After years of selling cigars, glassware and accessories — and gifting marijuana, as allowed under D.C. law — a cannabis shop blocks from campus is months away from operating as a fully licensed medical dispensary.

Velvet’s Dispensary & Smoke Shop, which has operated as a recreational cannabis “gifting” shop on Pennsylvania Avenue since 2021, posted notice in February that it applied for a medical marijuana license last year, so it can open its doors to medical marijuana patients this summer, store owner Eddie Musa said. Velvet’s is one of dozens of cannabis “gifting” shops in D.C. that have applied for the licenses since D.C. officials enacted legislation in March 2023 to overhaul the city’s marijuana sales model, with stores facing shutdown if they fail to apply before the March 31 compliance deadline.

“Once people get used to it, it makes it even more professional,” Musa said.

D.C. voters overwhelmingly approved Initiative 71 in November 2014, prompting the legalization of the possession, purchase and transportation of up to two ounces of marijuana for adults 21 and older. But Congress, which has oversight over D.C. laws, has long blocked the District from creating a legalized system for recreational marijuana sales.

As a loophole, D.C. adopted a “gifting” model in 2015 — a de facto legal recreational market in which businesses sell items like stickers and postcards and gift customers marijuana products with their purchase.

D.C.’s March 2023 law aimed to eliminate the gifting model by requiring shops to apply for medical marijuana licenses. Gifting shops will now have to  comply with medical cannabis regulations under the legislation, including that retailers must carry marijuana cultivated and sold in the District and test products for potency and harmful chemicals.

Any D.C. resident aged 21 or older can purchase cannabis under the new law after self-certifying their medical marijuana eligibility by filling out a short form online or in person at the Alcoholic Beverage and Cannabis Administration office that asks for identification, proof of residency and a photo, per the law.

At least 41 gifting stores across the District have made the transition to medical shops since 2023, according to the Outlaw Report, which covers cannabis news in D.C. Enforcement against businesses that failed to meet the deadline began April 1, which has included seizure of businesses and temporary shutdowns of stores.

As of late March, regulators have shut down 42 shops that did not apply for licenses. An ABCA spokesperson didn’t return a request for comment on how many shops officials have shut down since April 1.

Local medically licensed cannabis retailers said the transition will make marijuana consumption safer and more commercial, but the transition involves overcoming bureaucratic hurdles, like changing suppliers and obtaining building permits.

Musa said he is transitioning where he gets his supply of cannabis with his conversion to a medical shop, as D.C.’s law stipulates that medical retailers buy products from District cultivators instead of from those in other states, like Maryland. 

He said he’s heard from friends who own licensed stores that some customers aren’t comfortable signing up for medical cards because they’re worried about potential implications of the D.C. government having information about their marijuana use, despite the system being legal.

Musa added that his store plans to offer a free product with purchase for those who sign up for a medical marijuana card in his store as an incentive. 

“What I heard from the friends that I have already licensed, I haven’t experienced it yet, but what they say is, some people, they’re not comfortable signing up,” Musa said. “But there’s no way around it.”

Musa said he expects that competition in D.C.’s marijuana market will decrease once the government begins cracking down on unlicensed gifting shops, leaving only medically licensed retailers in the legal market.

“They shut down all the unlicensed to make it even more organized, which is good for me, and I like it,” Musa said.

Terrence White — the owner of Monko in Mount Vernon Square, which made the transition from gifting to medical marijuana and started legal sales late last month — said the licensing process was “rigorous.” 

He said the 2023 law stipulates that cannabis shops cannot be within 400 feet of each other, and despite Monko existing as a gifting shop for years, another cannabis retailer attempted to open a medical shop near his last year — which would have prevented him from obtaining a medical license if the competing business had ended up moving there. 

White said Monko has been a “vital part” of the community and worked with the neighborhood’s local governing body and Business Improvement District to ease the conversion.

“We had the right people behind us to fight that fight,” White said.

White formerly chaired the I-71 Committee, a group that advocated for D.C.’s marijuana entrepreneurs, and said he pushed for amendments to the 2023 law that give Black and brown individuals harmed by the War on Drugs a “jump start” in launching medical cannabis businesses. 

The law reserves half of all new medical cannabis business licenses to “social equity applicants,” including Black D.C. residents who disproportionately faced incarceration when the District criminalized marijuana before 2014. 

“It’s pertinent that we continue to right the social equity, not only for the equity side or the legal side, but more for the reciprocity side, so that people of color then get the opportunity to be in the space,” White said.

For D.C. Cannabis Society owner Eric Henning, D.C.’s pathway to medical marijuana licensing created an opportunity to start his own business in Dupont Circle after years of supplying gifting shops with cannabis he’d grown at home.

He said his business looks to “elevate” the marijuana market by creating a space for people to consume cannabis in his business, like people consume alcohol at a bar — a practice that the 2023 law permits by allowing medical licensees to apply for a safe use treatment facility endorsement, in which the D.C. government permits on-site consumption.

Henning said he applied for a medical license in July 2024 but didn’t hear any response until November before the ABCA approved his application in February.

The lack of response forced Henning to tell investors that he was unsure if the ABCA would approve his application, which made him not know if he should try to find a space for his business to operate out of — two items he’s heard “a lot” of cannabis gifting shops are “struggling” with. 

“It’s good for D.C., it’s good for cannabis, but, as with anything, it’d be nice if some things work better, nice if we moved a little faster on some stuff,” Henning said.

Mike Rothman — the owner of Blunt D.C. on 16 and K streets, which has had a medical license for half a decade — said that in past years, being a medically licensed shop hasn’t been a “surefire winner” for business and revenue because licensed shops have to pay taxes, licensing fees and for product testing while competing against gifting shops that don’t face the additional costs.

D.C.’s shift to medical marijuana will increase safety in the cannabis market because gifting shops aren’t required to test their products for pesticides, heavy metals or other “poisonous” substances, he said. 

“The advantage is you want to make sure that your cannabis is free of harmful chemicals because, know it or not, most everybody has been consuming cannabis that is not grown under controlled conditions, optimal conditions,” Rothman said.