D.C.'s Cannabis Crisis: How Weak Enforcement Is Pushing Legit Dispensaries to the Brink

Washington D.C.’s medical marijuana dispensaries are hanging by a thread, facing a dual threat from unlicensed I-71 “gifting” shops and Maryland’s legal recreational cannabis market. As dispensary owners fight for survival, city regulators seem stuck in a pattern of indecision, leaving many wondering if their businesses can last much longer.

Medical dispensary owners in the District warn that unless the government steps up enforcement against the I-71 shops — which exist in a legal gray area — many legitimate businesses could be forced to close their doors. The lack of regulatory action is creating an uneven playing field that favors cheaper, unlicensed operators, leading to a crisis of confidence in the city’s ability to manage its cannabis industry.

D.C.’s cannabis landscape is uniquely complex. While medical marijuana is legal, the city remains blocked from commercial recreational cannabis sales by Congress. In an attempt to sidestep this limitation, two years ago, the District allowed residents 21 and older to “self-certify” as medical cannabis patients, making it easier for dispensaries to attract customers.

However, despite the regulatory benefits offered to medical dispensaries, their high prices — a result of strict product testing and quality controls — leave them struggling to compete with the cheaper, unregulated products available from I-71 shops. These unlicensed businesses exploit a loophole in D.C. law, “gifting” cannabis alongside other products, allowing them to operate without the burden of compliance costs.

In the past two years, five medical dispensaries have shuttered, according to Grace Hyde, director at District Cannabis and co-chair of the Regulated Cannabis Association of D.C. Hyde and other dispensary owners are calling for Mayor Muriel Bowser to crack down on the illegal shops, but so far, results have been limited.

“The industry has, without enforcement, about 60 days before we really start to collapse,” says Hyde. “We haven’t broken even in any single month of 2024.”

The city’s Alcoholic Beverage and Cannabis Administration (ABCA) has issued 21 cease-and-desist orders and 75 warnings to I-71 shops. But even with these actions, not a single store has been padlocked by regulators — despite some shops reportedly selling contaminated products. According to Council Chair Phil Mendelson, the agency seems to be on the brink of shutting down its first illegal shop, but this delayed response has done little to ease the concerns of dispensary owners who feel the damage is already being done.

Exacerbating the issue is the allure of Maryland’s legal recreational cannabis market, just a short trip away for D.C. residents. Since Maryland legalized recreational cannabis in January, prices there have dropped significantly, drawing customers across the border and further weakening D.C.’s medical cannabis industry.

"Maryland has become a real threat to our survival," said one D.C. dispensary owner, citing the steady stream of customers who now prefer to shop out of state, where they can access cheaper, legal cannabis without any medical paperwork.

The city has created an “on-ramp” for I-71 shops to become legally licensed as medical dispensaries, but progress has been slow. Of the 75 applications received, only 13 have been accepted, with another 34 still under review. The remaining two dozen applications were denied, leaving many in the gray market still operating without proper regulation.

Hyde believes that the delays in enforcement are creating a sense of distrust in the District’s ability to govern its cannabis industry. “We’re doing everything by the book, but we’re competing with businesses that aren’t, and the city isn’t holding them accountable,” she says. “It’s a broken system.”

Without swift action, D.C.’s medical cannabis industry faces an existential threat. Dispensary owners are calling on the mayor to set a hard deadline for closing unlicensed I-71 shops. But with bureaucratic delays and mounting pressure from both the gray market and out-of-state competition, the future remains uncertain.

For now, the regulatory paralysis continues, leaving D.C.’s medical marijuana dispensaries in limbo and eroding the trust that these businesses once had in the city’s ability to enforce its own rules.

Is D.C. doing enough to regulate its cannabis market?