Inside DC’s absurdly confusing Recreational Weed market

Inside DC’s absurdly confusing Recreational Weed market

Federal meddling in local laws has created a challenging and preposterous gray market for DC's canna-businesses—and their customers.

When I first signed up for a bus tour of the Washington area conducted by Lucky Chuckie Tours, the $70 price seemed a bit high. It was only after I boarded a small Ford bus at a pocket park in Foggy Bottom that I began to understand the pricing philosophy. The cabin was decorated like a dorm room, complete with green window lights and a banner reading “Let the Shenanigans Begin.” On my seat was a gift bag that contained high-quality THC gummies, as well as a fat, pre-rolled joint.

Billing itself as “The Best Cannabis Tour in Washington DC,” Lucky Chuckie is owned by Steven Slaughter, a former bank branch manager in Silver Spring who came up with the idea while driving for a ride-share company at night to save money for a down payment on a house. “I knew people in DC smoked weed,” he says, “because when they got into my Uber, they smelled like it.”

My tour took place on a cold afternoon in early January. Because business tends to be slow in winter, Slaughter did what would usually be two separate jobs, driving and narrating. He didn’t have a microphone—the previous one got damaged when someone spilled THC-laced honey on the dashboard. We saw the monuments, swung by the Wharf, and gawked at Nationals Park. As we passed the Build-a-Bear Workshop on Waterfront Street in National Harbor, I felt reality turn a bit elastic. My edible was kicking in. (I’m not a smoker, but I hate to be rude to my hosts.)

The most Washington thing about the tour, however, wasn’t the sights. It was the rules. Lucky Chuckie may be extremely 420-friendly, but it’s not looking to get in trouble with the law. Drivers remain stone-cold sober, and passengers aren’t allowed to consume cannabis in the bus—instead, guides will gladly help them find quiet outdoor spots to light up.

Legally speaking, smoking outside is also verboten, but if you have a working nose and have walked down pretty much any local street in the last few years, you’ve probably noticed that the cops aren’t working up a sweat enforcing that ban. Meanwhile, those gummy ’n’ spliff gift bags are exactly that, gifts, because while recreational cannabis use and possession are legal in the District, sales and large-scale production are not—even though it’s perfectly legal to give the stuff away, which is what many tax-paying operations such as Slaughter’s end up doing.

If that all sounds confusing, well, welcome to DC. Across the nation, legalized cannabis is on the march, creating new business opportunities alongside the chance to toke up or pop a gummy. In California, for example, a West Hollywood cafe featuring tableside weed sommeliers offered loaded vape pens and rent-a-bongs before the pandemic forced it to close. But here, a unique crazy quilt of incongruous local and federal laws has created a bizarro market—one in which budding weed entrepreneurs face a frustrating gauntlet of obstacles, customers can’t be sure of what they’re getting, and the best way to run a canna-business is to pretend you aren’t.

You know how if you want a bottle of vodka, you can just walk into a liquor store, pay for one, and walk out? Washington’s cannabis industry works nothing like that.

DC, says Adam Eidinger, who led the effort to make weed legal for adult use, “looks like a city where there’s the law—and then how things work.”

It wasn’t supposed to be this way. In 2013, District dispensaries sold medical marijuana for the first time. A year later, city voters overwhelmingly passed Initiative 71, a ballot measure shepherded by Eidinger that legalized the possession of up to two ounces of cannabis, the ability to gift up to one ounce, and the personal cultivation of a small number of marijuana plants (six per person and up to 12 per household).

While I-71 didn’t legalize recreational sales, the DC Council planned to introduce subsequent legislation to tax and regulate the recreational market. (DC’s medical market had sales of more than $56 million in 2022, and the trade publication MJBizDaily estimates that a recreational market could be almost four times larger.) The upshot? Create a rational framework for what a whole lot of people who live, work, and visit here want: a convenient way to get high safely, at a reasonable price. “What we were envisioning,” Eidinger says, “was the ability to purchase [marijuana] in a wide variety of venues.” Think coffee shops, like in Amsterdam, or salons or music venues.

Only Holland-on-the-Potomac never happened. Roughly a month after I-71’s passage, Congress struck a spending deal that included a rider from Representative Andy Harris, a Maryland Republican and staunch cannabis opponent. The rider prevents the city from spending any money to tax and regulate marijuana, effectively blocking the creation of a legal way to buy and sell recreational weed. Local officials were incensed—but thanks to congressional authority over DC’s budget, their hands were tied.

In the years since I-71 passed, national attitudes and laws around cannabis have softened. Pew Research Center found last year that only 10 percent of Americans oppose legal marijuana, and last year’s midterms saw Maryland and Missouri join 19 other states, the District, and Guam in permitting recreational use. At the federal level, possession and sale remain a felony thanks to War on Drugs–era legislation that dates back to 1970.

However, President Biden has given marijuana advocates hope by issuing a mass pardon for people convicted of possession by the feds. He also has ordered the government to review—and potentially change—the drug’s status as a Schedule I controlled substance, a designation that puts a mango-flavored THC gummy in the same dangerous category as a balloon of black-tar heroin.

Despite this momentum, the Harris rider remains in effect. The House removed it last year while under Democratic control, only to see Democrats in the 50-50 Senate restore it due to what they claimed was Republican pressure. As a result, DC’s burgeoning cannabis industry is populated by a bewildering array of so-called I-71 businesses that take full advantage of the law’s gifting provision to look and act like marijuana sales operations—without actually selling marijuana.

Terrence White is chairman of the I-71 Committee, one of several cannabis business associations in the city. He opened Monko, an I-71 store in Mount Vernon Triangle, last October. White says he invested about $1.6 million to build out a retail space that wouldn’t be out of place on Rodeo Drive—in fact, White drew inspiration from Christian Dior’s Beverly Hills boutique. The average yearly income in Monko’s neighborhood is more than $150,000, White says, and many of his customers are professional women who want to shop for cannabis “somewhere that’s safe.”

Pop into Monko and you’ll be greeted by a security guard who scans your driver’s license before a salesperson toting a tablet and wearing an earpiece greets you and starts to show you around. Upstairs, you’ll find a high-end boutique for premium T-shirts, hats, and other apparel. Those garments, plus some CBD products, are the only things for sale. But once your salesperson learns what else you’re looking for—something to help you sleep, perhaps, or unwind at the end of a long day—they’ll escort you to another room. There, you’ll choose your gift: a package of elderberry-flavored THC gummies, a horchata-inspired pre-rolled joint, or a classy glass jar that holds an eighth of an ounce of Jet Fuel Gelato, a citrusy cannabis strain prized for its high THC and subtle cinnamon notes.

“I never envisioned we were creating a workaround with the so-called gifting loophole,” Eidinger says of I-71 businesses.

Many I-71 businesses started out as delivery or pickup services, but as the pandemic ravaged commercial real estate, more and more shops have opened—landlords, Eidinger says, are happy to find tenants for “spaces that have been dead forever.” Some, like Monko, have the professional sheen of an Apple Store. Others are alarmingly cowboy operations.

What they all have in common is peddling an array of curiously expensive items—stickers, trading cards, digital artwork, even motivational speeches, the last of which seem somewhat antithetical to the stoner ethos—alongside ostensible cannabis freebies. The now-shuttered delivery service District Derp sold paintings made by its owners’ dog, an Alaskan Klee Kai named Sudo. Lonny Bramzon, a criminal-defense attorney, offers “discounted coupons redeemable for legal services” with “an optional free cannabis gift of your choice” at his Street Lawyer Services shop next to the Nando’s on H Street, Northeast.

Lisa Scott, president of the DC Cannabis Business Association, freely admits that the city’s gray market for recreational weed can be deeply absurd. “You could sell your dirty underwear as long as you pay taxes,” she says. And that would be fine, fodder for a toke and a giggle, if not for a sobering truth: Without the rules and standards commonplace in other industries, challenges abound.

“There’s always a probability for any entrepreneur that you’re going to fail,” says Hannah Clarke, director of operations for Toker’s Guide, a website that offers reviews and advertising of I-71 businesses, “but especially in an industry where the barriers are so changing.”

Diana Alvarez’s I-71 store, , is a clean, comfy place just steps away from the DCUSA shopping center in Columbia Heights. Walk inside and you’ll find a box for a coat drive, a sofa in front of a picture wall, and artwork that salutes powerful women such as Frida Kahlo and Princess Diana—Alvarez really wants women to feel at ease in her shop. There are sharp-looking displays of cleaning supplies and cannabis paraphernalia including $30 basic glass pipes and $300 hand-blown bongs. “All the glass I have here is American,” she says. “No China stuff.”Lit City Smoke Shop

The daughter of Salvadoran immigrants, Alvarez grew up in Adams Morgan and later left college to work in banking. But after she trusted a friend with information that he used to steal money from other customers’ accounts, she had to plead guilty to conspiracy to commit bank fraud in 2012.

US Attorneys praised Alvarez for her acceptance of responsibility and her decision not to ask for a costly jury trial, moves that won her supervised release and a five-figure fine. With a felony conviction on her record, Alvarez knew she couldn’t return to finance. She got a job in real-estate development—and then her son, Anthony, started looking at universities where he could study video-game design, some costing almost $60,000 a year.

Alvarez decided she needed a second job. “I told my best friend, ‘If I can’t find anything good, I’m going to be a stripper,’ ” she says with a laugh. She began working at a tobacco shop a friend had opened, the Green Room, and in 2017 began managing it full-time. The shop sold pot-smoking supplies alongside tobacco and convenience items like soap and toothpaste, but Alvarez had zero idea of what bongs and grinders were used for. She’d never really messed with weed. “I remembered, growing up in the city, how many of my Black and Brown brothers and sisters went to jail for carrying little joints,” she says. She always thought, “What if I get caught?”

When Alvarez’s friend decided to exit the business, she gathered her life savings, borrowed money from her family, and bought him out. Customers began asking her to carry cannabis products, and with Anthony about to start college at Clark University in Massachusetts, she decided to test the waters with a basket of THC-laced brownies—displayed by the register in a basket labeled “ANT’s College Fund Brownies.” Alvarez’s mom reluctantly helped her develop the recipe. Other family members chipped in to help her source enough cannabis to make infused butter.

Customers were very into Alvarez’s new offerings. In 2017, she changed the shop’s name and started selling stickers and tote bags that read “Buy Weed From Women,” alongside an expanded selection of gifts. She now has nine employees and was able to pay for Anthony’s education. “I’m grateful that the I-71 law allowed me to do that,” she says.

While canna-business has been good for Alvarez, it also has brought headaches. I-71 operations are taxed on their revenues, just like bookstores and pizza shops. However, the IRS doesn’t allow businesses that are illegal under federal law—even if they’re permitted at the state or local level—to deduct common expenses such as staff salaries, marketing, and rent. Similarly, the Bank Secrecy Act of 1970 and federal money-laundering statutes criminalize transactions for businesses that engage in “unlawful activity,” even if that activity is legal in their states. As a result, banks and merchant-service companies seldom work with I-71 businesses. Few take credit cards, and most deal strictly in cash. “There was a time in District Derp’s history when we had upwards of $50,000 in a safe,” says Chris Licata, one of the shuttered delivery service’s co-owners.

This can make cannabis businesses crime targets. In recent years, robbery waves marked by gunfire and killings have hit shops in the Bay Area and Seattle; in DC, statistics are hard to come by amid conflicting crime data, but some neighborhood associations claim a rise in crime near I-71 businesses. At some, it’s hard to miss the guards at the door; Monko employs four to five security personnel through an agency.

Then there’s the matter of product quality—and safety. DC’s Alcoholic Beverage Regulation Administration, which oversees the city’s seven medical dispensaries, has for years been willing to license an independent local laboratory to test the products those dispensaries sell. However, only one lab has ever applied, and it didn’t meet the agency’s requirements.

That leaves the city’s medical dispensaries relying on supplier assurances, and I-71 businesses sometimes relying on the personal impressions of staffers who use weed. None of this is ideal for customers, says Darel Dawson, who came to the area from California as a botany student to conduct psychopharmacological research at NIH and Johns Hopkins and now owns an I-71 shop, Peace in the Air, in Adams Morgan. If you’re an experienced user—and have a jeweler’s loupe handy—you can spot problems with the sticky crystals, called trichomes, that cover the leaves of a cannabis bud. If they’re dried out, fuzzy, or hairy, the product is probably old; if there’s a powdery coating, it’s a sign of mold or mildew. Smoke the latter and you could end up with an unpleasant allergic reaction—or, if you’re immunocompromised, a serious infection.

Independent testing, Dawson says, would “optimally” eliminate quality problems, “but we’re a long way from optimal.” He points to an issue that has bedeviled California regulators: Product that doesn’t pass lab tests often gets dumped onto the unregulated black market—and can end up in overnight packages heading to DC.

That’s important, because while I-71 businesspeople like to talk up the local provenance of their product, Eidinger says few vendors “can look you in the face and tell you the cannabis was grown in the District of Columbia.” Under the law, only a shop’s owner is legally allowed to grow the cannabis sold in his or her shop. But according to Eidinger, there’s a strong chance that any cannabis you buy here comes from California (or, increasingly, Maine).

By sheer accident, the legal uncertainty surrounding the District’s recreational market has made it more equitable, scaring off large multistate companies and allowing smaller local operators to establish themselves. Similarly, minority entrepreneurs and people with criminal records can more easily get into the cannabis game here than in states like Nevada and Massachusetts. In 2009, White was convicted of aiding and abetting mail fraud and spent about a year and a half in a federal prison in Morgantown, West Virginia; there, he met so many people incarcerated on marijuana charges that he began researching the then-nascent legal weed industry. DC, White says, is “one of the few places in America that gives returning citizens the opportunity to be middle-class, upper-class again, without the scrutiny.”

The I-71 landscape is also something of a Wild West. While medical dispensaries answer to ABRA and have to follow strict rules governing what they can sell and who can buy it, I-71 businesses are largely unsupervised. “You have gift shops that are operating as legitimately as possible,” Alvarez says. “And then you have other ones that just don’t care.” In 2018 and 2019, she says, DC police and the FBI raided what cops called an “illegal marijuana pop-up” that set up in her building, forcing her to close Lit City for days at a time.

City government has accordingly struggled to get a handle on I-71s. In 2019 and 2021, DC mayor Muriel Bowser proposed legislation that would have fully legalized adult-use cannabis sales and used taxes from those sales to support entrepreneurs in areas of the city disproportionately harmed by the War on Drugs. Both plans presumed that congressional Democrats would end the Harris rider—and withered accordingly.

Last year, DC Council chairman Phil Mendelson threatened to close or otherwise kneecap I-71 shops after medical dispensaries complained that they were siphoning away sales, but strong pushback from I-71 owners and business associations convinced the Council to back off. In July, it passed a temporary measure allowing residents to self-certify that they require a medical card—no doctor required. Then, in October, Bowser signed another temporary measure extending that privilege to nonresidents.

The goal of these measures? To encourage cannabis customers to use medical dispensaries instead of I-71s—the better to reconcile, however imperfectly, the chasm between federal law and local desire. “We’re in the most liberal city in the country,” White says. “But when it comes to our cannabis laws, we’re almost some of the most conservative. The city doesn’t reflect where the people are.”

Unlike businesspeople in most industries—tech, finance, energy, take your K Street lobbying pick—many I-71 shop owners will tell you they want more regulation and oversight, not less. Both the I-71 Committee and the DC Cannabis Business Association have rules for membership, such as obtaining a certificate of occupancy from the District’s Department of Buildings, submitting sales-tax records, and not selling edibles that resemble candy.

“Yeah, we’re in a gray area,” White says. “But we want to do it right. We want the opportunity to hang a license on the wall.”

Which brings us back to the Harris rider. Its namesake, a member of the ultraconservative Freedom Caucus and a former Johns Hopkins physician, cosponsored a recent bill signed into law by President Biden that will make it easier to study medical marijuana. Still, Harris “categorically opposes” recreational use. He says he focuses on DC—and not Maryland, where a recreational market will come online this summer—because he reads “the Constitution, and I think the Constitution gives oversight of the federal enclave to the Congress.”

Stymied by the federal stalemate, the DC Council hit upon a novel solution in December: It approved a bill that would eliminate the current cap on the number of medical dispensaries in the city, provide a pathway for current I-71 businesses to go medical, crack down on those that don’t, and make the temporary ability to self-certify for medical-­marijuana cards permanent. In January, 27,036 people held medical cards, according to ABRA.

The bill became law last month, though there’s always the possibility Congress could try to bigfoot DC again as it did with criminal code reform this spring. Customers who once pretended to buy T-shirts could now become customers who pretend to be doctors, specifically to prescribe themselves weed. Preposterous? Of course. Yet in a city that lacks full control over its own laws, it also makes a strange kind of sense. “I have not thought of a better idea yet,” says James Kahn, a rabbi whose family has operated the medical dispensary Takoma Wellness Center since 2013.

In February, I visited Lit City, where I found the same edibles I’d received on my Lucky Chuckie tour. This time, I knew exactly what to say: “How much do I have to spend to get a gift of the level-5 Honey Blooms?” I paid my $35, plus tax, and received my purchase in a bag. It was almost like buying anything else in the city, except for one thing. “Don’t forget to take your sticker,” the clerk told me.

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