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Virginia Lawmakers Advance Bills To Kickstart Adult-Use Cannabis Market

In an attempt to finally establish recreational marijuana sales, the Virginia legislature is considering two new pieces of legislation to further that effort.

It has been almost two years since then-Democratic Gov. Ralph Northam signed the bill legalizing the potential $1.4 billion adult-use cannabis market in Virginia in 2021. Although that measure allowed adults 21 years and older to possess up to an ounce of marijuana, smoke it privately and grow up to four plants in their homes, it did very little to establish a framework for legally selling marijuana a la a retail dispensary.


As reported by multiple media outlets, Virginia state legislators recently presented two new bills to address the state’s confusing marijuana problem. The first would directly address the issue of establishing adult-use sales in Virginia by early 2024. The second measure would permit licensed companies to take tax deductions prohibited by the federal tax code.


The second bill is relatively straightforward and would allow marijuana businesses to deduct certain taxes disallowed under Section 280E of the U.S. tax code. Because cannabis is still a Schedule I narcotic under the Controlled Substances Act, marijuana operators cannot make standard expense deductions like other non-marijuana companies. This bill would effectively decouple state operators from the federal tax code. Other states, including New Jersey, New York, and Pennsylvania, are considering similar measures for their cannabis industries as well.


The first proposed measure is an entirely different and much more complicated endeavor. This past Friday, the Senate Rehabilitation and Social Services Committee approved an amended bill enabling current state medical marijuana providers to sell recreational cannabis to adult consumers starting Jan. 1, 2024. However, there would be certain stipulations to be met in order for those companies to start making adult-use sales.


For example, each provider would have to pay a fee and enter into no less than five franchise agreements with qualified social equity applicants. Each of those potential franchisees would also be allowed to open storefronts in January 2024.


Sen. Adam Ebbin (D-Fairfax) is the bill’s sponsor. In a statement about the measure, he shares, “Cannabis is legal to possess in Virginia, and we want people to have a way to buy a safe, regulated product.” Ebbin is also a strong advocate for utilizing Virginia’s recreational cannabis market to heal much of the past harm done to disadvantaged communities via state and federal prohibition enforcement and incarceration rates.


"Cannabis is legal to possess in Virginia, and we want people to have a way to buy a safe, regulated product.”

- Sen. Adam Ebbin (D-Fairfax)


However, some view Ebbin’s bill as unfair and potentially reckless. Providing specific segments of the population with an advantage over others would create an alarming subversion of market forces for social activism concerns in their minds. Not surprisingly, the division is split pretty evenly down party lines, with Democrats strongly supporting Ebbin’s social equity provisions and Republicans pushing back against them.


Sen. Jennifer McClellan (D-Richmond) said in a press conference on the first day of the 2023 session, “We need to legalize marijuana in the right way, in a socially responsible way, and in a way that ensures that the communities and people who are disproportionately impacted by the War on Drugs have a meaningful opportunity to benefit from a legalized market.”


"We need to legalize marijuana in the right way, in a socially responsible way, and in a way that ensures that the communities and people who are disproportionately impacted by the War on Drugs have a meaningful opportunity to benefit from a legalized market.”

- Sen. Jennifer McClellan (D-Richmond)


In stark contrast to that vision for the state’s adult-use industry, Republicans hold equally strong convictions that politically interfering with regular market forces sets a perilous precedent for the new and burgeoning marketplace. Sen. Glenn Davis (R-Virginia Beach) speaks for many in his party when he says, “I can’t support the provision inside the bill that gives those that were convicted of marijuana crimes in the past first access to all the licenses. It puts law-abiding citizens, (who) have not committed a crime, at the back of the line.”


"I can’t support the provision inside the bill that gives those that were convicted of marijuana crimes in the past first access to all the licenses. It puts law-abiding citizens, (who) have not committed a crime, at the back of the line.”

- Sen. Glenn Davis (R-Virginia Beach)


For his part, Governor Glenn Youngkin (R) does not appear interested in getting involved in the hotly contested issue. Youngkin is a devout Christian with an eye toward a potential presidential run in 2024. When interviewed about signing any measures that create a framework for allowing recreational cannabis sales in the state, he deflected, focusing instead on his concern for legislation that deals “with hemp and delta-8 and the regulations and consumer safety around those products.”


In the end, Ebbin’s bill to establish an adult-use market by January 2024 may provide more delays and political minefields than actual progress toward activating an industry that was already supposed to be accessible and flourishing at this point. However, the real victims of this all too familiar legislative merry-go-round are the small business owners and consumers who have patiently waited for the supposed leaders in Richmond to do their jobs and enact this law.


Hopefully, compromise and prudence will prevail over partisanship and ambition. If not, it may be a while before Virginians can buy a plant they have been legally allowed to possess, smoke and grow for close to two years now.


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