Recreational Marijuana Sales in D.C. Could Top $130 Million a Year

In the face of congressional pressure and legislative roadblocks, Washington D.C. edges ever closer to legalizing and taxing recreational marijuana shops.

With the hardline stance the U.S. continues to take on the federal level, it is hard to imagine cannabis being sold in the heart of our government’s capital, yet there is a medical marijuana dispensary less than four blocks from Capitol Hill. Another dispensary sits just north of Embassy Row. Despite the federal government’s continued indignation in keeping cannabis federally illegal, medical marijuana has been legal in D.C. for years now, and a total of five licensed dispensaries are scattered around the capital serving just over 3,500 registered patients under the D.C. medical marijuana program.

Then in November of 2014, voters approved Initiative 71, effectively legalizing possession and cultivation of cannabis for personal use for everyone over 21.

Despite being approved by nearly 65% of D.C. voters, Congress acted in December of 2014 to stop Initiative 71 by limiting the district from using funds to enact the new law. They passed an omnibus spending bill with language barring D.C. from using any funds to “enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act”. This bound the hands of D.C.’s mayor and city council and prevented them from complying with the will of their constituents. Congressional Republicans even threatened D.C. Mayor Muriel Bowser with jail time for misappropriating funds if she allowed Initiative 71 to move forward.

It was because Congress had control over the D.C. budget that they were able to enforce their will through the appropriations process. D.C. tried to escape this control by passing the Local Budget Autonomy Act of 2012, which found itself caught up in its own legal battle.

However, recent news out of D.C. could provide the means for legal cannabis in our nation’s capital to move forward. Late in March 2016, the D.C. Superior Court upheld the Local Budget Autonomy Act of 2012, giving D.C. greater control over its budgets and administration. It also opens the door for expanded recreational cannabis when a current ban expires in the end of September 2016.

President Obama also weighed in on the future of marijuana in D.C. with a slight alteration of the language in his most recent budget plan. Obama’s proposed change to the fiscal budget adds a single but important word to the current language. By including the word “federal” before funds, Obama seemingly gives D.C. ultimate control over how to spend its own revenue and funds, even for cannabis regulation. The change in language is provided below.

“None of the Federal funds contained in this Act may be used to enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act (21 U.S.C. 801 et seq.) or any tetrahydrocannabinols derivative for recreational purposes.”

If D.C. were to approve recreational dispensaries, the windfall to the city could be significant. During a 2014 city council hearing for the Marijuana Legalization and Regulation Act of 2013, Dr. Yesim Taylor estimated that legal marijuana sales could reach $130 million a year in D.C.

Of course, different regulation and taxation models will raise differing revenue numbers. The Marijuana Legalization and Regulation Act (ABRA) proposes a 15% tax, but even a conservative 10% tax (Colorado and Washington tax up to 25%) could raise $13 million dollars per year for the district.

Cannabis advocates are quick to acknowledge the significance of legalizing recreational marijuana in the federal government’s backyard. Even though our nation’s legislative bodies seem intent to hinder the progress of legal cannabis at every step, America is still coming ever closer to a new age of cannabis business.