Virginia’s House of Delegates gave preliminary approval to a measure that would regulate and legalize the retail sale of cannabis in the Commonwealth. A final vote is expected on the measure early next week.
The chamber voted on HB 698, a bill from Del. Paul Krizek, a Democrat, was the subject of Friday’s second reading. The advocates expect the final floor vote on third reading to take place Monday, before the crossover deadline of the legislature the following day.
In the meantime, another measure is making progress in the Senate after was passed out of committee Thursday. Both bills must pass their respective chambers before lawmakers can choose one, or combine the provisions.
Both bills are nearing the finish line of their respective chambers, ahead of the looming deadline for crossover,” said JM. Pedini. He is the development director at the advocacy group NORML as well as the executive director of its Virginia chapter.
Now, advocates are working on a consensus to determine the best way to proceed. They expect that as the legislative session continues, lawmakers will eventually try to merge the two bills together.
Pedini said in a Marijuana Moment message sent after the vote on Friday that “after crossover, we can anticipate each chamber amending the other’s bills with their own versions.” The real work is done in the conference committee. At that point, conferees must decide whether these bills are just messaging bills or if they want to send Governor Youngkin legislation that he will consider not vetoing.
While Gov. While Glenn Youngkin, (R), hasn’t explicitly stated that he will veto a bill legalizing retail marijuana sales, he did say last month that he didn’t “have any interest” in the Democrat’s plans.
The House bill, as it stands now, would allow adult-use marijuana stores to open slightly earlier than the Senate bill.
In its current form HB 698 allows existing medical marijuana operators to open retail sales as early as January 1, 2025. It also allows up 60 equity-focused microbusinesses and five hemp businesses. In order to qualify for an early opening, a medical operator would have to pay $400,000 each to six microbusinesses as part of a proposed accelerator programme.
At least two thirds of microbusiness licenses must be directly controlled by individuals who meet certain criteria for social equity, such as coming from historically low income areas or being directly affected by the cannabis prohibition. Priority will be given to those who meet multiple criteria.
The House Bill would tax cannabis products at 9 percent and ban outdoor cultivation.
The sponsor of the bill, Krizek, said to House colleagues before the vote on Friday: “This will create a regulatory scheme for an industry worth billions, and that is a complicated undertaking.” We only have one chance to roll out the retail market in a systematic way, so we must get it right.
Krizek stated that projections based on the legal sales in Maryland suggest the state can bring in up to $50,000,000 in the first year after opening retail stores.
SB 448, the competing Senate measure from Sen. Aaron R. Rouse, (D), on the other hand, would not grant any applicant a head-start in adult-use sales. Retailers will open in 2025, after a general licensing and application process.
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According to the Senate Bill products would be subject to a maximum tax of 17.5 percent. This would include a 12.5% state excise, a local tax of up 3.5 percent that can be imposed by municipalities, and the 1.125 percent of Virginia’s Sales Tax that funds K-12 Education.
The Senate proposal allows for outdoor cultivation by smaller licensed growers, but requires larger cultivators to grow indoors.
Jason Blanchette is the president of the Virginia Cannabis Association. He has applauded the success of advocates in shepherding two legalization measures through the legislature. However, he prefers the Senate’s proposal. He argued that the House bill unfairly favored large out-of state medical marijuana businesses and that its prohibition on outdoor growing would be prohibitively costly for small operators.
Marijuana Moment reported that despite his optimism, he is hopeful that lawmakers and advocates can come up with a plan that will be approved by the legislature.
Blanchette stated that “there is definitely a version” of these bills which Republicans will vote in favor. “The trick is to figure out which version it is.”
Chelsea Higgs Wise of Marijuana Justice (which currently prefers House measure) said that the differences between both bills “should concern every Virginian who championed legalization in 2021.”
She noted that the two bills have a major difference in how they treat equity. Krizek amended the House Bill to include accelerated funding for microbusinesses up to 30 and past cannabis convictions as eligibility criteria.
Wise, who said that the Senate’s majority of Democrats “left equity on the table,” said the Senate bill “lacks real equity” and “continues to use the talking points about an equal start, without acknowledging the fact that minorities businesses will never be on the same starting point without meaningful inclusion.”
She added that “Senator Rouse claims that his bill is a response to corporate monopolies” and that “an ‘equal starting’ without direct support to minority businesses would mean that Black and Brown entrepreneurs will be late to the party.”
Krizek’s comments were closed on Friday by a message he sent to Senate members. “I believe that it is time to bring competition to the $3 billion state illegal cannabis market with a product that’s safe, tested, and taxed.”
He said: “I understand that there are many aspects of the bill with which you may not be comfortable.” “But I am committed to working with everyone in this body and you to find a bill that is bipartisan as we continue to work on this complex topic.”
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. In the meantime, illegal stores have opened to satisfy consumer demand.
Some are hopeful that the state will pass cannabis sales legislation this year, following their victories in November last year to gain control of both chambers. It will take a lot of work to build consensus between Democrats and the Governor, while also avoiding the possibility of a veto.
Youngkin, when he first became elected, said that he “was not against” commercial sales. He said that certain Democratic “non starters” were included in the earlier 2021 legislation, such as labor union requirements for marijuana business. However, he still indicated that he was open to supporting a bill.
Some have tempered that expectation at the start of the new fiscal year. They predict the governor will veto all legal sales bills sent to him by lawmakers.
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.
A Senate committee also voted unanimously in favor on Wednesday of advancing legislation that would prohibit the state from using only marijuana as evidence of abuse or neglect or to deny visitation or custody rights. This change was made to protect parents from discrimination due to state-legal cannabis.
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