§ 7–1671.06. Cultivation centers, manufacturers, retailers, internet retailers, and testing laboratories.

*NOTE: This section includes amendments by temporary legislation that will expire on November 21, 2024. To view the text of this section after the expiration of all emergency and temporary legislation affecting this section, click this link: Past Permanent Version.*

*NOTE: This section includes amendments by temporary legislation that will expire on January 1, 2025. To view the text of this section after the expiration of all emergency and temporary legislation, click this link: Past Permanent Version.*

*NOTE: This section includes amendments by emergency legislation that will expire on October 21, 2024. To view the text of this section after the expiration of all emergency and temporary legislation affecting this section, click this link: Permanent Version.*

*NOTE: This section includes amendments by temporary legislation that will expire on May 1, 2025. To view the text of this section after the expiration of all emergency and temporary legislation affecting this section, click this link: Past Permanent Version.*

(a) Notwithstanding any other District law, and in accordance with this chapter and any rules issued pursuant to § 7-1671.13:

(1) A cultivation center may cultivate and possess medical cannabis for the purpose of distribution to a manufacturer, retailer, or internet retailer, and may manufacture, possess, purchase, and use medical cannabis products and paraphernalia;

(2) A manufacturer may possess medical cannabis for the purposes of manufacturing medical cannabis products and distribution to a retailer or internet retailer, and may manufacture, possess, purchase, and use paraphernalia;

(3) A retailer may possess medical cannabis and medical cannabis products for the purpose of dispensing to a qualifying patient or caregiver, and may manufacture, possess, distribute, purchase, and use paraphernalia;

(4) An internet retailer shall not have a physical location that is open to the public and shall be permitted to dispense and distribute medical cannabis, medical cannabis products, and paraphernalia through delivery to any qualifying patient or the qualifying patient's caregiver in the District of Columbia in accordance with this chapter and rules issued pursuant to § 7-1671.13; provided, that the holder of an internet retailer license shall not be permitted to offer curbside pickup at its ABC Board-approved location.

(5) A testing laboratory may possess medical cannabis for the purpose of testing its contents; and

(6) A qualifying patient, caregiver, or non-resident cardholder may only obtain medical cannabis and paraphernalia from a licensed retailer or internet retailer.

(b) Each cultivation center, manufacturer, retailer, internet retailer, courier, and testing laboratory shall be licensed with ABCA prior to cultivating, manufacturing, distributing, dispensing, delivering, selling, possessing, or testing medical cannabis or medical cannabis products, or manufacturing, possessing, purchasing, selling, or distributing paraphernalia.

(c) A cultivation center, manufacturer, retailer, or internet retailer shall ensure that the packaging is significantly difficult for children under 5 years of age to open and packaging or labeling on medical cannabis or medical cannabis-infused products shall not:

(1) Contain any content, image, or other labeling that specifically targets individuals under the age of 21, including, cartoon characters or similar images, on the product, packaging, or a container holding medical cannabis;

(2) Resemble packaging that is appealing to children, including cartoon characters or similar images, on the packaging or a container holding medical cannabis or medical cannabis-infused products; or

(3) Use the word candy or candies.

(c-1) It shall be a violation of this chapter for any unlicensed or licensed cultivation center, manufacturer, retailer, or internet retailer to represent that goods or services or the business is compliant with the Legalization of Possession of Minimal Amounts of Marijuana for Personal Use Initiative of 2014, effective February 26, 2015 (D.C. Law 20-153; D.C. Official Code § passim); except, that a licensed cultivation center, manufacturer, retailer, or internet retailer may have signage indicating that there is medical cannabis on the property.

(d)(1) A cultivation center licensed with ABCA as of the March 10, 2023, shall automatically receive a manufacturer's license, provided that the annual fee is paid.

(2) A cultivation center licensed with ABCA as of the March 10, 2023, shall be eligible, upon approval of an application and payment of an annual fee, to receive a retailer license.

(3) A dispensary licensed with ABCA as of the March 22, 2023, shall be eligible, upon approval of an application and payment of an annual fee, to receive a cultivation center license and a manufacturer's license.

(4) ABCA shall make applications for additional licenses in paragraphs (2) and (3) of this subsection available no later than May 1, 2023.

(5) Applications for additional licenses pursuant to paragraphs (1) through (3) of this subsection shall be filed with ABCA by the existing cultivation center or dispensary by May 1, 2024.

(e)(1) Before issuing, transferring to a new owner, or renewing a license, the ABC Board shall determine that the applicant is not disqualified because of a conflicting interest in another medical cannabis license, as follows:

(A) No licensee holding a testing laboratory license shall hold a cultivation center, manufacturer, retailer, internet retailer, or courier license.

(B) No licensee holding a retailer, internet retailer, cultivation center, testing laboratory, or manufacturer license shall hold a courier license.

(D) The combined number of retailer and internet retailer licenses held by a licensee shall not exceed 3.

(E) There shall be no limit on the number of manufacturer licenses that a licensee may hold.

(F) No licensee holding a cultivation center license shall hold more than one retailer license.

(G) No licensee holding a cultivation center license shall hold an internet retailer license.

(2) The ABC Board may modify, by rule, the number of licenses that a licensee may hold for one or more of the license categories listed in paragraph (1) of this subsection.

(f) The ABC Board may approve the holder of a cultivation center or manufacturers license that also owns, or has a valid lease for, real property adjacent to its existing cultivation center or manufacturing facility, to physically expand the licensed cultivation center or manufacturing facility into that adjacent real property for the purpose of increasing production of medical cannabis or medical cannabis products.

(g) An applicant seeking to qualify as a:

(1) Social equity applicant shall submit an affidavit with the application for a cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory license attesting to:

(A) The number of owners who meet the criteria for a social equity applicant pursuant to § 7-1671.01(20C);

(B) The ownership interests, incomes, and net worth of any owners;

(D) The residency of owners, employees, and contractors; and

(E) The locations of the assets and the percentages of the assets in each location;

(2) Medical cannabis certified business enterprise applicant shall submit an affidavit with the application for a cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory license attesting to:

(A) The number of owners who are economically disadvantaged individuals or individuals who have been subjected to racial or ethnic prejudice or bias because of their identities as members of a group without regard to their individual qualities;

(B) The ownership interests, incomes, and net worth of any owners;

(D) The residency of owners, employees, and contractors; and

(E) The locations of the assets and the percentages of the assets in each location.

(h) At least 50% of all new retailer, internet retailer, courier, cultivation center, and manufacturer licenses issued after March 22, 2023, shall be set aside for social equity applicants; except, that this set aside shall not apply to cultivation centers and retailers, and applicants who scored 150 points or more during the ABC Board open application period that occurred between November 29, 2021 and March 28, 2022, who receive a cultivation center, manufacturer, or retailer's license pursuant to subsections (d), (w), (x) and (y) of this section.

(i)(1) The ABC Board shall issue rules within 180 days following March 22, 2023, to establish processes and procedures for requesting, reviewing, and implementing a cap or moratorium on the issuance of cultivation center, retailer, or internet retailer licenses in a Ward, ANC, or Single Member District of an ANC.

(2) After one year following March 22, 2023, the ABC Board may, by rulemaking, limit the number of cultivation centers, retailers, and internet retailers in a Ward, ANC, or Single Member District of an ANC.

(3) The ABC Board shall analyze and consider supply and demand when determining whether to institute a cap or moratorium pursuant to this subsection.

(j)(1) Straw ownership for the purposes of meeting the ownership requirements of social equity applicants and medical cannabis certified business enterprises is prohibited for both District residents and out-of-state residents.

(2) A person or business who is found to have willfully asserted straw ownership shall have the person's or business's license or registration revoked and be subject to a civil penalty of not more than $30,000.

(k)(1) The ABC Board shall be authorized to issue a one-year conditional license for a cultivation center, retailer, internet retailer, manufacturer, or courier that does not currently have a proposed location; except, that the ABC Board shall be authorized to convert a one-year conditional license to 2 years for a cultivation center or manufacturer that does not currently have a proposed location.

(2) Under the conditional license, the applicant shall have one year or 2 years for a cultivation center or manufacturer applicant from the date of ABC Board approval to submit to ABCA:

(A) A lease or similar documentation;

(B) A security plan;

(D) Any remaining licensing or endorsement fees owed to ABCA; and

(E) Any other documentation requested by the ABC Board.

(3) The holder of a conditional license shall not engage in purchasing, possessing, cultivating, manufacturing, or selling of medical cannabis or cannabis products.

(4) A conditional license that does not meet the terms of this subsection or is not operating after a period of one year shall be canceled by the ABC Board; except that a 2-year conditional license for a cultivation center or manufacturer shall be canceled by the ABC Board after two years.

(k-1) A conditional license for a cultivation center or manufacturer that is in effect as of July 15, 2024, as of that date, shall be automatically converted to a 2-year conditional license, expiring one year after the date the original conditional license was set to expire, at no additional cost and without additional ABC Board approval.

(l) A conditional license approved by the ABC Board shall not be permitted to be transferred to a new owner.

(m)(1) For new social equity applicants, ABCA shall waive up to 75% of any nonrefundable license fees, including any nonrefundable application fees and annual or renewal license fees associated with receiving a medical cannabis facility license to operate for the first 3 years.

(2) This subsection shall not apply to fees associated with any endorsements requested by the applicant.

(n)(1)(A) Cultivation center, manufacturer, retailer, internet retailer, courier, and testing laboratory license fees shall be paid annually by credit card, debit card, cashier's check, money order, or certified check made payable to the D.C. Treasurer.

(B) The fee for the first year shall be paid within 60 calendar days of ABC Board approval but prior to license issuance, and the renewal fee shall be paid on or before the anniversary date of issuance of the registration.

(2)(A) The ABC Board shall, by rules issued pursuant to § 7-1671.13, establish the initial application and renewal fees for cultivation center, manufacturer, retailer, internet retailer, and courier licenses. The ABC Board may revise these fees as considered necessary.

(B) There shall be no initial application fee for a testing laboratory license. Renewal fees for a testing laboratory license shall be established by rules issued pursuant to sub-paragraph (A) of this paragraph.

(3) A cultivation center, manufacturer, retailer, internet retailer, courier, and testing laboratory license shall be valid for 3 years unless:

(A) Suspended or revoked; or

(B) The license takes effect on a date in between the dates established by the ABC Board for the regular license period of each license, in which case the license shall be valid only until the end of the license period.

(4)(A) The ABC Board may impose a late fee upon an applicant for a cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory that fails to timely renew their license. The late fee shall be $50 for each business day after the due date of payment. The total amount of the late fee to be paid shall not exceed the annual cost of the license.

(B)(i) The ABC Board may suspend a previously approved license until the renewal fee is paid.

(ii) A cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory that has not timely renewed its license shall not be permitted to operate with an expired license.

(5)(A) The ABC Board may suspend a license where the payment was made by the applicant with a check returned unpaid, invalid credit card, or any other form of payment that is denied by an intermediary institution.

(B) The applicant, in addition to any late fees imposed by the ABC Board pursuant to paragraph (4) of this subsection, shall also be charged a $100 returned check/denied payment fee.

(o)(1) Subject to paragraph (2) of this subsection, a retailer or internet retailer may not dispense more than 8 ounces of medical cannabis in a 30-day period to a qualifying patient, either directly or through the qualifying patient's caregiver.

(2) The Mayor, through rulemaking, may place alternate limits on the amount of medical cannabis that may be dispensed in forms other than dried medical cannabis.

(p) No medical cannabis or paraphernalia at a cultivation center, manufacturer, retailer, internet retailer, or testing laboratory shall be visible from any public or other property.

(q) A cultivation center, manufacturer, retailer, internet retailer, or testing laboratory shall not locate within any residential district or within 300 feet of a preschool, primary or secondary school, or recreation center.

(q-1)(1) No retailer license shall be issued for a facility that is located within 400 feet from another facility operating under a retailer license.

(2) In determining whether a retailer application is eligible to be approved, the ABC Board shall ensure that the retailer application will not be located within 400 feet of a previously submitted retailer application filed timely by another applicant.

(3) ABCA shall proceed forward with the application filed by the facility that is first in time. If the application is subsequently denied, ABCA shall proceed with the application that is second in time, third in time, et cetera, until an application is approved.

(r)(1) A cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory may be permitted to change ownership or controlling interest upon approval from the ABC Board.

(2) A license approved by the ABC Board for a social equity applicant or an unlicensed establishment shall not be permitted to be transferred to a new owner until 3 years after the issuance of the permanent license, except to a social equity applicant. After 3 years, should the license transfer to neither a medical cannabis certified business enterprise nor a social equity applicant, the new owner shall be required to repay any grants or loans provided by the District to the medical cannabis certified business enterprise or social equity applicant and pay ABCA any waived licensing and application fees.

(s) Each cultivation center, manufacturer, retailer, internet retailer, courier, and testing laboratory shall:

(1) Be either a for-profit or nonprofit corporation incorporated within the District;

(2) Implement a security plan to prevent the theft or diversion of medical cannabis, including maintaining all medical cannabis in a secure, locked room that is accessible only by authorized persons; and

(3) Ensure that all its employees receive training on compliance with District law, medical cannabis use, security, and theft prevention.

(t) Each retailer or internet retailer shall regularly distribute to all qualifying patients and caregivers the educational materials developed as part of the Program.

(u)(1) A criminal background check shall not be required to be submitted to ABCA with an employee, agent, or manager as part of the employee's, agent's, or manager's application.

(2) Except with respect to evaluating the applications of social equity applicants and returning citizens, the ABC Board shall not:

(A) Inquire into or consider:

(i) A director, officer, member, or incorporator's criminal conviction until after the applicant is found by ABCA to be otherwise qualified;

(ii) A criminal conviction that has been sealed, expunged, vacated, or pardoned, including a criminal conviction that has been set aside pursuant to subchapter I of Chapter 9 of Title 24;

(iii) A juvenile adjudication; or

(iv) Non-conviction information, including information related to a deferred sentencing agreement, participation in a diversion program, or an arrest that did not result in a criminal conviction; or

(B) Consider a criminal conviction of an offense of a director, officer, member, incorporator of a cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory that is not directly related to the position of employment sought or to the specific business for which the license is sought.

[(3)] Pursuant to paragraph (1)(B) of this subsection, ABCA shall determine whether a criminal conviction of an offense of a director, officer, member, or incorporator of a cultivation center, manufacturer, retailer, internet retailer, or testing laboratory is directly related to the position of employment sought or to the specific business for which the license is sought, by considering:

(A) Whether the elements of the offense are directly related, by clear and convincing evidence, to the license sought;

(B) Any evidence produced by the director, officer, member, or incorporator concerning their rehabilitation and fitness, including:

(i) Evidence as to whether the director, officer, member, incorporator has recidivated;

(ii) Evidence demonstrating compliance with any terms and conditions of probation, supervised release, or parole;

(iii) The length of time that has elapsed since the offense was committed;

(iv) The age at which the offense was committed;

(v) Any circumstances related to the offense, including mitigating circumstances;

(vi) Evidence of work history, particularly any training or work experience related to the license sought; and

(vii) Letters of reference; and

(C) The District's interest in promoting opportunities for business ownership and employment for returning citizens and individuals with criminal records.

[(4)] Before acting on a determination made pursuant to paragraph (2) of this subsection, the ABC Board shall provide the director, officer, member, or incorporator, in writing, the following information:

(A) The criminal conviction that forms the basis for the action and the ABC Board's reasoning for determining the offense is directly related to the license sought;

(B) A copy of any criminal history records on which the ABC Board relies;

(C) A statement that the director, officer, member, or incorporator may provide evidence of inaccuracies within the criminal history records;

(D) A description of additional information that the director, officer, member, incorporator may provide to demonstrate their rehabilitation and fitness; and

(E) Information about any applicable hearing procedures.

[(5)](A) After receiving the information pursuant to paragraph (3) of this subsection, the director, officer, member, or incorporator, shall have 45 business days to issue a response to the ABC Board.

(B) The ABC Board shall respond no later than 45 business days after receipt of a response pursuant to subparagraph (A) of this paragraph.

[(6)] The ABC Board may establish by rulemaking a list of criminal conviction offenses that are directly related to the operation of a cultivation center, manufacturer, retailer, internet retailer, courier, or testing laboratory for purposes of implementing this subsection.

(v)(1) The ABC Board may fine, suspend, or revoke the license or registration of a person or business found to have violated any provision of this chapter or rules issued under this chapter.

(2) The ABC Board may also issue a written warning to a licensed or registered person or business for a violation of this chapter or rules issued under this chapter to the extent permitted by regulations issued under this chapter.

(w)(1) The 2 cultivation center registration applicants that submitted a medical cannabis facility registration application to the ABC Board between November 29, 2021 and March 28, 2022, that tied for second and received the same total score shall be awarded a cultivation center registration.

(2) A cultivation center registration applicant not referenced in paragraph (1) of this subsection that scored 150 points or more during the same open application period shall be considered for a cultivation center registration after May 1, 2023; provided, that the applicant files a corrected application, including an application to change the facility location, with the ABC Board by May 1, 2024. An applicant that scored 150 points or higher shall be allowed to change the location of the cultivation center facility on its application by May 1, 2024, without negatively affecting the status of the application.

(3) An applicant that filed more than one cultivation center registration application during the open application period with one or more of the same owners shall be considered for only one cultivation center registration under this subsection.

(4) An initial application fee paid by a cultivation center registration applicant that scored 150 points or higher shall be credited by ABCA toward the entire cost of the applicant's cultivation center application fee.

(x)(1) A dispensary registration applicant that submitted a medical cannabis facility registration application to the ABC Board between November 29, 2021, and March 28, 2022, and received 150 points or more shall be considered for a retailer registration no earlier than 180 calendar days after March 22, 2023. An applicant shall be allowed to change the location of the retailer facility on its application by May 1, 2024, without negatively affecting the status of the application.

(2) An applicant that filed more than one dispensary registration application during the open application period with one or more of the same owners shall be considered for only one retailer registration under this subsection.

(3) An initial application fee paid by a dispensary registration applicant that scored 150 points or higher shall be credited by ABCA toward the entire cost of the applicant's retailer application fee.

(y) The 5 cultivation center registration applicants that submitted medical cannabis facility registration applications to the ABC Board between November 29, 2021 and March 28, 2022, that scored 150 points or more shall automatically receive a manufacturer license provided that the annual fee is paid after June 29, 2023; provided, that the applicant registers on a form provided by ABCA with the ABC Board by May 1, 2024.