Weeded out: As D.C. shutters cannabis gifting shops, what comes next?

For years, Happy Bud was just another storefront on Georgia Avenue in Petworth; a place where just about anyone over the age of 21 could walk in and buy all manner of smokable cannabis, edibles, and even magic mushrooms.

But in early February things were decidedly less happy: D.C. police officers and regulators with the Alcohol Beverage and Cannabis Administration confiscated more than four pounds of cannabis and padlocked the store. Two “Notice of Closure” signs are now visible in the door and window, scarlet letters marking a change in how weed is bought and sold in D.C.

Happy Bud is one of 28 cannabis gifting stores that ABCA shuttered since last fall, with another 28 having voluntarily closed after receiving warnings from the city. And that’s only the beginning: ABCA says that enforcement will expand in the spring, likely putting an even larger dent into what was a vibrant – albeit illicit – homegrown market for cannabis in the nation’s capital. (Have any doubt of its prevalence? Just take a deep breath on any D.C. sidewalk.)

The enforcement blitz against the so-called I-71 shops – named after the 2014 ballot initiative that legalized the personal possession, cultivation, use, and gifting of small amounts of cannabis – won’t leave consumers high and dry, though. ABCA has been rapidly issuing new licenses to new medical cannabis dispensers and cultivators, so much so that the regulated market for weed could grow exponentially in the coming year.

But even those legal sellers are facing stiff headwinds. The number of registered patients that can legally buy from them hasn’t grown significantly, there’s a shortage of locally made cannabis products for dispensaries to sell, and Maryland’s fully legal market for recreational cannabis sales easily draws D.C. residents just over the border.

“Things are in flux,” says Meredith Kinner, an attorney who specializes in helping cannabis sellers get medical licenses. 

A quick history on D.C.’s weird weed market

For the full story, we need to start in 1998. That’s when D.C. voters approved a ballot initiative legalizing the sale of medical cannabis to people with a range of significant conditions, like HIV/AIDS, glaucoma, cancer, and multiple sclerosis. The first actual sale, though, didn’t happen until 2013. (More on why in a second.) Then there was Initiative 71 in 2014, which was premised on the basic idea that D.C. residents should be able to grow, consume, and possess small amounts of cannabis for personal use. 

Republicans in Congress, though, didn’t like either of the voter-approved initiatives. After the 1998 vote legalizing medical cannabis, they prohibited the city from spending any money to actually get the program off the ground. (Hence the delay until 2013 for sales to start.) And in 2015, they signed off on a budget provision prohibiting D.C. from taking any steps to legalize the sale of recreational marijuana, as was becoming a growing trend in states across the country. (It’s known as the Harris Rider, after Maryland Republican Rep. Andy Harris, who authored it.)

D.C.’s cannabis aficionados, though, were quick to find a loophole: gifting, which Initiative 71 allows. It didn’t take long before an underground scene made up of pop-up events and delivery services emerged, all offering everyday items for sale with gifts (wink, wink) of cannabis on the side. This so-called gray market quickly graduated to storefronts, with more than 100 popping up across D.C. and producing estimated annual sales worth some $600 million.

All the while, the congressional prohibition on D.C. legalizing recreational sales remained in place – despite city officials saying they wanted to move forward with it – and the small number of medical marijuana dispensers started complaining that they were losing business to the large sector of unregulated gifters.

Getting rid of gifting

In late 2022, the D.C. Council came upon a somewhat clever compromise. It made it far easier for residents and visitors to get a medical cannabis card, which lawmakers posited would mean more people would shop at legal medical dispensers instead of the gifters. More importantly, though, the council offered illicit gifting shops a path to transition to the legal medical market – or face the city’s regulatory wrath. 

The move produced quite a rush: more than 200 license applications were filed through mid-2024, most for retail locations. Around the same time, ABCA gained the power to issue warnings to any gifters that hadn’t applied to transition – and eventually padlock their doors. Those closures started last fall, and the pace only picked up in recent months. (D.C.’s crackdown was modeled on the one that happened in New York City last year.)

According to Fred Moosally, ABCA’s director, in the latter months of 2024 the agency confiscated more than 265 pounds of cannabis, 151 pounds of edibles, six unregistered guns, and more than $50,000 in currency. In some cases, police found what they said was cannabis laced with amphetamines, along with 61 pounds of psychedelic mushrooms – which are not regulated nor legal, though enforcement is a low police priority. 

The enforcement – which to date was coordinated by a single ABCA inspector – is expected to ratchet up in April. Moosally says that 33 gifters who applied for dispensary licenses have until March 31 to finalize the transition or close up shop altogether. He also says ABCA is in the final process of hiring two more cannabis inspectors.

‘We are still barely surviving’

All of the talk of enforcement is of little comfort to some of D.C.’s existing medical marijuana dispensaries, who say they are still losing business to existing gifters and illicit delivery services – not to mention Maryland’s market.

“For many years, there have been hundreds of illegal shops operating in D.C. It is still true that most if not all retailers are a block away from an unregulated retailer,” said Rabbi Jeffrey Kahn, the owner of Takoma Wellness Center, the city’s longest-running medical dispensary, in testimony to the council earlier this month. “This failure to shut down more shops quickly has made it harder for legal shops to succeed. We are still barely surviving.”

As of January 2025 there were some 30,000 patients registered with the medical cannabis program, including D.C. and non-D.C. residents, an increase of roughly 3,000 patients compared to September 2024. But in that same time the number of licensed medical dispensaries has doubled – and there’s more competition to come. There are 33 pending dispensary licenses that could come online by the end of March, and another 150 conditional licenses that have until mid-2026 to open.

On top of that, businesses in the medical cannabis market are regulated in a way their gifting counterparts never were. To start off with, dispensers have to source the product from local cultivators while gifters have been known to illicitly ship it in from as far away as California. 

“We were shocked that our profits were not a tenth of what we projected,” shared Caroline Crandall, co-owner of Green Theory in the Palisades, which was one of the first gifting stores to make the jump to the legal medical market last year. “We are simply trying to make a living … but the reality we face is unsustainable. We are operating at a significant loss.”

Like Kahn, Crandall wants ABCA to come down harder on the remaining gifters in town. And there seem to be plenty – Moosally told the council he estimates anywhere from 50 to 75 shops remain, though there are more when delivery-only services are factored in.

Crandall asked the council to make registering for a medical card easier, while Linda Mercado Greene, who owns Anacostia Organics, the only dispensary in Ward 8, wants financial assistance to cover the discounts she is required to give low-income patients. (Per D.C. law, they get a 20% discount on all products.) Greene estimates that she’s lost almost a half-million dollars over the last five years because of the discounts.

“The licensees need to be supported. They need to advertise that they exist,” Kinner tells us, adding that a lot of people don’t know the difference and just assume whatever dispensary they go to is a legal one. “A lot of people don’t know the medical market exists, and ABCA and the council have done a poor job touting its existence, providing more information on how to become a patient.”

But legislative solutions may be tough to come by. D.C. Council Chairman Phil Mendelson said at the council hearing that he’s concerned that ABCA isn’t moving fast enough to close illegal operators. At the same time, he said that the city’s ability to do more to help ease the burden on medical cannabis operators could be curtailed by the decade-old congressional prohibition on legalizing recreational sales.

“If it gets too easy, do we increase the risk that maybe we’re running afoul of what Congress allows?” he said. “We have to be mindful of that.”