New Amendments To Virginia Marijuana Sales Bill Risk Upsetting Earlier Compromise Between House And Senate

Supporters of legalizing retail marijuana sales in Virginia are scrambling after a Senate committee on Tuesday moved to adopt amendments to pending legislation to enact the reform. In making the changes, senators brought the House-passed measure away from a negotiated compromise reached last week—a move that could eventually send the issue to a bicameral conference committee to hammer out the differences.

To avoid that, lawmakers are now exploring how to bring the bill back into alignment with its Senate-passed counterpart that is now pending in the House.

Already the House has pressed pause on the Senate legal sales measure, SB 448, from Sen. Aaron Rouse (D). That bill, which the body gave preliminary approval to on Monday, was set for a third and final reading on Tuesday afternoon. But after the Senate-side changes, the House instead passed by the bill for the day at the request of Del. Paul Krizek (D).

“I passed it by to give us another chance to keep it out of conference,” Krizek, the sponsor of the separate House-passed retail marijuana bill, HB 698, told Marijuana Moment in an email from the House floor. “If we come to an agreement today, then we can amend on the floor tomorrow, and Senate can do the same.”

The new changes to HB 698, made in a Senate Finance and Appropriations subcommittee and then in full committee, adjusted the proposed tax rate on cannabis sales as well as where licensing fees would go. Specifically, the committee increased the agreed-upon 9 percent tax rate up to just over 17 percent—reflecting a rate in Rouse’s original Senate bill prior to the compromise—and decreased the share of licensing fees that would go toward an equity-focused microbusiness program. Rather than receiving 100 percent of licensing fees, that program would instead get 75 percent, with the remaining quarter going to the Cannabis Control Authority, which would be responsible for regulating the industry.

Rouse, the sponsor of SB 448, has yet to weigh in publicly on the changes to Krizek’s bill. He did not appear to be present at the Senate meetings on Tuesday morning, and his office did not immediately respond to an email from Marijuana Moment.

But in an email Rouse’s office sent on Monday, prior to the changes, the senator said he was proud of the earlier compromise measure.

“We feel this bill represents the best possible way for Virginia to regulate the existing illicit market, generate tax revenue, create jobs and address some of the public health issues we’re seeing arise out of our currently unregulated market,” he said. “We will continue to work with stakeholders, my colleagues in the General Assembly and the Administration as we work towards final passage.”

Some advocates say they’re open to the new changes, but either way, they’re hoping lawmakers can quickly resolve the issue in order to get a final proposal to the governor’s desk.

“Our position is that we want Virginia to have a healthy, competitive market that doesn’t continue to lose consumers to Maryland because of better pricing and convenience,” said Chelsea Higgs Wise, executive director for the group Marijuana Justice. “We would support a compromise such as scaling up in taxes and starting low, but hope discussions can lead to a bill both chambers can agree to and get a bill to the governor.”

Jason Blanchette, president of the Virginia Cannabis Association, called the 17.125 percent tax “too high.”

“We need to land around 12 [percent] max, if possible,” he told Marijuana Moment, adding: “Fingers crossed… Who would’ve thought that this bill could be blown up by the chambers not agreeing on the taxes.”

JM Pedini, development director for the advocacy organization NORML and executive director of the group’s Virginia chapter, said they prefer the lower, House-approved rate.

“The previously agreed upon compromise tax rate of nine percent is a much smarter approach,” Pedini said, “ensuring that high prices don’t dissuade consumers from transitioning to the legal marketplace.”

Despite the new changes, the bulk of the two bills remain largely the same following the recent compromise.

Here’s what the compromise bill would do if the legislation were to become law:

• Retail sales would not begin until May 1, 2025—later than what proponents said would likely be a March start date in the revised bill and later still than the January 1 date in the measures the House and Senate separately passed earlier this session.
• Adults would be able to purchase up to 2.5 ounces of marijuana in a single transaction, or up to an equivalent amount of other cannabis products as determined by regulators.
• A state tax of 4.5 percent would apply to the retail sale of any cannabis product, and local governments could levy an additional tax of up to 4.5 percent. (Senators have since adjusted HB 698’s rate to 17.125 percent.)
• The Virginia Cannabis Control Authority would oversee licensing and regulation of the new industry. Its board of directors would have the authority to control possession, sale, transportation, distribution, delivery and testing of marijuana.
• Local governments could ban marijuana establishments, but only if voters first approve an opt-out referendum.
• Locations of retail outlets could not be within 1,000 feet of another marijuana retailer.
• Cultivators would be regulated by space devoted to marijuana cultivation, known as canopy size, rather than by the actual number of plants they grow.
• Both indoor and outdoor marijuana cultivation would be allowed, though only growers in lower tiers—with lower limits on canopy size—could grow plants outside. Larger growers would need to cultivate plants indoors. Secure greenhouses would qualify as indoor cultivation.
• Only direct, face-to-face transactions would be permitted. The bill would prohibit the use of other avenues, such as vending machines, drive-through windows, internet-based sales platforms and delivery services.
• Existing medical marijuana providers that enter the adult-use market could apply to open up to five additional retail establishments, which would need to be located at their existing licensed facilities.
• Serving sizes would be capped at 10 milligrams THC, with no more than 100 mg THC per package.
• No person could be granted or hold an interest in more than five total licenses, not including transporter licenses.
• People with convictions for felonies or crimes involving moral turpitude within the past seven years would be ineligible to apply for licensing, as would employees of police or sheriff’s departments if they’re responsible for enforcement of the penal, traffic or motor vehicle laws of the commonwealth.
• An equity-focused microbusiness program would grant licenses to entities at least two-thirds owned and directly controlled by eligible applicants, which include people with past cannabis misdemeanors, family members of people with past convictions, military veterans, individuals who’ve lived at least three of the past five years in a “historically economically disadvantaged community,” people who’ve attended schools in those areas and individuals who received a federal Pell grant or attended a college or university where at least 30 percent of students are eligible for Pell grants.
• “Historically economically disadvantaged community” is an area that has recorded marijuana possession offenses at or above 150 percent of the statewide average between 2009 and 2019.
• Adults could also share up to 2.5 ounces with other adults without financial remuneration, though gray-market “gifting” of marijuana as part of another transaction would be punishable as a Class 2 misdemeanor and a Class 1 misdemeanor on second and subsequent offenses.
• A number of other new criminal penalties would be created. Knowingly selling or giving marijuana or marijuana paraphernalia to someone under 21, for example, would be a Class 1 misdemeanor, punishable by up to a year in jail and a maximum $2,500 fine, as would knowingly selling cannabis to someone reasonably believed to be intoxicated. It would also be a Class 1 misdemeanor to advertise the sale of marijuana paraphernalia to people under 21.
• Knowingly obtaining marijuana on behalf of someone under 21 would be a Class 1 misdemeanor.
• People under 21 who possess or use marijuana, or attempt to obtain it, would be subject to a civil penalty of no more than $25 and ordered to enter a substance use disorder treatment and/or education program.
• Illegal cultivation or manufacture of marijuana, not including legal homegrow, would be a Class 6 felony, punishable by up to five years imprisonment and a $2,500 fine.
• People could process homegrown marijuana into products such as edibles, but butane extraction or the use of other volatile solvents would be punishable as a Class 1 misdemeanor.

Late last week, the compromise legislation was advanced by a separate Senate committee as well as a House panel.

Even if the legislature does pass a legalization bill this session, it will still have to get past Gov. Glenn Youngkin (R), who has sent mixed messages around legalization. While the governor has not explicitly said he’ll veto a retail marijuana bill, he signaled last month that he doesn’t have “any interest” in legalizing sales under the Democrat-led plans.

When he was first elected, however, Youngkin said he was “not against” allowing commercial sales categorically.

Use, possession and limited cultivation of cannabis by adults is already legal in Virginia, the result of a Democrat-led proposal approved by lawmakers in 2021. But Republicans, after winning control of the House and governor’s office later that year, subsequently blocked the required reenactment of a regulatory framework for retail sales. Since then, illicit stores have sprung up to meet consumer demand.

Following last year’s elections, Democrats took control of both chambers of the legislature.

A sales bill did advance through the Democratic-controlled Senate last session, but it stalled in committee in the House, though at the time the chamber had a GOP majority.

Earlier this week, meanwhile, Virginia lawmakers passed a bill to protect public sector workers such as government officials and teachers from being fired for medical marijuana use, sending the proposal to Youngkin’s desk.

Photo courtesy of Philip Steffan.