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DC's Marijuana Legalization Has Sparked A Blossoming New Industry

On Oct. 26, 2011, less than four years after the store's opening, Capitol Hemp's two DC locations were simultaneously raided by the DEA.

The smoke shop's landlord, Demers Real Estate, took the retailer to court to have the store evicted. Capitol Hemp won the case because, technically, what it was doing—selling pipes and smoking accessories under the guise of tobacco use only—was not illegal. But the agreement the shop's owners struck to take back their thousands of dollars of seized inventory forced them to close down the store

Demers could not be reached for comment.

Stories like this were common for head shops in the District. That is, until DC residents voted to legalize the growing and possession of marijuana and the sale of paraphernalia. Since the law went into effect last year, a new industry of boutique head shops and hydroponic stores has begun to emerge, although not without its roadblocks. 

After Capitol Hemp shut down in 2012, its co-owner, Adam Eidinger, above, decided to focus his efforts on changing the law. He led the DC Cannabis Campaign that successfully convinced voters to pass Initiative 71 in 2014.

Even for a marijuana-focused advocacy campaign, Adam struggled to find a landlord who would lease to him. Unable to find office space for the campaign, Adam rented a house under his own name and used it as an office.

"Nobody would rent to us, as soon as they heard what it's for they were like 'no, we don’t want to,'" Adam says. "It was full discrimination. We would say, 'there's nobody using here, it's just a campaign office.'"  

He then went to work looking for retail space to reopen Capitol Hemp. Now that he had fought and changed the law, Demers decided to work with him and leased Capitol Hemp an Adams Morgan storefront at 1770 Columbia Road NW in August 2015. Capitol Hemp's other co-owner, Alan Amsterdam, also owns its sister headshop The Noon in Silver Spring

Because the law now allows for paraphernalia sales, the shop can be open about marketing its products for marijuana use. It started performing services that previously would have raised flags—for $40 users can bring in marijuana for testing and the store will tell them how potent it is, and for $20 people can bring in their bongs to be cleaned. 

Adam says the store just had its best month since reopening and business "has been rocking." But while Capitol Hemp used to be the go-to headshop in DC, Adam says the law has begun to bring more competition to the market

"More shops have opened in DC across the city," he says. "I think the whole industry is growing."

Adam says many convenience stores and gas stations have begun to sell smoking pipes, and the increasing use of e-cigs has led to more vape shops opening that also sell some marijuana accessories.

He says landlords are friendlier to marijuana-related shops since the law has changed and he has gotten offers to open a second location. While he is not ready to make the expansion yet, he is considering an H Street NE location, where they would have to compete with smoke shop Island Dyes.

Adam says competing with online stores like Amazon has forced Capitol Hemp to cut its margins significantly. 

"We don't want someone to say 'I could just order this online and save 30 bucks,'" Adam says. "We have to make our price competitive to the internet."

Adam says about half of the roughly 60 customers who come into his store on a daily basis grow their own cannabis plants and like the help and expertise provided by the brick-and-mortar shop. This growing culture has created demand for a new type of shop—hydroponics stores specializing in cannabis cultivation. 

Wash Hydro opened in February just down the street from Capitol Hemp at 2318 18th St NW (conveniently below a soon-to-be-open Insomnia Cookies). The store caters to the cannabis industry by selling all the necessary equipment to grow and providing free weekly classes to aspiring growers, store manager Sarah Kenney says.

"Across the country in all the legal states this is a big industry," Sarah says. "People want to learn how to grow. It's not a difficult thing to grow, it can be as simple or as complex as you want it to be."

The store proves it. It is one of the only retailers in the US that grows its own cannabis inside the store. It is not legal for the shop to sell it (although gifting is perfectly legal), but Wash Hydro can grow the plant as a way to teach others how to do it. At the moment, it is growing two plants of granddaddy purp, a popular strain that blooms in shades of purple. 

Because of their taboo nature, these stores still don't have the same institutional support other retailers enjoy. One of the world's three biggest real estate brokerages, contacted by Bisnow, said the company has a policy against discussing or providing services to any marijuana-related businesses, regardless of legality.

The city government has also been slow to begin paying attention to this emerging industry. A spokesperson for the DC Department of Small and Local Business Development tells Bisnow they have only begun preliminary discussions and soon plan to begin looking into the potential business effects of the law, which went into effect in February 2015. 

Miller Walker Retail's Alex Walker and Bill Miller

Broker Bill Miller of Miller Walker Retail Real Estate, says his firm has no policy against working with marijuana-related retailers, but they haven't been contacted by anyone looking to open a headshop or a grow shop.

Bill, on the right with partner Alex Walker, says he has not noticed a significant number of new pot-related businesses opening, but would expect more movement if DC were to legalize sales of marijuana as Colorado and Washington states have done. 

"I bet there are people looking very closely at whether or not it becomes legal from a retail perspective," Bill says. "That would be big financially for the city. We would certainly see positive tax increases, sales and there would be some retail leasing. Probably not a whole lot by way of square footage, maybe a few new storefronts."