APCA presents FY26 budget, details cannabis enforcement and explains a contested placard rescission

Fred Mesali, Director of the Alcoholic Beverage and Cannabis Administration (APCA), testified to the Committee on Business and Economic Development on June 11 about APCA’s FY26 budget, enforcement priorities for illegal cannabis retailers, and proposed Budget Support Act subtitles affecting alcohol and cannabis regulation.

Why it matters: APCA regulates alcohol and medical cannabis retail activity in the District, enforces against unlicensed cannabis operations and administers programs that affect late‑night public safety and neighborhood impacts. Budget and staffing choices shape the agency’s ability to inspect, investigate and enforce licensing requirements.

Budget and staffing: Mesali told the committee APCA’s proposed FY26 operating budget is $11,654,064 with 77 FTEs (a net decrease of 3 FTEs from FY25). APCA’s budget relies largely on special‑purpose revenue funds and includes $999,875 in capital funding (IT modernization), and the agency plans to keep a $500,000 reimbursable subsidy for off‑duty MPD details that support late‑night on‑premise establishments. APCA said the proposed FY25 supplemental reduces about $350,000 in SPRs by delaying or cancelling purchases (vehicles, laptops and shredding) under the mayoral spending freeze.

Cannabis enforcement and closures: Mesali told the committee that APCA had closed 44 unlicensed retail operations as of April 1 and 57 in total by the date of testimony. He described enforcement following the March 31 conversion deadline for unlicensed retailers as a factor in bringing the legal market online and increasing legal sales in April and May.

Staffing, vacancies and hiring freeze: APCA currently reported roughly 18 vacant positions across the agency; the combined salary/fringe cost for those vacancies was $2,043,880 (FY25), Mesali’s fiscal officer said. APCA is subject to the citywide hiring and spending freeze but stated it can pursue waiver requests; the agency said it planned to file a waiver to hire two cannabis investigators imminently.

NPD reimbursable subsidy and budget mechanics: APCA explained the reimbursable detail program reimburses MPD for off‑duty officers at on‑premise establishments for hours between 11:30 p.m. and 5:00 a.m.; APCA currently reimburses roughly 65% of the cost to licensees and requested $500,000 to support the program in FY26. APCA’s fiscal officer explained the agency relies on license renewal cycles (many alcohol license renewals occur in FY25) to smooth multi‑year revenue variations and said SPR reductions in FY26 reflect lower projected receipts in an ABC licensing fund.

Placard rescission and investigation of a Ward 2 venue: Committee members raised a placarding dispute where APCA had issued and later rescinded a placard for a proposed venue near Jefferson Place NW (address details discussed in committee). Mesali said licensing specialists used available geographic information systems to review the site before placarding; enforcement then investigated after complaints and identified a nearby certificate of occupancy (C of O) that reflected a change of use to a condominium building with private residential units. APCA said the enforcement memo documented the property’s C of O and concluded the application could not proceed under the new‑dancing/residential‑proximity rule; APCA also noted the local Alcohol Beverage Control Board issued a decision on June 4 and that the administrative process includes reconsideration and subsequent appeal routes.

Medical cannabis social equity and sliding scale: Mesali supported removing a sliding‑scale patient discount that had disproportionately affected medical cannabis dispensaries in Wards 7 and 8 and argued the existing provision discouraged retailers from operating east of the river; the Mayor’s proposed Medical Cannabis Amendment Act of 2025 would eliminate the sliding‑scale requirement. APCA said legal market conversions, enforcement and increased licensure (from about six stores to roughly 60 licensed dispensaries) had driven sharp increases in legal sales in April–May and that the agency would work with the committee to ensure social‑equity programs and workforce supports are developed.

Other program notes: APCA defended its proposed capital IT investment, described a $1.7 million reduction in contractual services (moved to capital), and said the agency supports the mayor’s commercial‑bingo and card‑gaming subtitle proposals in principle but noted rulemaking and interagency coordination would be required.

What happens next: APCA will provide additional follow‑up data requested by the committee, including vacancy timing and the dollar value of vacant positions, and will pursue hiring waivers for investigators if permitted. The committee requested further detail about the placard case and APCA said it will coordinate documents and clarify procedural steps.

Ending note: Mesali told the committee the recent surge in legal cannabis sales and the closures of unlicensed retailers reflect a successful mix of conversion opportunities and enforcement, while the agency continues to operate under fiscal constraints and a hiring freeze.