: There are people out there who legit have health issues that just don’t trust the gifting shops, and I don’t really blame them. I’m hoping to bring some of those people in.”

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