Washington, DC’s cannabis market is in crisis—not because of the legacy "gifting" market, as some would claim, but due to regional competition and regulatory red tape. Much of the District’s legacy cannabis market has served the community reliably and with integrity for years. Yet, despite their commitment to compliance and community support, many of these businesses now face unfair treatment, barriers, and heavy-handed enforcement from the Alcohol Beverage and Cannabis Administration (ABCA) as they attempt to transition to licensed medical dispensaries.
This intense regulatory environment, coupled with a recent lawsuit against legacy operators and their landlords by a coalition of licensed dispensaries, highlights the urgent need for DC Council and ABCA to honor the pathways they promised, allowing legacy operators to transition fairly and seamlessly into the medical market.
Additionally, the DC Council should reevaluate its regulatory strategy to prioritize the long-term health of DC’s cannabis market as a whole. We must demand that they work together to create a more inclusive and fair regulatory environment that protects community businesses who are on a legitimate path to licensing. Doing so would greatly benefit consumers, local economies, and the future of cannabis in DC.
A Promised Pathway with Unfair Barriers
DC’s regulatory bodies initially offered legacy cannabis dispensaries a pathway to licensure, creating application categories for “Unlicensed Operators,” “Standard Retailers,” and “Social Equity” applicants. Unfortunately, the experience of many dispensaries has revealed this path to be far from straightforward. Numerous applicants report being denied licenses on questionable grounds, undermining the integrity of the licensing process.
Take, for example, Elevated Lounge, a well-regarded legacy dispensary that was denied due to an alleged location violation. ABCA officials claimed Elevated Lounge was within 300 feet of a recreation center, disqualifying them from licensure; however, the dispensary produced evidence from a DC-registered land surveyor showing that their location is actually 398 feet away.
ABCA officials also argued that Elevated Lounge could have been granted an exception for the falsely measured distance if they had applied during the designated “Unlicensed Operator” phase. However, they must have had their wires crossed in this instance because Elevated Lounge actually did, in fact, apply during the “Unlicensed Operator” phase. Either way they were mistakenly denied and any appeal should be granted. Yet, the latest update on the situation reveals that no appeals have been considered and little clarity has been offered.
This experience is not an isolated incident. Many DC legacy businesses share similar accounts, where technicalities, often misapplied or inconsistently enforced, have been used to deny licenses. Legacy operators committed to compliance and licensing are being stonewalled and left in regulatory limbo, with a lack of due process and limited recourse. As Aaron Rogers, CEO of Elevated Lounge, recently told us, "The entire licensing and appeals process has been marred by unclear answers and regulatory roadblocks."
As a counter argument you might argue that perhaps it is the community that, in some way, is denying the presence of Elevated Lounge and holding up their license. In this case, we've been provided with a letter from Jackie Blumenthal, the Chair of the Advisory Neighborhood Commission 3B (ANC3B) which serves the communities of Glover Park and Cathedral heights. In her letter she not only mentions the unanimous support that the ANC has for the licensure of Elevated Lounge, but also voices their preference for a "locally owned and operated" dispensary in their neighborhood. Mr. Rogers is a long-time resident of the Glover Park community, and he and his business have "presented no problems to the community and the ANC has heard no complaints from anyone." In fact, some might say that it's been a beautiful day in the neighborhood since Mr. Rogers moved in.
Any way you look at it these license denials are more than just bureaucratic snags—they threaten the livelihoods of local businesses that have operated successfully and transparently for years during a period of utter regulatory confusion. Their contribution to DC’s economy in the form of taxes paid and jobs created should also be weighed, in addition to the community benefits, and local regulators would do well to help them flourish instead of contributing to their demise.
Furthermore, unjust denials send a dangerous message to the cannabis community: that the pathway to licensure is fraught with obstacles that cannot be overcome by evidence or appeals. This kind of opaque and punitive approach stifles legitimate businesses, undermines public confidence, and exacerbates the instability that has plagued DC’s cannabis market.
ABCA’s New Enforcement Powers and Its Impact on Transitioning Legacy Businesses
Recent actions by the ABCA have increased pressure on legacy dispensaries, many of which have been shuttered despite actively working to comply with legal standards and transition to the medical market. Following the passage of Bill 25-0872, ABCA has been aggressively enforcing new measures, including padlocking stores deemed an “imminent danger” to public safety. The Outlaw Report recently broke the story of ABCA’s closure of five such dispensaries, with one cited as operating in violation of a cease-and-desist order. The closure of Flight Pass/Green Room on U Street, NW, brought the number of closed businesses to five, signaling ABCA’s intensified efforts to enforce compliance, even on businesses actively working toward licensure.
Unfortunately, these enforcement measures disproportionately impact operators who are in the process of transitioning and complying with new regulations. For legacy operators like Elevated Lounge, which was denied licensure based on dubious grounds despite extensive evidence of compliance and then subjected to search, seizure, and a cease-and-desist order, these closures and enforcement actions represent an injustice and lack of due process. If a legacy business is actively pursuing licensure, it should be protected from undue enforcement and allowed to continue operations as long as it meets reasonable criteria. This should include clear guidelines for sourcing, labeling, public safety, and appeals while accounting for local supply and capital barriers that transitioning operators face.
Misplaced Blame: The ALCE Lawsuits Against Legacy Operators
On top of regulatory obstacles, legacy market dispensaries now face lawsuits (first lawsuit and second lawsuit) from the Alliance of Legal Cannabis Entities-DC (ALCE), a group of licensed medical dispensaries. The Outlaw Report recently broke the story, revealing that ALCE claims legacy operators and their landlords have unfairly siphoned revenue from the licensed market, asserting that these businesses deceive consumers into thinking their products are fully licensed. The lawsuit paints legacy market operators as the root of licensed dispensaries' struggles, which is, at best, a misrepresentation of the reality facing the cannabis industry in DC.
The ALCE’s lawsuit is a red herring. As cannabis demand shifts across the region, with Maryland’s recent legalization of recreational use drawing many consumers away from DC, it’s misleading to blame legacy operators for the declining fortunes of licensed dispensaries. The 680,000 residents of DC are simply not enough to sustain the entire medical market, especially as consumers in the surrounding 6.3 million-strong metro area find more accessible, less fee-intensive options in Maryland. It is regional competition and an outdated regulatory approach—not the legacy market—that is at the core of the industry’s issues.
As an example, Will, a longtime friend and occasional contributor of Toker's Guide, recently described the painstaking process of going to a DC dispensary from Northern Virginia. "Not only do I have to worry about traffic and parking, but now I'm supposed to fill out forms, wait for approval, and pay extra fees? Why wouldn't I just drive to a recreational dispensary in Maryland? It saves me money, time, and stress."
The lawsuit also conveniently overlooks the larger legal barrier preventing a true recreational cannabis market from emerging in DC: the Harris Rider. This federal rider, prevents DC from allocating funds for the creation of a recreational cannabis market from a budgetary perspective. Until the removal of the Harris Rider DC will not be able to properly address the issue of recreational demand and its struggles to compete will continue.
The Harris Rider’s Unfair Impact
As mentioned, the Harris Rider, introduced by U.S. Rep. Andy Harris (R-MD 1st District), bars DC from using its own local funds to establish a regulated recreational cannabis market. The result is a patchwork system in which only medical cannabis is legal, leaving consumers who don’t want or need medical certification few options beyond legacy “gifting” dispensaries. The Harris Rider has kept DC’s cannabis market in a perpetual gray area, discouraging the very economic development and tax revenue that regulated markets bring to communities. Without the Harris Rider, DC could establish a fully regulated adult-use market, bringing clarity and fair competition to all businesses involved.
The reality is that demand has declined in DC largely due to Maryland’s recent legalization of recreational cannabis, which has redirected consumer spending to that market. Nearly all of Maryland's medical marijuana dispensaries now offer adult-use recreational cannabis as well, and the sales of recreational has far surpassed medical since implementation. In fact, a report from the Maryland Cannabis Administration published 6 months after the July 1st opening of adult-use cannabis stated the following:
"December marks the highest-grossing month since adult-use cannabis legalization took effect on July 1, 2023. Monthly retail sales surpassed $96 million, with the adult-use market accounting for nearly two-thirds of total sales ($61.5 million). Combined medical and adult-use retail sales totaled almost $800 million for 2023 ($796.3 million), with $550 million in sales since adult-use sales began on July 1. Adult-use retail sales for the period from July 1 through December 31 totaled $331.8 million. Based on the adult-use retail sales total, tax revenue for the 6-month period is projected to total nearly $30 million ($29.9 million)."
Conversely, DC Dispensary data from the ABCA shows that sales went flat to lower compared to the same month from the prior year at the end of 2023 and then continued to decline across 2024 (see chart below).
The success of Maryland's recreational market launch versus DC's medical market woes, clearly demonstrates that market participants within the 6.3 million population in question prefer a recreational experience to a medical one. This even occurred despite DC's effort to make patient registration less rigorous. Let this serve as additional evidence supporting the notion that it has been the strategic utilization of a federal restriction by a certain Maryland congressman that has been and remains the primary barrier to a thriving and unified adult-use cannabis industry in Washington, DC.
Bill 25-581: New Protections and the Push for Fair Transition
In an effort to address enforcement and licensing barriers, the DC Council recently introduced Bill 25-581 which was signed by Mayor Muriel Bowser on October 28th, 2024.
Spearheaded by council members Kenyan McDuffie and Phil Mendelson, the bill proposes additional protections for transitioning businesses, extending license application deadlines, and increasing distance requirements between dispensaries and sensitive locations like daycares and recreation centers. It also reinforces enforcement powers, allowing the ABCA to shutter any establishment that poses a public safety risk. The bill also sets a definitive deadline: all unlicensed operators who wish to transition must do so by March 31, 2025, or face closure.
While the bill does address certain regulatory gaps, it still lacks sufficient protections and support for businesses actively working to comply. Transitioning businesses need protections from abrupt enforcement actions to maintain their viability while they await licensing decisions, as well as clearer guidelines that allow them to continue operations during the interim.
Regulatory Reform: A Fair Pathway and a More Unified Market
With the continued existence of the Harris Rider or not, what DC’s cannabis community truly needs is regulatory reform that respects the contributions of legacy operators. Instead of issuing denials and heavy-handed enforcement measures, the ABCA should adopt policies that genuinely support legacy businesses in transitioning to licensure. A restructured approach would include:
Transparent and Fair Application Reviews and Appeals: The ABCA must ensure applications are reviewed accurately and fairly. In cases like Elevated Lounge’s, misapplications of regulations not only undermine trust in the ABCA but also place undue burdens on small businesses attempting to operate legally. Appeals should be considered in a timely and transparent manner with proper accuracy, communication, and accountability.
Realistic Location Standards and Clarity: Given DC’s dense urban landscape, location-based restrictions are challenging to comply with, especially with often-ambiguous measurement standards. These requirements should be updated, or realistic exceptions should be clearly defined and accessible to legacy operators.
Increased Legacy Operator Support: The ABCA should work with legacy operators rather than creating barriers. A supportive licensing environment should include tax breaks, subsidies, or adjusted fees to level the playing field between legacy operators and well-funded new entrants.
Inclusion of Legacy Operators in Policy Development: Including legacy operators in regulatory discussions ensures the cannabis market remains rooted in the needs of those who helped build it. Legacy operators’ experience and insight are valuable resources that could greatly improve the regulatory process.
Protection for Legacy Operators and Landlords from Lawfare: The Council should consider regulation that would protect Legacy operators and their Landlords from legal action that stems from their legacy market business. Industry groups in direct competition with legacy businesses should not be allowed to prey upon them for activities that occurred during a time of regulatory confusion. Some form of amnesty would be appropriate here, in our view.
Protection for Legacy Operators from Undue Enforcement: If a legacy business is in the process of transitioning they should be allowed to continue operating as long as they are meeting reasonable criteria. This criteria should be fair and clearly disclosed while taking into careful consideration the barriers that currently exist around access to licensed, locally cultivated supply.
***Additionally, the DC Council, alongside local advocates, should continue to push for the repeal of the Harris Rider, which has constrained the market’s growth potential and discouraged investment. The establishment of a full recreational market would bring clarity and open competition, benefiting all cannabis businesses in DC.***
Overall, the legacy marijuana market in Washington DC has long provided consumers with safe, affordable access to cannabis and deserves a fair shot at integration into the licensed market. The DC Council and ABCA must take swift action to ensure a pathway that is not merely promised but honored. Ending the misguided targeting of legacy operators will help unify DC’s cannabis market and foster a regulatory system that works for everyone. With equitable reform, DC has the opportunity to become a model for inclusive, responsible cannabis policy—one that benefits operators, consumers, and the entire community.
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