Nowadays, a nice day in D.C. means the pungent stink of pot smoke wafting on a gentle breeze. And a trip to the farmers market can, if you’re so inclined, include a stop by the neighborhood cannabis pop-up, where your purchase of a $30 baseball cap, say, or $50 fanny pack comes with a “free gift” of cannabis-laced crackers.
Or, more straightforwardly, customers can buy an otherwise ordinary Bob Marley poster for $60, and receive up to an ounce of weed with it—the precise amount depends how many prints you buy. But an ounce is the legal limit for a casual, totally non-commercial transfer of recreational homegrown cannabis under a law the District of Columbia passed in 2015 called Initiative 71.
It’s far closer to full legality nationwide than it used to be, and on 4/20 eve Senate minority leader Chuck Schumer announced plans to push it further still. For now, pot’s decriminalized for recreational use in 13 states and Washington, D.C., and “fully legal” in nine. But, federally, marijuana is still a Schedule I narcotic. And, under Initiative 71, it’s still a crime here in the federal city to sell it in any amount or to consume it in any form public.
Were I in the mood to narc on my neighbors for toking out on the sidewalk, the Metropolitan Police would come pick them up, or at least hit them with a warning. MPD’s enforcement policy is passive but not unclear: They don’t actively pursue District residents who violate I-71, but they do respond to public complaints. Late last month, cops raided a “cannabis bazaar” downtown and arrested 22 vendors for possession with intent to distribute—vendors who argue they are “I-71 compliant small business owners” distributing their wares as “gifts” for which they accept nothing in return but a generous “donation” from each client. As in most of these minor crackdowns, prosecutors dropped the charges within weeks.
Cops confiscate the merchandise, cannabis law expert and D.C.-based attorney Joshua Sanderlin told me. But that’s just about all they’re willing to do to enforce I-71. “It’s a fine line,” said Sanderlin: “At what point are you selling a legitimate good and ‘gifting,’ and at what point are you actually just selling cannabis? Because it is clear you can’t sell cannabis under D.C. law.” But it’s less clear, he claims, where the sale ends and a voluntary gift begins.
One issue is that vendors are more brazen than ever: “One of the problems with these pop-ups,” he said, “is that a lot of those folks sell nothing.” That is, they just sell marijuana, and—though they do risk the costly confiscation of the cannabis they’d be caught distributing in a police crackdown—they aren’t going to be charged with a crime.
The more cut-and-dried crime and punishment would have to come later, at the inevitable money laundering phase of the enterprise. The rules as they stand do little more than inspire creative manipulation, but they do, inevitably, lead to money laundering.
“The sale of goods with an associated gift of cannabis would be the predicate crime, but when the merchant tries to do something with the money”—make a purchase, or put it in the bank—“that second step is money laundering,” said Ross Delston, a Washington D.C. lawyer and anti-money-laundering expert.
When a weed merchant brings his earnings to the bank, he’ll have to misrepresent his business, hoping that the bank doesn’t do its due diligence and ask a self-proclaimed “hat seller,” So why do these hats cost so much, and why does everyone pay cash?
Because any national bank, I learned from Sanderlin, now has to file a suspicious activity report when an suspected drug dealer makes a deposit. And as long as federal and state laws differ, he says, vendors are “being forced” to launder money—not just in D.C., but nationally, wherever marijuana laws are lighter than the federal-level prohibition. “Whether you’re in Colorado or California or Michigan, Nevada, Louisiana, Arkansas now, Florida, you are being forced,” as Sanderlin put it.
Where there’s a crime, however out-in-the-open it is, there are criminal proceeds. And where there are criminal proceeds, there’s criminal money laundering. “The transparent subterfuge of selling goods and then giving a ‘gift’ would not work with the feds. It might work with D.C., but it would not work with the feds,” Delston told me. “They would not see that transaction as being anything other than a sale of drugs.” The gift-giving provision wasn’t meant to be the bedrock for a new bazaar economy. But until the rules adapt to stamp out D.C.’s homegrown mercantile system, or to liberalize it entirely, all this “transparent subterfuge” is actually criminal trafficking. Which is, by any definition, the gateway drug to money laundering.
