Melvin Clay of the D.C. Cannabis Campaign holds a sign urging voters to legalize marijuana at the Eastern Market polling station in Washington on Nov. 4, 2014. (Gary Cameron/Reuters)

The D.C. Council abandoned plans to hold a hearing on how to tax and regulate marijuana Monday after the District’s new attorney general warned that it could subject city lawmakers and their staff members to fines and even jail time.

The move amounted to a setback for advocates of marijuana legalization and highlighted the difficulties the District is likely to face as it tries to implement Initiative 71, the ballot measure approved overwhelmingly by voters in November.

The hearing was scuttled even though business leaders who had launched sales of marijuana in Colorado and Washington state had traveled to the District to discuss a proposed bill to fully legalize marijuana in the nation’s capital.

The city’s new attorney general, Karl A. Racine, warned the D.C. Council not to hold the planned hearing Monday. Doing so, Racine said in a letter to the council, would violate a spending prohibition placed on the city by Congress barring it from setting up a regulatory scheme for sales of the plant.

Racine said holding a hearing could expose lawmakers and their staffs who help conduct the hearing to potential federal fines up to $5,000 each and jail terms of two years.

As the meeting was scheduled to begin at 10 a.m., D.C. Council Chairman Phil Mendelson (D) instead met with the heads of three committees who were scheduled to participate in the hearing. They emerged saying they would cancel the hearing on the bill and ask the dozens of assembled witnesses to participate in an informal round-table discussion on the topic so as to not risk contempt of Congress.

Council member Vincent B. Orange (D-At Large), who presided over most of the four-hour meeting that followed, blasted the decision as a bad precedent, especially since the council’s own attorney had argued that lawmakers could proceed without risking the wrath of Congress.

“Holding hearings, that’s what we do,” Orange said. “If we can’t hold a hearing, then we need to pack up and go home.”

The episode further intertwined the fate of the District’s voter-approved measure to ­legalize marijuana with its long-stymied­ struggle for statehood.

Josh Burch, co-founder of a group called Neighbors United for D.C. Statehood, said near the start of the hearing that he was less engaged on the issue of marijuana legalization than on the issue of D.C. autonomy, the fact that D.C. lawmakers were not free to hold a hearing and the lack of “fairness, equality and the basic tenets of democracy that don’t apply to the District.”

“Congress has imposed its will on the District for too long,” Burch said. “We the citizens and elected leaders have capitulated. The time for capitulation must end and the time for confrontation is upon us.”

Confrontation of one form or another is probably what’s coming next.

D.C. voters in November overwhelmingly approved legalizing marijuana, but Congress in December moved to block the District from allowing legal sales. The fate of the ballot measure remains in limbo, with Mayor Muriel E. Bowser (D) saying that it was “self-enacting” and the city will begin enforcing it as law as early as late this month. Republicans in Congress say the initiative was blocked.

The initiative legalizes possession of up to two ounces of the plant and home cultivation of up to three mature plants per adult. But the initiative left up to D.C. lawmakers the complicated task of setting up a system for legal sales and taxation of the plant.

The move by Congress clearly blocked the city from enacting any new laws that weaken enforcement of federal drug laws before the end of the federal budget year in September. But some D.C. lawmakers pressed for the city to defy Congress. At a minimum, they said, the council should do everything up to enacting a system to allow for pot sales, namely holding the hearings and drafting the law for whenever Congress allows it.

Last month, D.C. Council member David Grosso (I-At Large) and three others introduced a measure for the council to move forward with establishing a comprehensive system for licensing and regulating the cultivation, manufacture and legal retail sale of marijuana and marijuana products in the District.

Grosso’s bill included plans for collecting licensing fees, imposing taxes and designating the city’s Alcoholic Beverage Regulation Administration as the regulatory agency for city marijuana sales.

In the letter to the council, Racine warned that Monday’s hearing would put city officials and even staffers in violation of the federal Anti-Deficiency Act, which can expose lawmakers and government bureaucrats to penalties for spending tax money in ways prohibited by Congress. He cited a small change, or rider, that Congress made in a $1 trillion spending package after the election in November as the problem for the council.

“The issue here is not whether Initiative 71, which was, in our view, enacted before the 2015 Appropriations Act became effective, but, rather, whether the hearing on this bill — which was not enacted by the time the rider took effect — would violate the rider. We believe it would,” Racine wrote.

“I reluctantly conclude that it would be unlawful to do so notwithstanding my full support of the sentiments behind your desire to conduct this hearing,” Racine wrote.

Racine urged the council to either delay the hearing until after September or change the structure of Monday’s hearing to an informational hearing, not frame it around possible passage of a District law.

David Zvenyach, the D.C. Council’s chief attorney, replied to Racine on Saturday, saying he disagreed with the attorney general’s interpretation and said council members should move forward if they wish.

The council, however, chose to follow Racine’s warning.

Grosso said he was warned two weeks ago by Racine’s office not to introduce the measure because it could be in violation of the congressional spending restriction. He said he was disappointed the council chairmen involved Monday chose to not go forward.

In the informational hearing, Grosso addressed the issue indirectly, saying he wanted to thank President Obama’s new drug czar Michael Botticelli for saying last week that D.C. should have the right to set its own drug laws, like a state.

“That was courageous,” Grosso said.