Legislative Memo Concerning DC’s Proposed Tax & Regulate Legislation

Dear Councilmembers,

Thank you for agreeing to have your staff meet with us concerning the “Comprehensive Cannabis Legalization and Regulation Act of 2021.” We have waited for 6 years to address many of the important issues contained in this legislation and during that time we’ve had the opportunity to solicit feedback from DC’s cannabis users, growers, and their families. While we are generally supportive of this important piece of legislation, we do have some concerns that we will be sharing with your staff. Overall, we do not want any of the freedoms enshrined in Initiative 71 to be reduced or altered in significant or possibly detrimental ways, and more importantly, we urge the DC Council to support the existing cottage industry in the District of Columbia before allowing multi-state operators, with billions of capital, to make further inroads.

1. While not contained in this legislation, the Mayor’s “Safe Cannabis Sales Act of 2021” contains a provision we find reprehensible. We feel it is important to start with this problematic component of the Mayor’s legislation before addressing the Council’s legislation in order for it not to be added at a later date. Namely, the provision that allows adults to possess no more than 10 ounces of cannabis at home. This provision is not acceptable and we are thankful that the Council’s legislation does not contain this onerous section. An adult who grows cannabis at home could violate this provision with one plant and we fear that its potential inclusion would result in more home raids and arrests. It shows that the Mayor’s legislation was written without serious consultation with any member of DC’s cannabis community because if only one DC resident homegrower had been given a chance to comment they would have said “This is not workable,” and we believe it is in the best interest to make this legislation work for everyone.

Initiative 71 permits adults to keep all of the cannabis they have grown at home and we are not aware of any safety issues that have arisen from this home cultivation provision, but we do believe a lack of access to the marketplace is a problem. A better gauge is to compare the limits adults currently have when it comes to the possession of beer, wine, and liquor at home. Currently we are not aware of limits that DC-based home brewers might have with respect to the amount beer they can produce for personal consumption without fear of their home being raided. Why should cannabis growers be any different?

2. We are suggesting that the Council legalize “casual sales.” If a DC resident was to end up with more cannabis than they need for personal use, we need to offer them a legal outlet to sell their extra home grown cannabis to other adults as this is a direct way to provide equity for the cannabis community that has been historically oppressed. A DC resident homegrower will pay for electricity, water, soil, rent, and nutrients to grow a plant and under Initiative 71 they can give that cannabis away without remuneration (payment for goods or services). But why should we criminalize a home grower selling some of their extra cannabis to their neighbor? We don’t care if a neighbor sells their extra tomatoes to a neighbor, or extra bottles of home made wine so why not cannabis? We don’t care if a home brewer sells their neighbor a 6-pack of their beer either. These types of casual sales are of no concern to police, so why should they be a concern when it comes to small amounts of cannabis?

We are aware that some growers are selling their extra cannabis for supplemental income. With only 12 plants, a home grower cannot make this into a fully sustaining business. But some do sell their extra cannabis to pay for rent, electricity, water, soil, and nutrients that went into the production of the cannabis. We feel casual sales should not remain criminalized as there is no compelling public interest to do so if a ultra-micro license is created. How much casual sales one can make before they need to collect sales tax and require a license?

We suggest $599 in “casual sales” to be the threshold for sales tax. At $600 the grower is really an independent contractor in the cottage industry, so like a normal small business they are still required to report income and pay taxes on perhaps up to $30,000 in sales or perhaps even more. We feel this is a relatively small amount of “casual sales” that would allow the home grower to recoup their expenses and generate supplemental income that could make the difference for someone living in poverty or not, or being able to make ever higher property tax payments on a family home in a gentrifying area.

3. We believe there needs to be more licenses offered and they have a lower price tag. The barrier to entry for many adults will be the cost to obtain the license. The microbusiness license permits a grower to utilize 1,500 square feet of space. We feel this “micro” license should be considered “small” and what we consider an “ultra-micro” should be added in its place as the “microbusiness” license. Thus there would be a “small business” license and a “microbusiness” license be offered. The revised “microbusiness” license should be for home growers to be able to sell more than $600 of cannabis and grow more plants at home. The proposed “microbusiness” license requires the licensee to rent a properly zoned space for the cultivation of cannabis to comply with the licensee requirements. We anticipate this type of zoned space to become more expensive as more licenses become available. This will cause the overhead cost to produce the cannabis to increase and lower and possibly eliminate the profit margins of these “micro” businesses. Thus it’s important that the existing cottage industry remains within the homes of DC growers. The only difference between the current system of home cultivation and a true “microbusiness” licensee is the allowance to grow more plants and sell small amounts directly to consumers through casual sales. We believe the new “microbusiness” license should be $100 and allow growers to grow 30 plants, which is a little more than two times the number of plants that are permitted under Initiative 71. While the “small business” license should be $500 and allow growers to utilize up to 1,500 square feet of space and grow an unlimited amount of cannabis and pay taxes on everything above $600 in sales. The new “microbusiness” licensees would not be required to sell their small amounts of cannabis to distributors, but the “small business” licensees would be required to do so. Both the “micro” and “small” business licensees should have access to the farmers markets.

4. The expansion of licenses should mirror those which are offered for businesses who sell alcohol. For example, there are licenses to allow bed & breakfasts to serve alcohol to their guests, so why not a similar $650 license for cannabis establishments? If alcohol can be sold at farmers markets, then why not allow “small business” or “microbusiness” licensees to sell their cannabis at farmers markets as well? There are so many examples of licenses for alcohol that are currently available, it doesn’t make sense to limit the number of licenses available for cannabis businesses to so few in number and type. Nearly all the existing alcohol licenses address what this legislation fails to address: the need for on-site consumption licenses.

There are thousands of adults who are prohibited from consuming cannabis in their homes and this legislation does not address this important need. DCMJ worked with Congresswoman Norton in 2018 to help introduce the “Sondra Battle Cannabis Fair Use Act,” which would permit adults to consume cannabis in public housing in states where medical and adult-use cannabis has been legalized. While this legislation has been incorporated into the MORE Act, which was passed by the House of Representatives last December, it shows the need for adults to have a safe place to consume cannabis outside of their homes. We believe there needs to be no less than 5 of these licenses per ward. An adult should not be required to travel across town to be able to legally consume their cannabis outside their home.

Unless the Council of District of Columbia amends the decriminalization of cannabis statute, which prohibits the use of cannabis in public spaces, this legislation is incomplete. Like cannabis, tobacco requires adults to be 21 years of age to purchase or consume. Tobacco is not allowed to be smoked in public housing either, but there is space afforded to smokers at public housing. We believe that adults should be able to consume cannabis at any place an adult can consume tobacco. This parity will make it easier to enforce the law. Right now there are places in DC where tobacco can be consumed indoors and we believe there should be a license available for cannabis as well. New York’s recent cannabis reform legislation permits cannabis to be consumed at any place tobacco is permitted, including sidewalks, but not in public parks.

5. With a large segment of the population unable to legally grow cannabis at home, there needs to be a license for cooperative growing sites. We believe this would be a great use of the “small business” or “microbusiness” license. For example, if 10 adults pooled their resources they could rent a space where they could each have 150 square feet grow their own cannabis for non-commercial use. There is an intrinsic difference between these cooperative growing licenses that are non-commercial and those that are commercial and this legislation needs to make a distinction between the two. For example, if a friend who lives alone has an extra room at their house, I could grow my 6 plants there alongside their 6 plants under a cooperative grow license. Under Initiative 71, the person who lives alone and is growing these 12 plants would be breaking the law, but if there was a means for them to obtain a cooperative grow license they would be within the scope of the law. This license would allow the homeowner of the cooperative to charge a small fee for electricity and help them supplement their income by providing a small space in their homes. There are already growers in DC who do this in violation of the law and it shows the need for another type of license “microbusiness” license.

6. Finally, both this legislation and Mayor’s proposed legislation contain a prohibition on giving away cannabis to those engaged in advocacy. This prohibition is included in a section that addresses some of the existing ways people currently sell cannabis. Namely, buy this thing and get this cannabis for free or join this group and get cannabis for free. But come to this demonstration and get cannabis for free is entirely different. DCMJ has lead numerous advocacy-related demonstrations where cannabis was used as means to further the goals of reforming cannabis laws. For example, next month we plan on giving away joints outside of vaccination centers. Dubbed “Joints For Jabs,” this form of advocacy encourages adults to get vaccinated and to voluntarily call their elected officials to pass this law. At no point is there any money being requested in order to receive the cannabis. Since this form of advocacy carries no inherent value other than promoting reform, the portion dealing with advocacy must be removed. There is no sales component with respect to free speech activities and we question the constitutionality of this prohibition. If there is any money exchanged in relation to the advocacy, then we agree that this section would constitute an illegal sale, but there needs to be better clarity. If this section is strictly about the exchange of money for anything, including advocacy, for cannabis, then its an illegal sale. But if we are to permit casual sales, then there needs to be a limit on what constitutes an illegal sale. In 2017, we gave away over 10,000 joints at Donald Trump’s inauguration in order to advocate that cannabis reform is a non-partisan issue. There was no money that exchanged hands, just free joints containing cannabis grown at home by DC residents given to adults for advocating for the change of unjust laws. This type of advocacy is not a backdoor to allowing illicit cannabis sales and must be removed to protect free speech rights.
We look forward to working with you on this important legislation. We understand the Harris Rider remains in effect and this legislation will not receive a final vote until later this year. Therefore, we believe there is ample time to expand this legislation and make into something that reflects the values and needs of the cannabis community in the District of Columbia.

Adam Eidinger, Proposer of Initiative 71, Co-Founder of DC Marijuana Justice
Nikolas Schiller, Co-Founder of DC Marijuana Justice