GOP Virginia Governor Doesn’t Have ‘Any Interest’ In Legalizing Marijuana Sales Under New Democrat-Led Bills

January 11, 2024 · Marijuana Moment

As Virginia Democrstic lawmakers renew their push to legalize marijuana sales, the Republican governor says the issue isn’t something he’s personally interested in advancing this year.

While advocates are hopeful that commercial legalization could move through both chambers of the legislature, which are now controlled by Democrats, the remarks from Gov. Glenn Youngkin (R) indicate that the plan might not be enacted into law even if it is approved by the House of Delegates and Senate.

Following his State of the Commonwealth address on Wednesday, Youngkin was asked about the prospects of further cannabis reform.

“I just don’t have a lot of interest in pressing forward with marijuana legislation,” he told reporters.

Cannabis is “an area that I really don’t have any interest in,” the governor said.

The governor is setting a sobering tone for cannabis reform advocates as the 2024 session begins, making the brief comment on the same day that a bill to legalize cannabis sales was filed in the House. A Senate companion is expected to be introduced shortly.

Use, possession and limited personal cultivation of cannabis by adults is already legal in Virginia as 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 in the most recent election last November to take 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 strong consensus in the legislature under the looming threat of a veto.

Youngkin’s disinterest in marijuana reform isn’t necessarily a surprise. Advocates were relieved that he committed to simply not attempt to overturn the noncommercial legalization law enacted by his Democratic predecessor in 2021.

When he was elected, Youngkin said he was “not against” allowing commercial sales, per se. He said there were certain Democratic “non-starters” such as provisions setting labor union requirements for marijuana businesses—and he wanted to address concerns from law enforcement—but he generally indicated that he did believe there was a bill he could support.

That expectation has been quickly tempered at the beginning of the new year, though.

Last session, a cannabis sales bill did advance through the Democratic-controlled Senate, but it stalled out in committee in the House, which at the time had a GOP majority.

The newly filed commercial legalization 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 six percent at the state level, with local governments permitted to levy an additional tax of up to six 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.

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.

Days after the GOP-controlled House rejected the prior cannabis sales 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.

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. (Full Story)
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