Washington, D.C.’s legal medical marijuana industry could soon collapse, insider says

The small cadre of longstanding medical marijuana businesses in Washington, D.C., are now at risk of shuttering due to pressure from both the underground market and neighboring Maryland.

Already, five of just 23 licensed companies that compose the legal industry there have closed their doors since June.

“If enforcement doesn’t really meaningfully begin by the end of July and start to turn things around, I think the medical market could cease to exist within the next 90 days,” Grace Hyde, the owner of District Cannabis, told Green Market Report last week.

Hyde said that her company, which has been in the cultivation sector for eight years and just opened a medical dispensary this past spring, has seen sales plummet since 2023 thanks to fierce competition from an estimated 200-300 unlicensed storefronts, even more illegal delivery services, and waning prices in the Maryland recreational market that launched last year.

Hyde said that only 15 of the 23 licensed medical cannabis businesses in the city are currently operational. Some of the more newly licensed medical businesses – such as retailers D.C. Smoke Shop and Miel Cannabis – haven’t opened yet, and cultivator DC’s Finest never got off the ground, she said.

“Since January of 2024, the market has been in a really big slump. We sold less than 400 pounds of flower each month, which is almost nothing,” Hyde said.

Meanwhile, Hyde said, the city-run transition of scores of gray market marijuana companies that sprung up in the wake of voter-legalized recreational cannabis legalization 10 years ago at has not gone as planned. Instead, Initiative 71 gave life to so-called “gifting” businesses because Congress blocked a fully legal recreational market. The measure allowed for adults to legally give cannabis to each other, which created a loophole industry based on selling overpriced items, such as T-shirts or lighters, that then came with a “gift” of cannabis products.

So far, Hyde said, only 76 of the so-called I-71 companies have even applied for legal status with the city, and only 26 have reportedly been deemed eligible for licensure. In addition, the city’s Alcoholic Beverage and Cannabis Administration has not been able to effectively shut any of the others down.

“Enforcement was really supposed to kick off after Jan. 31,” Hyde said. “Every single day, we have tons of people who come in through the door and are unwilling to … purchase through the program, because there’s an I-71 gifting shop right down the street.”

City leaders approved wide-ranging reforms in 2022 to make the medical market into a recreational one in everything but name, including allowing residents and visitors to self-certify as medical marijuana patients in order to make purchases at legal medical dispensaries, Hyde pointed out. But even that short process is too much of a deterrent for many customers, who opt instead for the registration-free I-71 stores, where they can also buy other drugs if they so choose.

“It’s difficult to compete when they’re buying really cheap product from across the country. They’re selling things that are not in compliant packaging, 1,000-milligram edibles and brightly colored packaging with cartoons and fruit all over it,” Hyde said. “They’re also selling things like mushrooms and DMT, which obviously we’re not allowed to sell.”

Hyde also predicted that without a newly reinvigorated enforcement push, social equity licensees poised to enter the D.C. market will fall victim to the same market forces that have pushed out the other licensed companies.

“They think they’re going to enter this market and they’re going to create generational wealth for themselves and their families, when in fact they’re just burdening themselves with generational debt because they’re doomed to fail if they don’t shut the illegal businesses down,” Hyde said.

Hyde said she’s hoping that Mayor Muriel Bowser will give ABCA more leeway to partner with local police on sending cease-and-desist orders to unlicensed I-71 shops, but it’s not clear if that will happen or not – or if it’ll happen in time.

“ABCA has the motivation to shut these businesses down, but they need support from the police department to do that, and the only person who can compel … is the mayor, and she’s been silent on this issue from the beginning,” Hyde said.