- It’s illegal to sell marijuana in Washington, DC, but businesses can still give it away for free.
- Two entrepreneurs used that loophole to start their own “art gallery” in which they sell paintings made by their dog, and include a free marijuana “gift” with each purchase.
- However, another technicality is causing the art gallery to close down because of the coronavirus – unlike traditional marijuana dispensaries, art galleries are not considered essential businesses in Washington.
- View more episodes of Business Insider Today on Facebook.
Would you buy a painting made by a dog?
What if it came with some weed as a free gift?
Welcome to District Derp, an art gallery in Washington, DC, with a couple quirks.
All the artwork is painted by Sudo, a 4-year-old Alaskan Klee Kai. And each painting comes with a “gift” – an amount of marijuana proportional to the cost of the painting. The gallery’s menu ranges from a $55 painting with a 3.5-gram gift to a $330 painting with a 1-ounce gift.
In 2014, Washington voters approved the recreational use of marijuana in a ballot initiative known as Initiative 71, or I71. But it's still illegal to sell marijuana in the nation's capital.
So Washington businesses like District Derp operate in a legal gray area: They can't sell weed directly, but they can give it away.
The confusion exists partly because the federal government weighs in on the city's budget. In 2015, after Washington voters approved Initiative 71, a Republican lawmaker threatened to delay the enacting of the law if it wasn't modified.
The Maryland Congressman, Andy Harris, included a rider in the federal budget, which eventually became law, essentially forbidding Washington to spend any city money to regulate marijuana.
But his efforts to stifle legalization resulted instead in a loophole: Trading weed for money is against the law, but "gifting" it alongside a purchase of comparable value is not.
This is why District Derp calls itself an art gallery - not a dispensary. Other similar outlets sell food or clothing alongside cannabis gifts.
"Part of the reason why we were able to link cannabis and Sudo's art is that there is no set value on art. Art can be worth anything to anyone," District Derp co-owner Anais Hayes told Business Insider Today.
Legally, the gallery can transfer less than an ounce of marijuana to adult customers without payment.
"There can be no monetary value assigned to the marijuana. There can only be value assigned to the product they are selling that the marijuana comes with," Meredith Kinner, a partner in a Washington law firm that specializes in marijuana law, told Business Insider Today.
In the confusion following the passage of Initiative 71, Hayes and Christopher Licata, her fiancee and CEO of the gallery, found opportunity. The sketchy situations marijuana buyers often find themselves in inspired them to build a business that emphasizes customer safety and experience.
"We do tests for every possible thing that could be unsafe to the consumer. But going beyond that, we also want to think about your physical safety," Hayes said.
For a business that doesn't technically trade in weed, District Derp takes pride in its quality control and concern for the customer.
"We aren't looking at just, is this good cannabis?" Licata said. "We're looking at, is this the highest-quality cannabis available here? Is this the highest-quality cannabis for this particular person?"
But if District Derp's business model was built on a legal technicality, it's in danger because of one, too.
Because of the coronavirus health crisis, Washington Mayor Muriel Bowser closed all nonessential businesses in the city through May 15. That means medical marijuana dispensaries remain open, while "art galleries" such as District Derp are closed.
In April 2019, Bowser introduced a bill that would have legalized recreational marijuana and applied revenues from taxes to pay for housing programs.
But that effort was halted when the $1.3 trillion spending bill passed by Congress in December included the same rider prohibiting the city from regulating marijuana sales. That leaves companies like District Derp with no regulatory support until September at the earliest. Kinner, the Washington attorney, said that it's hard to grow a business in the midst of such uncertainty.
"It's really important that we allow companies that have tried to operate in the market to have a pathway to full legality," she said.
Before the closure, Hayes and Licata noticed a pandemic-related uptick in sales.
"With the panic people tend to buy things up and so in a panic they have been coming to us to stock up for the foreseeable future," Hayes said.
Getting their dog Sudo to paint, meanwhile, took some effort. Licata said he had to design the paintbrush himself.
"My friend bet me that I couldn't teach Sudo to paint," he said. "It just kind of gave us that springboard into, well, if we can connect this to something else that everyone loves, well then we can put them together, and it would make everyone really happy. And I think it's done so."