Virginia lawmakers in the state Senate and House of Delegates have passed parallel cannabis legalization bills. The news comes approximately nine or so months after the state decriminalized cannabis last spring, and weeks after New York’s Governor Cuomo committed to legalizing in 2021 during his state of the state. In other words, the east coast, between Virginia, New York, New Jersey, Vermont and other states could be very busy for the industry over the next few years.

For now, let’s break down what still needs to be done for Virginia to become the 16th state to legalize, and the first state in the South to legalize adult-use cannabis.

Lawmakers need to iron out differences in legalization bills

First things first, while Virginia’s Governor Ralph Northam has continually signaled his enthusiasm for adult-use legalization, lawmakers in Virginia’s Senate and House of Delegates need to iron the differences between their two cannabis bills.

The biggest difference is that the Senate’s bill is calling for vertical integration, with a hefty one-million dollar licensing fee being tacked on for the right to be go vertical, while the House version does not. The House’s effort is in part to afford more opportunities and licenses for smaller businesses.

Additionally, the Senate version calls for municipalities to have the option to opt-out of legalization via ballot measures, while the House version would leave all licensing up to the state.

Intriguingly, both versions call for social equity licenses to be awarded on an earlier timeline than non-S.E. Social equity groups also, according to both bills, would be defined as 66% social-equity owned. That percentage is by far the highest qualifying amount in the country and seems to be a strong foundation for keeping social equity groups involved.

Virginia cannabis legalization will look like…

There’s still a lot to be sussed out legislatively, but lawmakers in the Commonwealth have an aggressive time table. Here’s what we know they’re pushing cannabis legalization in Virginia to look like based off the bill that was introduced.

• Five license categories
  • Retail
  • Cultivation
  • Manufacturing
  • Wholesaler
  • Testing
    NB: It’s unclear from the language we’ve seen, what license would handle transportation.
• Local control
  • Again, the Senate version is calling for towns and municipalities in Virginia will have to pro-actively opt in for adult-use. This differs from what, say, New Jersey has proposed, where towns need to pro-actively opt out.
• Taxes
  • Virginia’s lawmakers are proposing a 21% tax on cannabis sales, with local governments being given the option to tack on an additional 3% tax. These two taxes would be in addition to the state’s current sales tax of 6%. Potentially the full tax would be up to 30%. Tax revenues would be divvied up among funding for a pre-K education program, a cannabis social equity reinvestment program, and substance abuse and public health programs.
• Expungements of cannabis priors
  • Prior non-violent cannabis convictions would be expunged. Individuals currently serving cannabis-related sentences could also petition for a re-sentencing hearing.
• Sales start no sooner than 1/1/2024
  • Retail cannabis sales could not start until January 1, 2024. This is a full year later than what Governor Northam was calling for.
• Virginia Alcoholic Beverage Control Authority will take on Cannabis regulation
  • The state’s alcohol regulatory body would be renamed the Virginia Alcoholic Beverage and Cannabis Control Authority, and it would be responsible for promulgating rules and issuing licenses.

There’s more to it, but those are the crucial basics. If you have questions on Virginia cannabis legalization, reach out to MMLG today.