D.C. Continues Crackdown On Cannabis Gifting Shops: One Arrested, Store Padlocked, Although Many More Remain Open

On Friday, September 13, Washington D.C. authorities shut down Green Cloud Shop, an unlicensed cannabis business, as part of a broader crackdown on illegal cannabis operations.

The Alcoholic Beverage and Cannabis Administration (ABCA), alongside the Metropolitan Police Department (MPD), padlocked the shop. The owner, a 49-year-old man, was arrested and charged with Possession with Intent to Distribute and Operating a Business After Certificate of Authority had been revoked.

This measure came in the context of an ongoing conflict with unregulated “gift economy” cannabis shops, which were tolerated in the past but are now being pushed to adapt to regulations, reported Axios.

Say Goodbye To D.C.’s Cannabis Gifting Economy

Cannabis gifting shops in D.C. have long used a loophole by "gifting" marijuana when customers purchase other products. This allowed them to bypass laws against recreational cannabis sales, in the context of the tricky legal situation affecting Washington D.C. cannabis.

However, city officials are now stepping up enforcement. The more than 100 unlicensed shops that are currently operating are seen as a major threat to the legal medical cannabis market.

The crackdown comes after the D.C. Council green-lit an emergency bill to give city officials the authority to impose penalties on unlicensed cannabis stores earlier this year. D.C. lawmakers, including progressive members, are backing this crackdown due to concerns about crime around all-cash businesses and the proximity of some shops to schools and daycare facilities.

• Read Also: Washington State Gov. Signs Bill Eliminating Medical Marijuana Tax, Iowa To Add 25% Excise Tax On Hemp & More

The Latest Developments In D.C.

Green Cloud Shop's closure is part of a new wave of enforcement following the Medical Cannabis Conditional License and Unlicensed Establishment Closure Clarification Emergency Amendment Act of 2024. This law, enacted in July, grants the ABCA enhanced authority to close illegal businesses.

Green Cloud is the second illicit cannabis business closed by ABCA since the new law went into effect.

Curiously, authorities reported padlocking the access to the store. This echoes New York’s special operation that cracked down on illicit cannabis during the first few months of the year.

In addition to the closures, the ABCA has issued 23 cease-and-desist orders and 79 warning letters to unlicensed cannabis businesses. Many shops, however, continue operating, with only a few being forced to shut down.

But still, property owners of illicit cannabis shops could face a $10,000 fine if they fail to comply with the ABCA's closure orders.

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The Struggle Of Legal D.C. Cannabis Dispensaries

The crackdown comes at a crucial time for D.C.'s legal medical cannabis market, which has been struggling to compete with unlicensed operators.

Adding to the pressure, D.C. dispensaries face stiff competition from Maryland's legal recreational market, where prices are often lower. Since January 2024, D.C.'s legal market has been in a steep decline, selling less than 400 pounds of flower per month.

• Read Next: Washington Provides Tax Break For Medical Cannabis Users, But Is It Enough?

Cover: Benzinga edit based on Washarapol D BinYo Jundang and Anna Lowe via Pixels