A Senate committee also approved the compromise deal a day after Virginia House members had passed a bill to legalize marijuana retail sales. Supporters are hoping that both chambers will pass the same legislation, and then send it to Gov. Glenn Youngkin, a Republican, has indicated that he does not intend to sign either of the bills led by Democrats.
The Senate Rehabilitation and Social Services Committee voted Friday morning 9-5 for the latest version, HB 698, of the sale legislation. While the votes for cannabis bills have generally been along party lines so far, two Republican panel members voted in favor of this measure.
The bill will now be sent to the Senate Finance and Appropriations Committee for consideration on Tuesday.
Before the vote on Friday, the House adopted substitute language in order to fill the gaps between the House Bill, sponsored by Del. Paul Krizek, a Democrat, and Sen. Aaron Rouse’s (D) competing measure were the two main contenders.
Rouse said, “There’s finally peace in the valley about this.” His own bill, SB 448, , received similar changes before it passed a House committee on Wednesday. What I am most proud of is that we were transparent and got this bill to a place where it can receive broad support.
Krizek thanked Rouse, who spoke also at the Friday hearing, “for his tireless work with me in bridging this gap between our bills.”
He told the Senate panel that it was a good substitute. “This is a conference report that gives both bodies the opportunity to review, and vote on, a consequential piece of legislation.”
The new 103-page bill aims to resolve disagreements in three key areas: the timeline and launch dates of the industry, equity promotion and the regulation of marijuana growers.
Retail stores would not open before May 1, 2025 under the new compromise legislation, but the licensing process would start in September this year.
During the first year after legalization, license fees would be used to fund a microbusiness support program that would provide capital, technical assistance and training, waivers of fees, and other benefits to help repair past harms caused by the drug war. The microbusiness program would then receive 60 percent of the tax revenue generated by legal cannabis sales.
Krizek stated that “these preferences will be race-neutral and will offer significant opportunities to economically disadvantaged people, including those who have experienced hardship or losses due to the war against marijuana exclusion in this country.”
The microbusinesses must be owned by and controlled directly by the eligible applicants. These include those with previous cannabis misdemeanors or convictions, as well as their family members, veterans, and people who have lived in “historically economically challenged communities” for at least three years. They also include individuals who attended school in these areas, or who received federal Pell grants or who attended a college where at least 30% of students were eligible for Pell Grants.
The amended bill would tax retail sales of cannabis at around 9 percent, which includes a state tax of 4.5 percent and a local tax up to 4.5 percent that can be imposed by local governments. The Senate bill taxed cannabis products up to 17.5%.
The compromise regulates the size of commercial marijuana growers, based on square footage instead of individual plant counts, as originally specified in the Senate bill. The compromise proposal, unlike the House bill that would have prohibited outdoor growing, allows smaller-scale growers to cultivate outdoors. The larger operators would only be allowed to grow indoors.
Rouse stated, “This was a true team effort. We received input from Republicans and Democrats, business leaders and law enforcement officials, as well as grassroots activists, farmers, health care providers, advocates for criminal justice reform, and others.” This bill is the work of every stakeholder. This is why we have seen so many substitutes and changes in this bill.
Krizek was thanked by the chair of the Senate committee, Sen. Barbara Flavola.
She said: “You have done a remarkable job in bringing this piece of legislation into a place that we can all be comfortable.” I believe this is the bill that will go to the floor.
The compromise legislation is supported by many small business owners, medical marijuana operators and justice groups, as well as a large part of the hemp industry in the state. However, some have expressed concern about the consensus.
JM Pedini told Marijuana Moment that after the House panel hearing on Thursday, they were disappointed with the new bill, which pushes legal sales back even more.
In an earlier report, Krizek had told reporters the compromise bill was expected to open in March. The start date has been pushed back by two more months.
Pedini stated that it was unfortunate to have to wait yet another year before Virginians can begin to shop at retail stores. “Consumers have been told to wait in line behind business interests, while their own needs are not prioritized.”
This is what HB 698’s latest version would do, if it were passed:
- Retail sales will not start until May 1, 2025, which is later than the March date that proponents had predicted in the revised bill. It’s also later than the January date of the measures passed by the House and Senate earlier in this session.
- Adults will be allowed to buy up to 2.5 ounces in one transaction or an equivalent amount of cannabis products, as determined by the regulators.
- Retail sales of cannabis products would be subject to a state tax of 4.5 %. Local governments could also levy a tax up to 4.5 %.
- Virginia Cannabis Control Authority will oversee the licensing and regulation for this new industry. The board of directors of the Virginia Cannabis Control Authority would be able to regulate possession, sale and distribution of marijuana, as well as testing.
- Local governments can ban marijuana establishments if the voters approve an opt-out vote.
- The locations of marijuana retailers cannot be located within 1,000 feet of each other.
- Cultivators will be regulated based on the amount of space they dedicate to marijuana cultivation (also known as canopy size) rather than how many plants they actually grow.
- Indoor and outdoor marijuana growing would be permitted, but only those in the lower tiers – with smaller canopy sizes – could grow plants outdoors. The larger growers will need to grow plants indoors. Indoor cultivation would include secure greenhouses.
- Only face-to-face, direct transactions will be allowed. The bill would ban the use of any other means, including vending machines and drive-through windows. It also prohibits internet-based platforms, delivery services, and online sales platforms.
- Existing medical marijuana providers who enter the adult-use markets could apply for up to five additional retail outlets.
- The maximum serving size would be 10 milligrams of THC. This means that no more than 100mg THC can be contained in a package.
- A person cannot hold or be granted more than five licenses in total, excluding transporter’s licenses.
- People who have been convicted of felonies, or crimes that involve moral turpitude, within the last seven years, would not be eligible to apply for a license, nor would employees of sheriffs’ or police departments, if they are responsible for enforcing the penal, traffic, or motor vehicle laws in the commonwealth.
- The equity-focused program will grant licenses for entities that are at least two thirds owned and controlled by the eligible applicants. This includes people with previous cannabis misdemeanors and their family members, veterans, people who have lived in “historically economically challenged communities” at least three out of the last five years, people who attended school in these areas, and people who have received a federal Pell Grant or attended a university or college where at least 30% of students qualify for Pell grants.
- A historically economically disadvantaged area is one where marijuana possession offences have been at or above the state average from 2009 to 2019.
- The tax revenue generated by the program will first cover the cost of administering and enforcing California’s cannabis law. The remaining 60 percent will be used to support the microbusiness program. 25 percent will go towards substance abuse disorder treatment and prevention. 10 percent goes toward pre-K programs and 5 percent is for a public awareness and health campaign.
- Adults can also share up 2.5 ounces of marijuana with other adults, without monetary compensation. However, gray-market “gifting”, of marijuana in conjunction with another transaction is punishable as Class 2 misdemeanors and Class 1 misdemeanors for second and subsequent offenses.
- Other criminal penalties will be introduced. Selling or giving marijuana, or marijuana paraphernalia, to anyone under 21 would, for example, be punishable with up to one year in prison and a maximum fine of $2,500, just as selling cannabis to someone who is reasonably believed to have been intoxicated would be. Advertising the sale of paraphernalia containing marijuana to those under 21 is also a Class 1 Misdemeanor.
- A Class 1 misdemeanor would be committed if you knew that someone under the age of 21 was obtaining marijuana for your benefit.
- Under 21s who use or possess marijuana or try to get it would face a civil fine of up to $25, and be ordered to enroll in a treatment program for substance abuse disorders.
- Illegal production or cultivation of marijuana (excluding legal homegrown) would be a Class 6-felony punishable by a maximum five-year prison sentence and a fine up to $2,500.
- Homegrown marijuana could be processed into edibles. However, the use of butane or other volatile solvents is punishable as Class 1 misdemeanor.
The governor has not explicitly said he’ll veto a retail marijuana bill, but he did signal last month that he a data-google-interstitial=”false” href=”https://www.marijuanamoment.net/gop-virginia Governor does not have any interest in legalizing marijuana sales under new democrat led bills/” rel=”noopener” target=”_blank>doesn’t The governor hasn’t explicitly stated that he will veto a bill legalizing retail marijuana sales, but he did indicate last month that he does not have “anyinterest” in doing so under Democrat-led plans.
Youngkin, when he first was elected, said that he “was not against” categorically commercial sales.
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 a retail sales regulatory framework. Since then, illegal stores have opened to meet the demand of consumers.
After the last election, Democrats gained control of both chambers in the legislature.
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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