Johannes Cassidy-Seyoum opened his medical cannabis business in D.C. just last year. Already, he’s bracing for a devastating blow to his customer base.
Across the Potomac, Virginia lawmakers in June approved the sale of recreational cannabis beginning in July 2027. The move will upend the region’s cannabis market, which has historically seen Virginians travel to D.C. to access the city’s permissive medical program in which anyone over 21 can “self-certify” as a user.
Cannabis business owners in D.C., who already took a hit when Maryland began recreational sales in 2023, fear for their livelihoods.
“Virginia coming online will definitely, probably take 20% to 25% of our business,” said Cassidy-Seyoum, the owner of High Demand in Capitol Hill. “A good amount of our customers come from Richmond, Fredericksburg. They make a trip maybe two, three times a month and they stock up.”
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Virginia will issue 350 recreational retail licenses to cannabis businesses in February through a lottery system, with a portion set aside for smaller operators. The goal is to capture the business of both Virginia’s underground cannabis market and customers who shop in neighboring jurisdictions. The state expects its cannabis sales tax to generate $71 million in its first two years.
“We’re very concerned, our store is right on the border around Virginia,” said Caroline Crandall, who owns Green Theory in the Palisades. “Virginia and a lot of other southern states account for a decent portion of sales every month.”
Of the 2,101 non-D.C. residents who patronized D.C. cannabis retailers in July, 807 came from Virginia, according to a report from D.C.’s Alcoholic Beverage and Cannabis Administration.
Maryland’s cannabis regulator does not track such metrics, but about half of Virginia’s medical cannabis patients reported going out of state to purchase cannabis, according to an October 2024 survey conducted by Virginia’s Cannabis Control Authority. A quarter of those respondents said their destination was D.C. and one-fifth said it was Maryland.
That could devastate “an already difficult business,” said Greg Casten, president of the restaurant group OceanPro Industries, who’s in the permitting process to open a dispensary in Northeast D.C.
“It’s just a very scrappy time. Rent is high in D.C.,” said Allison Lipowitz, the manager of District Cannabis’ storefront in NoMa. “I think that’s why Virginia feels so scary — it’s already a very unstable market.”
Some business owners feel helpless. District voters overwhelmingly approved marijuana legalization in 2014, but Congress has blocked that from happening.
“D.C. currently lacks the democratic autonomy to enact laws affecting its own local markets without interference from federal policymakers,” Chinyere Hubbard, the president and CEO of the D.C. Chamber of Commerce, told The Sun in a statement. “That disparity leaves District businesses competing on an uneven playing field with our neighboring jurisdictions.”
Since 2014, hundreds of businesses operated in a “gray market” by “gifting” cannabis alongside clothing, food or even motivational speeches out of gift stores, gas stations and delivery services. When the District began its self-certified medical program in 2022, it gave those businesses a window in which they could get licensed — 45 of them did.
That program, for residents, made cannabis almost as easily obtainable as it might be in a recreational market. But out-of-towners still need to pay at least $10 in fees to purchase it. Business owners have long wanted to scrap that, reduce it, or — better yet — have cannabis federally rescheduled — something Robbie Martin, president of the D.C. Cannabis Business Association, said is closer to happening than ever.
“We have a lot more restrictions in D.C. right now than Virginia will next year,” Crandall said. “[We’re trying to] figure out ways to remain competitive. One of those is hoping and praying that rescheduling of adult-use cannabis ends up happening.”
There are other ways D.C. businesses might keep their edge. Some are trying to get permits to add on-site consumption spaces to their dispensaries, Martin said. Martin runs one such a site: Higher Ground in Northeast D.C., a converted distillery stylishly outfitted with leather couches, deep green walls, artful glasswork and even a café space he hopes will soon sell sandwiches, coffee and other “munchies.” On a Tuesday afternoon last week, one customer was using it as a co-working space.
“We have a big competitive advantage in D.C.,” Martin said. “There’s very few places in the country, let alone the East Coast, with this capability.”
What’s more, Virginia is entering the marketplace with problems of its own. Existing medical dispensaries will have to pay a one-time $10 million conversion fee to become licensed as recreational facilities.
That’s “especially concerning” to JM Pedini, the development director of the National Organization for the Reform of Marijuana Laws.
“These are the operators currently serving Virginia’s medical cannabis patients, and the law effectively conditions their ability to continue operating on paying that fee,” Pedini said. “We should be protecting patient access and affordability during this transition, not introducing a new eight-figure cost into the medical supply chain.”
Virginia has seen more than $107 million in medical cannabis sales this year as of early August, but the state’s illicit market could be worth between $1.5 billion and $3 billion, said Trent Woloveck, the chief strategy officer at Jushi Holdings. Woloveck’s company operates 42 cannabis dispensaries across eight states including Virginia, and recently launched a $50 million expansion in Manassas on the back of the legalization announcement.
That could convert to the regulated marketplace. States adopting recreational cannabis laws see both a 45% reduction in law enforcement seizures of the drug (which could either indicate a smaller illegal marketplace, or a shift in law enforcement priorities), said Nicole Fitzgerald, a postdoctoral fellow at Columbia University who studies illegal drug markets.
Those states also see a 9% reduction in street prices, said Angelica Meinhofer, an assistant professor at Weill Cornell Medical College who specializes in health economics.
As further incentive, Virginia has kept its initial sales tax rate low at 6%, though municipalities can levy an additional tax of up to 3.5%. Maryland’s, by contrast, is 12%. D.C.’s tax rate is also 6%.
While D.C. businesses brainstorm ways to keep their customers, Virginia municipalities are gearing up to welcome more tax revenue, job creation and redirected sales. In Fairfax, Woloveck’s company Jushi already has a medical dispensary that Colleen Kardasz, Fairfax’s director of economic development, expects will become a recreational facility.
The city is currently evaluating how to zone recreational dispensaries as well as how to tax them, but Kardasz said she expects legalization to keep cannabis-related business in the community.
“People like convenience,” Kardasz said. “If you can get something in your own community, you’re going to choose that over traveling.”
Consumers aren’t the only ones who might choose to do business in Virginia instead of D.C.
“We are planning to hopefully expand into Virginia,” Crandall said, adding that she’ll apply for a license as soon as they open. “We’re probably not the only ones to do so.”
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