Could Legal Recreational Sales Begin in DC in 2016?

The Financial Services spending bill adopted by the Senate Appropriations Committee on July 23, 2015, omitted language that would ban regulated sales of marijuana in Washington, D.C. If the provision becomes law, D.C. could finally tax and regulate recreational marijuana like alcohol, and legal dispensaries might open as early as next year.

Regulated, legal commerce seems like minimal fairness to the 70 percent of D.C. voters who voted to approve full legalization in 2014. But with a population of only 658,893, D.C. itself will never be a huge market.

For investors, the real prize is the surrounding, largely prosperous, metropolitan region with nearly 10 times the population. The Mid-Atlantic strategy may be less a matter of state-by-state legalization, than of the ultimate development of a regional market.

 

Recapping the Latest in DC’s Fight for Legalization

Initiative 71, approved by D.C. voters on November 4, 2014, made the possession of up to 2 ounces of marijuana and the cultivation of up to three marijuana plants legal according to city law. Congress, however, controls the city’s budget and acted to prohibit federal or local funds from being used to enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance. The effect has been to block the City Council from enacting and implementing rules to regulate and tax the sale of marijuana.

D.C. residents can grow, possess, consume and give away marijuana. They simply cannot buy it, except on the black market. “It’s the dealer-protection act of 2015,” according to a source quoted by The Washington Post.

This could change in 2016.

The Obama administration’s proposed budget submitted to Congress retains the ban on the use of federal funds to implement marijuana regulation, but omits the ban on the use of local revenues. The House funding bill retains the ban on the use of any funds for that purpose, but the bill adopted by the Senate Appropriations Committee aligns with the president’s proposal. The issue will be resolved in conference committee later this year.

 

Fairness for DC

The lack of political autonomy has rankled D.C. residents and flummoxed observers for years. Congressional intervention has blocked the funding of abortions for low-income residents and needle exchange programs in addition to frustrating the regulation of marijuana.

There is an economic side to the story as well, though. Because so much of the real estate in D.C. is tax exempt, being owned and occupied by either the federal government or non-profit institutions, D.C. has a very small revenue base, even for a city its size. Taxation of marijuana sales would generate much-needed revenue for public purposes, such as education and drug treatment programs.

 

Maryland Suburbs and Beyond

“The Mid-Atlantic region is driving cannabis policy in the U.S. right now,” Hunter Holliman, Regional Project Lead at 4Front Ventures told MJINews last month. The first moves toward a regionalized market may take the form of medical marijuana reciprocity, which Holliman expects to see in D.C. this summer and in Maryland thereafter.

The regulation and taxation of recreational cannabis sales in D.C. would be a collateral move in the same direction. Much will depend on the resolution reached by the House Senate Conference Committee in the coming months.

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