Virginia Bills Would Legalize Recreational Marijuana Sales In 2024, Though Threat Of Governor’s Veto Looms Large

A month after Virginia Sen. Adam Ebbin (D) declared he was confident a marijuana sales bill could pass the legislature and reach the governor’s desk this year, lawmakers have officially filed legislation to make it happen.

Del. Paul Krizek (D) introduced the sales legalization bill, HB 698, in the House of Delegates on Wednesday, with an identical bill from Ebbin expected to be filed in the Senate shortly. The legislation follows a proposal Ebbin put forward last session that passed the Democratic-controlled Senate but died in committee in the GOP majority House of Delegates.

Use, possession and limited personal 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 state House and governor’s office in the 2021 elections, later blocked the required reenactment of a regulatory framework for retail sales. In the interim, the unlicensed market has expanded.

But Democrats’ victories last November to clinch control of both legislative chambers have some cannabis advocates hopeful that the state could enact cannabis sales provisions this year, though the path requires building consensus among Democrats in the legislature while also passing a bill that can avoid a possible veto from Virginia Gov. Glenn Youngkin (R)—or galvanizing enough lawmakers in the polarized state to overcome a veto.

“I just think this is a sensible approach whose time has come,” Ebbin told Marijuana Moment on Wednesday, “and we now have the legislative majorities to try and make it a reality.”

The new bill would reenact the earlier sales provisions blocked by Republicans while making a number of updates to the planned regulatory scheme.

Existing medical marijuana businesses in the state would be able to begin adult-use operations on July 1 of this year, while some other businesses—including microbusinesses and a small number of hemp companies—could begin operation on January 1, 2025. Broader issuance of all license types wouldn’t happen until July 1, 2025.

Among other changes, the legislation would create a new microbusiness licensing program, which replaces past equity-licensing provisions. The microbusiness program would offer small business licenses exclusively to eligible individuals, including veterans or people in the state from areas impacted by marijuana policing historically, and would provide technical assistance and other benefits to qualifying applicants.

Sales of adult-use products would be taxed at 6 percent at the state level, with local governments permitted to levy an additional tax of up to 6 percent. The proposal would also prohibit outdoor cultivation by cannabis businesses, instead requiring grows to be indoors. Products, meanwhile, would need to be sold in plain packages, free from commercial branding, trademarks and other design.

Some advocates were encouraged by the revised bill’s provisions, noting that the bill is shorter and more accessible than past iterations—which they think is important for winning approval from lawmakers and, potentially, the governor.

“When it comes to size, readability and substance, this is a significant improvement from previous legislative efforts,” said JM Pedini, development director for the advocacy group NORML and executive director of the organization’s Virginia chapter.

“Virginians are ready for the remainder of legalization to be enacted,” Pedini added, “and these bills prevent a real opportunity for Democrats and Republicans to deliver just that.”

Others in the cannabis space, however, have already taken issue with many of the new bill’s provisions, including around equity, the establishment of new criminal penalties and advantages they say the bill would give to large and existing businesses.

Chelsea Higgs Wise, executive director of the group Marijuana Justice, criticized a number of elements of the bill in comments to Marijuana Moment.

“It’s erasing those directly impacted,” she said, noting that people who were arrested or convicted on criminal cannabis charges don’t qualify for any benefits under the bill. As for the microbusiness program’s attempt to include equity in the proposed system, she pointed out that there’s nothing to prevent regulators from granting the licenses only to military veterans instead.

Letting medical marijuana businesses enter the market early, she argued, would further hamstring equity efforts by making it harder for later arrivals to establish themselves and be competitive in the market. With a licensing process still to be determined, she noted there’s “no guarantee of when other folks would be operational.”

Together, Wise said the changes amount to “a stripping of the promises that were made to our communities on creating an equitable market.”

“I’m really concerned about how far we’ve strayed from our original language and what we promised to the people of the commonwealth our industry would look like, how inclusive it would be, how intentional it would be” Wise said. “That’s why we have to stop making some of these same compromises.”

One thing Marijuana Justice would like to see is the removal of an opt-out provision that would let local governments ban marijuana businesses if voters approve it. That’s a provision she accepted as politically necessary in past years, she said, but no longer supports.

Ultimately, Wise predicts Youngkin will veto any legal sales bill passed by Democrats this year, regardless of how carefully Democrats craft the bill. “It’ll be vetoed,” she said repeating a prediction she made last year, “but I still think it’s important that we’re transparent with the constituents that voted in a new majority and what their priorities are in cannabis.”

Asked about a potential a veto, Ebbin replied: “I’m working to pass a bill. You want me to talk about hypotheticals, about what could happen if it was vetoed, when it hasn’t even passed yet?”

Queried about how he viewed Youngkin’s stance on the bill, Ebbin called it “an unknown.”

“The governor has not been very forthcoming in his views on this topic. And you know, we’ll cross that bridge when it comes to it, if it does, but we do not have a veto-proof majority with this bill. Certainly not as of yet. I mean, I’d love to see that, but we’re working on a constructive approach to pass the marketplace bill and get it to the governor’s desk.”

A separate bill filed Wednesday by Del. Charniele Herring (D), meanwhile, would make a number of changes to criminal penalties around marijuana, establishing some new crimes while easing others. HB 773 would also create a petition process to allow people convicted of marijuana offenses to seek resentencing hearings. Those provisions, if passed, would take effect July 1, 2025. The state’s existing cannabis possession law included a separate expungements process.

Ebbin’s bill last year included similar resentencing provisions, but those aren’t included in his current proposal. The lawmaker said he was not familiar with Herring’s bill.

Here are changes that would be made in Virginia under the new legal sales legislation:

• Existing medical marijuana businesses could begin adult-use operations on July 1, 2024, while some other businesses—including microbusinesses and a small number of hemp companies—could apply to begin operation as of January 1, 2025. Broader licensing wouldn’t happen until July 1, 2025.
• Sales of adult-use marijuana products would be taxed at 6 percent at the state level, with local governments able to impose another 6 percent tax. If a town imposes a tax, that would supersede any tax imposed by the surrounding county. Medical marijuana, meanwhile, would be taxed through a separate 12-percent state excise tax.
• The Virginia Cannabis Control Authority’s board of directors would create regulations and control the possession, sale, transportation and delivery of marijuana products. The board would also be in charge of licensing, packaging and labeling, lab testing, security requirements and sanitary standards, as well as some educational efforts around preventing marijuana-related harms.
• The board could set a maximum THC level on marijuana and cannabis products, though edibles couldn’t exceed 10 milligrams per serving or 100 mg per package.
• Licensees could be granted or have an interest in multiple license types, including cultivation, manufacturing, wholesale and retail, but regulations “shall be drawn narrowly to limit vertical integration to small businesses and ensure that all licensees have an equal and meaningful opportunity to participate in the market,” the bill says. No member of the board could have a financial interest in any licensee or applicant.
• Local governments could opt out of allowing all marijuana establishments, but only with the approval of local voters. Towns within a county could allow the businesses even if the county it’s in prohibits them.
• As for medical marijuana, the board would be required to align existing regulations with any new requirements that “establish health, safety, and security requirements for pharmaceutical processors and cannabis dispensing facilities.”
• The board would also create Cannabis Micro Business Liaison, who would lead a microbusiness support team designed to assist eligible microbusiness applicants through business accelerator plans, conduct an analysis of potential barriers to entry to the legal market, spread awareness of business opportunities in historically economically disadvantaged communities, provide technical assistance and conduct outreach.
• Microbusinesses would be created as a license category reflecting some social equity considerations, with eligibility open to businesses owned at least two-thirds by qualifying individuals. Those include military veterans, people who resided for at least three of the past five years in historically economically disadvantaged communities, people who attended at least five years of public elementary or secondary school in such areas or people who received federal Pell grants or attended a school where at least 30 percent of students are eligible for Pell grants.
• “Historically economically disadvantaged communities” would be defined as either as jurisdictions in which “offenses for marijuana possession were committed at a rate in excess of 150 percent of the statewide average for marijuana possession offenses during the previous 10 years” or federally defined historically underutilized business zones (HUBZones).
• Microbusinesses could enter into cooperative agreements with other microbusinesses as well as lease space and equipment “and cultivate, manufacture, and sell” cannabis products on the premises of another licensee.
• Microbusinesses could not manufacture more than 1,000 pounds of marijuana products per year or sell at wholesale more than $500,000 products annually. They would also be limited to no more than 10,000 square feet of canopy space.
• Retailers would need to be no more than 1,500 feet in area, though medical processors or facilities would be grandfathered in so long as they were permitted prior to July 1, 2024 and the retail portion of their facilities don’t expand after that date.
• Cultivation facilities would be limited to 150,000 square feet of canopy, with similar grandfathered-in exemptions for existing medical facilities, which are limited to 200,000 square feet.
• Maximum purchase limits, in terms of purchasable amounts over a given period of time, would be set by regulators, and the bill would require creation of “a retail sales monitoring program to ensure compliance” regarding sales to a single purchaser.
• No cannabis retailer would be allowed to be located within a quarter mile of another marijuana store. Regulators would also be required to ensure that licensees are in compliance with other applicable zoning and land use restrictions.
• Labels on cannabis products would need to be “complete, accurate, easily discernable [sic], and uniform among different products and brands,” and would also need to be accessible through licensees’ websites. Among other details, labels would also need to include all active and inactive ingredients, the total percentage and milligrams of THC and CBD, serving size, usage instructions as well as child and safety warnings “in a conspicuous font.”
• Laboratory testing would need to analyze a sample from each batch of cannabis, with thresholds for failure set in accordance with other states’ standards. Processed products would need to be tested after manufacture of the product is complete. “In the case of retail marijuana,” the bill says, regulators could limit testing to CBD, THC, terpenes, pesticide residue, heavy metals, mycotoxins, moisture and microbial contaminants.
• Regulators would create rules around routine inspections of all cannabis establishments, which under the bill would need to occur at least annually. Rules would also need to be made around minimum equipment and resource requirements, safe and secure dispensing, wholesale distribution and transfer to retail establishments and sale of devices, among other details.
• Rules on the number of licenses any person could be granted would need to both “ensure that all licensees have an equal and meaningful opportunity to participate in the market” and forbid people who hold multiple categories of business licenses from transferring a license to any other person who owns more than one license type.
• Regulators would need to craft a process allowing “certain licensees” to acquire hemp extracts “grown and processed in the Commonwealth in compliance with state and federal law” as well as a process allowing cannabis licensees “to formulate such extracts into retail marijuana products.”
• Providing marijuana or marijuana paraphernalia to individuals who are under 21 would be a Class 1 misdemeanor, which carries penalties of up to a year in jail and a $2,500 fine. Advertising marijuana to minors in any type of publication would also be a Class 1 misdemeanor. Failing to check ID prior to selling cannabis to a minor, meanwhile, would be a Class 3 misdemeanor, carrying up to a $500 fine.
• Minors who attempt to use false documentation to buy marijuana would also be subject to a Class 1 misdemeanor.
• Providing marijuana to an intoxicated person would also be a Class 1 misdemeanor, as would buying marijuana on behalf of an intoxicated person.
• Regulations would need to be “commercially reasonable” and consistent with “standards in states with regulated cannabis markets.”
• Banks and credit unions that work with cannabis businesses would not be held liable under state law for working with the legal industry, though nothing would require financial institutions to work with marijuana clients.

Advocates say they’re confident Virginians want to see legal sales provisions enacted. Nationally, a Gallup poll released in November shows that a majority of Republicans—along with 70 percent of Americans overall—support legalizing marijuana.

Under Ebbin’s bill last legislative session, recreational cannabis sales would have begun on January 1, 2024. Sales would have taken place through existing medical cannabis dispensaries as well as at new businesses run by people who live in “historically economically disadvantaged communities.” Those operators would be eligible for training and support from current medical cannabis companies.

Marijuana products would have been subject to a 21 percent excise tax under the prior bill, and localities could have imposed an additional three percent tax. Revenue would have supported reinvestment programs for historically economically disadvantaged communities, education for at-risk youth and addiction prevention services.

Days after the GOP-controlled House rejected that proposal, it also killed a bill that would have let medical cannabis businesses made certain state-level tax deductions. Republicans also scuttled separate legislation to create a psilocybin advisory board and reschedule the psychedelic.

Meanwhile in the state, several hemp businesses were recently hit with five-figure fines as part of an effort to crack down on hemp cannabinoid products.

Two companies and a private citizen have also sued over the newly tightened rules for hemp products, which set the maximum amount of THC in hemp products at 0.3 percent concentration and 2 milligrams per package. The threshold made illegal hundreds of products already on store shelves. But in October, a judge denied their claim.

Senate President Pro Tempore Louis Lucas (D), for her part, quipped last month that her support for a plan to bring two professional sports teams to Alexandria might be contingent on getting a marijuana sales bill enacted into law.

Last year, Lucas was flagged in a media investigation around CBD products, as the co-owner of a cannabis shop in Portsmouth. Lab testing revealed the shop stocked mislabeled products, some of which contained illegal levels of THC. The problem is common among hemp-derived CBD products, which in most states remain unregulated.

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