Washington DC Council Pushing for Recreational Cannabis Sales Amid Stiff Resistance

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A very public fight over marijuana in Washington DC is brewing between city leaders and Congress, and the outcome will likely determine whether recreational cannabis sales come to the nation’s capital.

While the situation has always been murky, recent developments have muddied the waters even further.

“I hate to say it, but I don’t know (what’s next),” said Bob Capecchi, deputy director of state policies for the Marijuana Policy Project.

Last week, the city’s new attorney general warned DC Council members that holding a scheduled hearing on a bill to establish recreational cannabis sales could result in jail time and fines for local lawmakers and even their staffers. The attorney general cited a recent move to prohibit the city from setting up a system to tax and regulate cannabis sales.

The council backed off of its plans to hold a formal hearing, but some members exploited a loophole and still discussed the issue during a “roundtable discussion” held Monday. Councilors spent hours listening to testimony from dozens of witnesses, many of whom were equally vocal in their stances in favor of or against rec sales.

The decision to hold the meeting anyway could bring to a head months of administrative wrangling between DC leaders and conservatives in Congress. Many of the latter have been working behind the scenes to torpedo both recreational possession – legalized last November by local voters – and the possibility of legal rec sales, which has been in the works for some time at the council level.

“This is supposed to be the land of the free and the home of the brave,” said committee chairman Vincent Orange at one point. “If we can’t stand up for the right to hold a hearing, we should pack up and go home.”

The primary bill in question, dubbed the Marijuana Legalization and Regulation Act of 2015, sets out a number of guidelines for hopeful entrepreneurs who want to open up cannabis companies in DC.

A few key provisions in the 40-page bill:

  • Application fees for rec shops, infused product manufacturers, cultivators and testing labs would be $5,000. Annual renewal fees for licenses issued would be $5,000 for cultivators, manufacturers and testing labs, but would be $7,500 for stores.
  • There would be a tax rate of 10% on all gross receipts, plus a 15% tax on wholesale marijuana from growers to retailers or processors.
  • Business owners would have to be district residents for at least six months prior to applying for a business license, so those from outside DC interested in the market would have to find a local partner.
  • Many future regulations, including a seed-to-sale tracking system and a possible cap on the number of business licenses, would be established by the DC Alcoholic Beverage Regulation Administration.

But the bill is a work in progress, said Councilman David Grosso, one of the measure’s primary sponsors. He indicated there could be significant revisions to the measure before it passes – if it ever does.

“It’s not like this is set in stone,” Grosso said during the hearing. “There’s a lot of work to be done from the other angle, when it becomes a regulated product.”

One of the main problems is simply that the council members are treading on thin ice legally, since Congress has authority over laws passed in the district. And given that the district is prohibited from using federal funds to implement any marijuana laws in DC, a court battle could be in the works.

That’s what led DC’s new attorney general to warn the council to cancel or delay the hearing, according to The Washington Post. And it has a number of observers wondering what will ultimately happen.

It’s not even clear if there will ever be a formal vote on the proposed law. Grosso’s office said on Monday that the councilman wouldn’t comment further, and given that the district’s top attorney advised against even just holding hearings, the measure could be put on hold indefinitely until there’s some further legal clarification.

Regardless, proponents who want to see the district take the next step showed up in force at the council’s roundtable discussion to offer suggestions on how the bill could be improved.

Self-described “potential licensee” and longtime entrepreneur Julian Wright told the council he supports the requirement that business owners be residents of the district, and even suggested increasing the requirement from six months to 36 months. He also proposed requiring business license applicants to submit a plan on how they’ll contribute positively to the community their business operates in.

That, Wright contended, “Will force the licensee to think about the impact of marijuana on the community it will serve.”

Other tweaks suggested by advocates included allowing for rooftop grows on apartment buildings, establishing communal places where consumers could legally use marijuana products, and increasing the cap on sales from two ounces for district residents and a quarter ounce for visitors to much more.

There was also back-and-forth between council members and multiple industry experts on the pros and cons of vertical integration and allowing vendors to grow their own marijuana; currently, the bill would establish a model akin to Washington State, where retailers must purchase cannabis from separately licensed growers.

At the same time, another legal question that’s up in the air is whether Congress will take any action on Initiative 71, which DC voters passed overwhelmingly last November to legalize recreational possession and consumption. Council Chairman Phil Mendelson submitted the initiative to Congress last month in order to force the issue after conservatives were able to attach a small provision into an enormous spending bill in December that seemingly blocked implementaiton of 71.

But observers say that’s far from settled, in part because the White House recently submitted a budget to Congress that reverses the move conservatives made in December.