The details of a proposed bill compromise to legalize cannabis retail in Virginia have begun to emerge, ahead of the planned Thursday negotiation session.
The compromise proposal, which is not final but aims to bridge the gap between the two competing measures that were passed by the House of Representatives and Senate last week, would eliminate the provisions of the current House bill allowing some businesses to start sales earlier while also slightly delaying the date for the opening of the recreational market.
Del. Paul Krizek, the D-sponsor of HB698 and the lead sponsor for the proposed compromise, confirmed to Marijuana Moment by email some details on the proposed compromise on Wednesday.
Krizek stated that under the revised plan retailers could open their doors as early as March 1, next year. This is a slight delay from his current bill which allows existing medical marijuana operators and five hemp businesses to start selling on January 1, 2020. According to that plan, more retailers would not be licensed until the end of the year.
Social equity is another topic that will be discussed during the closed-door discussions on Thursday. The current House bill would offer $400,000 to microbusinesses that are equity-focused as part of an accelerator program. To open adult-use marijuana sales on January 1, existing medical marijuana providers will need to contribute $2.4 million each to these businesses.
Others are worried that the details may prompt a governor’s veto. Glenn Youngkin (R).
Jason Blanchette told Marijuana Moment that the Virginia Cannabis Association president had agreed on the start date, but needed to review the language of equity to make sure it didn’t set up an automatic governor veto.
The proposed compromise will likely attempt to preserve funding to equity businesses, but divert money to state resources instead of medical marijuana operators.
Some have pointed out that Senator Aaron Rouse, the lead sponsor of Senate Bill 448 on legal sales, could reject the compromise proposed by the House.
“Sen. Rouse is clear in his opposition to an incubation program where medical providers directly fund micro-businesses,” Greg Habeeb, a lobbyist for Cardinal News told the local media outlet. Cardinal News was the first news outlet to report on the March 1 start date.
“The elected officials expressed agreement that there should be a way to help those small businesses but also agreed that the support shouldn’t come from one particular market player,” said Habeeb. He is a former Republican delegate to the House of Delegates of the State.
Marijuana Moment has repeatedly asked Rouse’s Office for a comment in the past few weeks.
House minority leader Del. Todd Gilbert (R) has emphasized, meanwhile that the governor is likely to veto any Democrat led bill – a prediction that some legalization supporters share.
Gilbert told Cardinal News that “the governor made it clear he was not interested in signing such a bill.” This should put an end to all speculation about what will happen, no matter how the vote turns out.
The governor hasn’t explicitly stated that he will veto a bill legalizing retail marijuana sales, but he indicated last month that he does not have “anyinterest” in legalizing the sale of marijuana under either the Democrat’s plans.
Youngkin, when he first was elected, said that he “was not against” categorically commercial sales.
JM Pedini told Marijuana Moment in an interview earlier this week, that supporters of legal marijuana sales will have to create a plan that appeals to Youngkin and GOP legislators.
Pedini stated that he hoped the compromise would be able garner bipartisan backing. “A bill that is passed without Republican votes will be dead as soon as it reaches Gov. Youngkin’s desk.”
Gilbert told Cardinal News, however, that he is not interested in considering any of the proposals. Dealmaking over legal sales is between the Governor and Democrats.
Below are some key differences between the two bills in terms of how they approach regulated cannabis sales.
- Priority licensing House Bill would allow certain licensees to start earlier than other applicants. It would allow medical marijuana operators and up to 60 equity focused microbusinesses, as well as up to five hemp businesses, to start legal sales by January 1, 2025. Other operators would need to wait until July 20, 2025 in order to get a license. The Senate bill would, on the other hand, not allow any retailer group to get an early start in sales.
- Timing According to the House bill some retailers will be able open retail marijuana shops on January 1, 2025. Licensing of eligible businesses would begin in July this year. The licensing of other retailers would begin in July 2025. In the Senate bill, stores would be licensed as early as July this year. However, retail sales would not begin until January 1, 2025.
- Social Equity: Both Bills have provisions which provide an advantage to those from “historically economic disadvantaged areas”, who have historically been over-policed for marijuana. The House measure, however, includes provisions that prioritize the licensing of those with previous cannabis convictions as well as family members. The House measure also provides $400,000 in startup capital as well as other business supports to each of thirty equity-owned microbusinesses. The medical marijuana providers will be required to provide these funds to the microbusinesses to be eligible for opening sales in January.
- Tax Rates: Under the House bill, marijuana would be taxed at up to a 9 percent rate. This is split between state taxes and optional local taxes. The Senate bill would have a maximum rate of taxation of 17.5%, which would include a 12.5% state excise and a local tax of up to 3.5 percent that can be imposed by municipalities.
- Outdoor cultivation. Under the House bill, outdoor grows would be completely banned. However, the Senate bill allows smaller cultivators to grow outside. Both bills require that larger grows be done indoors.
- Penalties: Since the Senate version had been amended to include mandatory minimum penalties in certain cases, advocates for justice reform preferred the House Bill over the Senate bill. This provision was removed in the past. Both measures currently create new criminal offenses for marijuana-related activities, but the House Bill contains more restrictive language as well as more severe penalties in certain cases.
Virginia has already made it legal for adults to use, possess and grow cannabis in limited quantities. This is the result of a Democrat proposal that was approved by legislators in 2021. After Republicans gained control of both the House of Representatives and the Governor’s Office later that same year, they blocked the required reenactment for retail sales. Since then, illegal stores have opened to meet the demand of consumers.
In an interview with Marijuana Moment on Tuesday, Krizek said that he was not concerned about how the governor would react to his legislation. Instead, he focused on crafting the best possible law.
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He said: “I don’t write bills based on my opinion of what the governor will do.” “All I can try to do is craft the best possible legislation and hope it’s compelling so that the Governor would either sign it, or…just allow it to become law.”
Krizek, however, said that if Youngkin does not veto the legal sales bill next year, he will push for it again.
He told Marijuana Moment, “I will keep bringing it back until we pass legislation that does what we are trying to achieve.”
A sales bill did advance through the Democratic-controlled Senate last session, but it stalled in committee in the House, which at the time had a GOP majority.
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Photo by Chris Wallis // Side Pocket Images.
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