Retail sales of Marijuana possible with two new bills
Bills hoping to establish a retail marijuana market in Virginia have advanced in the General Assembly.
Virginia has no retail marijuana market in place, despite the General Assembly decriminalizing the drug in 2020, according to the Virginia Code.
Sen. Aaron Rouse, D-Virginia Beach, introduced Senate Bill 448 which creates a framework for a retail marijuana market, according to the bill.
Decriminalizing marijuana but not creating a regulated market has caused a public safety and health crisis and made the state miss out on potential millions in revenue, Rouse said during a House meeting.
“Since that time, we’ve seen a major expansion of the illegal market,” Rouse said. “Unregulated, untested and untaxed products are sold oftentimes to minors.”
SB 448 sets up a system to regulate and tax marijuana being sold illegally, rather than creating an adult-use market, Rouse said.
The General Assembly created the Cannabis Control Authority in 2021. It’s the governing body on cannabis in the state and can develop and enforce rules within the medical market and, if the legislation passes, the retail market, according to the bills.
Adults 21 and older can possess up to one ounce of marijuana and are allowed to grow up to four marijuana plants per household, according to legislation passed in 2021.
VCU prohibits marijuana on campus. Possessing it can result in a student code of conduct violation.
However, there is no prohibition on smoking paraphernalia, excluding hookahs, tobacco products and vapes, according to the VCU guide to residential living.
Items such as bongs, pipes, bowls and roach clips were previously against the student code of conduct, according to a previous report by The Commonwealth Times.
Del. Paul Krizek, D-Alexandria, introduced House Bill 698, a similar measure albeit with stark contrasts to Rouse’s bill.
Harshini Kanala, a VCUarts first-year, said she doesn’t think the creation of a retail market would make a difference.
“I hope it’s for a good cause — they’re making it legal so people don’t buy it illegally,” Kanala said. “I think people are still going to buy it illegally.”
Emily Gomez-Ponce, a fourth-year criminal justice student, said she supports its creation.
“It’s not hurting anyone, I fully support it,” she said.
Rouse and Krizek came together on Feb. 22 on a compromise to hash out the differences in their bills, according to Krizek.
The bills already had agreements such as increasing the maximum level of THC in edible cannabis products and allowing localities to vote on whether marijuana establishments should be prohibited.
“After these bills passed their respective bodies, Sen. Rouse and I went to work immediately with the stakeholders to harmonize them,” Krizek said at a House General Laws meeting on Thursday, Feb. 22.
The two came to agreements on tax rates, timing for licensing and opening the market, which means how much space people and facilities have to grow plants and equity, according to both the bills’ substitutes.
Tax rates
There will be a 4.5% state tax rate on retail sales of the drug and localities can choose to add an additional 4.5% tax, according to the bill. This is the same as the original House bill.
The Senate bill includes a 16% tax.
Rouse and Krizek agreed on the lower tax to keep prices low and reduce the cost advantage of buying the drug illegally, Krizek said at the Feb. 22 meeting.
Timing
HB 698 originally had prioritized licensing for small businesses, pharmaceutical companies and up to five hemp processors. The facilities would have been licensed as early as this July and able to start selling on Jan. 1, 2025.
SB 448 had the same timing but excluded prioritized licensing.
The compromise made it so licensing will begin Sept. 1, with the retail market opening in May 2025.
Space
The House bill originally aimed at limiting the area that facilities had to cultivate their plants. Marijuana cultivation facilities would have up to 150,000 square feet of space unless the facilities were a part of a small business, which would’ve been given 10,000 square feet.
Outdoor growing would be prohibited under the House bill.
The Senate bill didn’t mention how much room cultivators had to grow, but rather how many marijuana plants facilities could grow based on its type of license.
“We will provide a variety of options for both large and small cultivators,” Krizek said at the meeting. “We will also allow outdoor growth on a limited basis for the small growers.”
Depending on the type of licensing a facility has, they are given either 2,000 or 10,000 square feet maximum to grow indoors or outdoors. Indoor growing can range from 25,000 to 70,000 square feet.
Equity
HB 698 includes a plan to promote small businesses’ participation in the market. Medical marijuana processors would be required to mentor six of these businesses and pay $400,000 to each, a total of $2.4 million.
SB 448 aimed to establish a minority and small business support team to look for barriers that make it hard for these businesses to enter the market.
The compromise instead creates a small business support program funded by the CCA, according to the Senate bill. The money will come from licensing fees between July 2024 and July 2025. The funding will be continued through 60% of the tax revenue from retail sales.
There will be licensing preferences for small businesses, according to the Senate bill.
“These preferences, which will be race-neutral, will offer significant economic opportunities for economically disadvantaged persons, including persons who have suffered hardship or loss due to this country’s war on marijuana,” Krizek said.
