Washington DC's budding market for legal pot is rife with potential pitfalls — here's what you need to know  

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Washington DC's budding market for legal pot is rife with potential pitfalls — here's what you need to know  

Adam Eidinger along with other DC marijuana advocates gathered on the east side of the US Capitol plaza grounds to urge Congressional lawmakers to lower the restrictions on marijuana use in the District of Columbia, and made a further statement by illegally smoking marijuana and consequently being arrested, on Capitol Hill in Washington DC Monday April 24, 2017. 
Melina Mara | The Washington Post | Getty Images

It's been nearly four years since Washington, D.C., citizens overwhelmingly passed Initiative 71, granting all citizens over the age of 21 permission to possess up to two ounces of marijuana. The law allows district residents to use and grow pot on private property, and to exchange weed as long as no money, goods or services are exchanged.

The nation's capital now has a market full of "ganjapreneurs," who navigate a unique ecosystem that's unlike any other legal weed market. However, that same market can be difficult for tourists, vendors, businesses and government employees. CNBC recently took a look at several elements that make the cannabis culture in Washington, D.C., different from most others in the nation.

  • A gift that keeps giving

    DC's pot laws don't allow users to purchase marijuana in a traditional buyer-seller interaction. Instead, they allow someone to buy another item, good or service — and then receive a free marijuana product that's "gifted" or donated by the vendor, instead of being sold. Some gifting interactions have featured things like stickers, single ticket raffles, shirts, cups, music and even motivational speeches.

    According to Joe Tierney of GentlemanToker.com, "most of the time pot is used to promote something else during these exchanges." Marijuana seekers can find these vendors by going to "pop-up" events usually advertised on social media platforms like Instagram by the vendors themselves. The postings are often kept secret, so users must direct message vendors, or hosts to find out the actual location.

    These events take place at random venues throughout the city in places like bars, restaurants and even private residences. Once there, a user can find themselves in a farmers market-like atmosphere where anything from cannabis buds, edibles, concentrates and merchandise, can be found. However, "gifters" should definitely beware. Officials have recently been cracking down on gifting markets, and even revoked the license of one nightclub where weed was openly used.

    If users do not feel comfortable going to a pop-up event, there is also a burgeoning (but pricey) marijuana delivery market.

    A marijuana bud on display in Washington, D.C.
  • Gray market, green rush

    Maine and Massachusetts have legalized both medical and recreational cannabis, but political infighting and bureaucratic red tape has delayed the process of opening up recreational dispensaries. Right now, DC is the East Coast's most thriving pot market, with more than 300 local marijuana-affiliated businesses. However, because of marijuana's quasi-legal status in the district, many larger companies are staying away. A 2014 study by District officials estimated that the city's cannabis market could be worth up to $130 million a year, leading to a possible $20 million of revenue for local government. This is just a small fraction of the estimated growth of the entire national industry, which could top $20 billion by 2022 according to some estimates.

    The DC Council's efforts to fully tax and regulate marijuana have been consistently block by Congress. But many, including Sarah Gersten, a Cannabis attorney and member of the DC Cannabis Business Association, are looking to change that.

    "People on the DC council have written regulations to tax and regulate marijuana," Gersten told CNBC. We are writing our own because the DC council might not know the intricacies, so we can better help people who used to be criminalized by marijuana. I think we have seen what happens in states where its legal. You see huge economic booms."

    Mike Piesto (L) and Rodrigo Alarcon trim the buds of marijuana plants during a harvest at Alternative Solutions, a DC area medical marijuana producer, April 20, 2016 in Washington, DC. 
    Brendan Smialowski | AFP | Getty Images
  • Medical marijuana has been legal in the city since 1998, but congressional efforts to prevent the opening of dispensaries, delayed availability to the public until 2011. In fact, the first legal medical purchase of marijuana in the city came in 2013, just a year before the city legalized recreational pot.

    Meanwhile, the process of acquiring a medical card to purchse legal medical marijuana comes with some bureaucratic hurdles. In order to obtain and maintain medical patient status, applicants must fill out an application with two proofs of DC identification, a recommendation from a licensed medical marijuana physician, and waiting at least 30 days for the Department of Health to process the application, and a $100 fee. Although the district accepts medical cards from 16 other states, there are currently only five dispensaries in the city, serving over 5,458 medical patients. Also, dispensary prices tend to be more expensive because of the supply chain from growing center to dispensary to patients, and there are currently only dispensaries in half of the city's wards. This forces 43 percent of medical patients to travel to another ward.

    The pop-up events have presented multiple solutions for medical patients, offering relatively cheap prices, easy access and a variety of different options. The city is currently looking into opening more medical dispensaries and streamlining its medical card process.

    A customer of the medical marijuana dispensary Takoma Wellness Center in Takoma Park, is shown inventory, August 30, 2016. 
    Tom Williams | CQ-Roll Call Group | Getty Images
  • Policing pop-ups

    According to DC Police Department data, the number of possession arrest has fallen substantially, from almost 1,500 in 2014, to a low of only 16 in 2016. However, the number of public consumption arrests have surged from a low of 99 in 2014, to an average of 274 per year for the last two years. Users could face even more risk if they decide to use marijuana on any federal land, which makes up 29 percent of DC's total land mass.

    Police insist they are obligated to take action, because the community has consistently expressed frustration over the amount of public consumption. However, the department says it "respects District law regarding the legalization of small amounts of marijuana for home grow or home use." Meanwhile, officers have conducted raids on pop-up events, including one raid in June where 30 people were arrested and over $10,000 of marijuana was seized. The raids are aimed at cracking down on users and vendors trying to circumvent the gray area of gifting.

    Because it is still illegal, restaurants, and bars can be fined thousands of dollars or shut down completely if violations of I-71 occur on their property, many businesses are hesitant to host events or to allow marijuana in their facilities. Many banks, credit unions, and financial institutions will not take "marijuana money" fearing federal charges or accusations of money laundering. This forces vendors to deal primarily in cash, putting them at greater risks for theft. A few vendors are even rumored to play dirty, by calling the police on other vendors in order to cut down on some of the competition.

    Secret Service block pro-marijuana protesters from carrying their 51-foot inflated marijuana joint down Pennsylvania Avenue in front of the White House on Saturday, April 2, 2016. 
    Bill Clark | CQ-Roll Call Group | Getty Images
  • The synthetic Marijuana problem

    Although the synthetic pot substance widely known as "K2" is not a new phenomenon in the district, the amount of use and overdose cases has increased dramatically. K2 mimics the sensations of marijuana, but with much stronger effects. Adding to the problem, K2 is easily obtained at gas stations and corner stores, and has become a public health threat in cities like New York

    That problem has extended to DC, where officials have gotten hundreds of emergency calls for suspected K2 overdoses. Officials, vendors, and residents are still unsure as to how K2 will affect the future of legal marijuana in the city, but the epidemic is complicating efforts to fully legalize marijuana use.

    A man prepares to smoke K2 or 'Spice', a synthetic marijuana drug.
    Spencer Platt | Getty Images News | Getty Images
  • Jobs for women and minorities

    According to Tierney, many of the vendors that go to these events are run by racial minorities, women, and veterans. This allows some of Washington's most underrepresented groups to have access to good paying jobs that range from growers to retailers, to consultants and delivery service providers.

    Last year, DC's Council passed a measure to give minorities preferential status for working at DC dispensaries and cultivators. Yet despite the efforts to give preferential treatment to minority marijuana business, many still face stigma: some 86 percent of people who are arrested for marijuana are black.

    Council member Robert C. White Jr., who sponsored the bill said that DC has an "obligation to make sure that minorities and local small businesses can get in on the ground floor and secure a piece of this foundation. We have locked up so many black people for marijuana, and I see it as incredibly hypocritical for those folks to return from prison on marijuana charges just to come back to a place that has now legalized and industrialized it, and they can't play any role."

    A customer buys cannabis products at MedMen, one of the two Los Angeles area pot shops that began selling marijuana for recreational use under the new California marijuana law today, on January 2, 2018 in West Hollywood, California. Los Angeles and other nearby cities outside of West Hollywood have not finalized their local permitting rules so licenses to businesses in those jurisdictions are yet to be granted.
    Getty Images