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Virginia Democrats reach a deal on adult-use cannabis retail market bill

RICHMOND, Va. (WRIC) – Virginia Democrats have reached a legislative compromise to start legal retail cannabis sales in May 2025, agreeing on a path forward for a marketplace that appears likely to pass but faces a potential veto from Gov. Glenn Youngkin.

Details on the agreement to pave the way for a legal adult-use cannabis market were shared by Del. Paul Krizek (D-Fairfax County), the sponsor of the Virginia House’s version of the bill, during the House’s General Laws Committee meeting Thursday.

The substitute version of the bill agreed to by Del. Krizek and state Sen. Aaron Rouse (D-Virginia Beach), the sponsor of the Virginia Senate’s bill, would allow businesses to seek applications for licenses in September, allow sales to begin on May 1, 2025, and products would be subject to a 9% retail tax (4.5% local and 4.5% state). Under the bill, the market can have up to 350 retail cannabis stores and 100 cannabis processing facilities. It also sets limits on how many cultivation facilities can be set up, based on how much square footage each uses to produce plants.

The start dates for applications and sales for all businesses ensure that the medical cannabis industry doesn’t get the head start that lawmakers and cannabis advocates raised concerns over, which Del. Krizek’s initial bill did.

The agreement, Krizek said, comes with “race-neutral” license preferences for micro-businesses that are economically disadvantaged, “including persons who’ve suffered hardship or loss due to this country’s war on marijuana.”

The micro-business program, to be overseen by the Cannabis Control Authority, will get 100% of its funding in the first year from fees collected from licensees, Krizek said, moving down to 60% in subsequent years. Krizek concluded by saying he and Sen. Rouse were glad “that the Senate and House are on the cusp of sending the governor legislation which will create a retail marijuana market in a very responsible and thoughtful way.”

“And we have to do this because we’ve got to do something about that $3 billion illicit market,” he added. “It’s time to give Virginians access to a safe, tested and taxed product.” Those in favor of the deal who spoke Thursday included representatives of advocacy groups, such as Marijuana Justice Virginia, and those in the cannabis industry, like Jushi.

Representatives from the Family Foundation and the Virginia Catholic Conference spoke in opposition. Virginia legalized cannabis more than two years ago, allowing people 21 and older to possess small amounts. And while Virginians can buy cannabis at dispensaries through the state’s medical program, there’s no way to buy it for recreational use. After public comment and questions from a Republican state delegate about the legislation on Thursday, the substitute bill advanced out of the Democrat-controlled committee on a 12-10 party-line vote. The legislation is expected to pass out of the Democrat-controlled legislature, but without a supermajority to block a veto, the question has continued to be what the governor will do.

Youngkin has made his disinterest in the proposal clear but hasn’t directly said whether he would veto the legislation. With the governor needing to work with Democrats on his priorities, particularly his hopes of bringing a $2 billion sports arena and entertainment district to Alexandria, he could be required to compromise on Democrat-led priorities.

In Richmond, Virginia, Democrats have hammered out a legislative agreement aimed at kickstarting legal retail cannabis sales by May 2025. However, despite this significant progress, the plan could face a potential hurdle in the form of a veto from Gov. Glenn Youngkin.

During Thursday's House General Laws Committee meeting, Del. Paul Krizek (D-Fairfax County) disclosed details of the compromise reached to establish a legal adult-use cannabis market. The agreement, hashed out between Del. Krizek and state Sen. Aaron Rouse (D-Virginia Beach), sets forth a timeline for businesses to apply for licenses starting in September, with sales slated to commence on May 1, 2025. Notably, products would be subject to a 9% retail tax, split evenly between local and state coffers. The legislation caps the number of retail cannabis stores at 350 and allows for 100 cannabis processing facilities, with restrictions on the establishment of cultivation facilities based on square footage.

Of particular note is the provision ensuring that the medical cannabis industry doesn't gain an unfair advantage, a concern raised by lawmakers and cannabis advocates. Del. Krizek emphasized the inclusion of "race-neutral" license preferences for economically disadvantaged micro-businesses, particularly those affected by the historical ramifications of marijuana criminalization.

The micro-business program, overseen by the Cannabis Control Authority, will initially be funded entirely by fees collected from licensees, gradually transitioning to a 60% funding model in subsequent years. Del. Krizek and Sen. Rouse expressed satisfaction with the impending legislation, characterizing it as a responsible and deliberate approach to establishing a retail marijuana market.

Supporters of the deal, including representatives from advocacy groups like Marijuana Justice Virginia and industry stakeholders such as Jushi, voiced their approval during Thursday's proceedings. However, opposition from groups like the Family Foundation and the Virginia Catholic Conference underscores the contentious nature of the issue.

Virginia legalized cannabis for adult use over two years ago, permitting individuals aged 21 and above to possess limited amounts. Despite this, recreational sales remain prohibited, with only medical cannabis available through the state's program. The substitute bill cleared the Democrat-controlled committee on a party-line vote, signaling its likely passage through the legislature.

The looming question, however, revolves around Gov. Youngkin's stance on the legislation. While he has expressed lukewarm interest in the proposal, his stance on a potential veto remains unclear. Given the need for collaboration with Democrats on his policy priorities, including a proposed $2 billion sports arena and entertainment district, Youngkin may find himself compelled to navigate a delicate balancing act regarding Democrat-led initiatives.

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