Virginia is set to become the first state in the South to establish a regulated adult-use cannabis market, after both chambers of the legislature passed a bill that would allow sales to begin in May 2025.
The Bill Details
The bill, House Bill 698, was approved by the House of Delegates on February 12, 2024, with a 52-48 vote, and by the Senate on February 13, 2024, with a 21-18 vote. The bill would create a new regulatory scheme for the cultivation, processing, testing, and retail of cannabis products, as well as a tax structure and a social equity program.
Some of the key features of the bill are:
- Cannabis sales would start on May 1, 2025, with a six-month window for existing medical cannabis operators, hemp processors, and social equity microbusinesses to enter the market before other licensees are allowed.
- Cannabis products would be taxed at 11.65%, plus a 6% sales tax and a local option tax of up to 3%, for a total of up to 20.65%. The revenue would be allocated to various funds, including public education, substance abuse prevention, and social equity grants.
- Social equity applicants would be eligible for reduced fees, expedited review, and technical assistance, as well as access to an accelerator program funded by a one-time fee of $2.4 million paid by the existing medical cannabis operators. Social equity applicants are defined as those who have been disproportionately impacted by cannabis prohibition, such as people with prior convictions, low-income individuals, or residents of certain areas.
- Personal possession and cultivation of up to one ounce of cannabis and four plants per household would be legal for adults 21 and older, effective July 1, 2024. The bill also includes provisions for expungement of past cannabis convictions and sealing of records.
The Political Context
The bill’s passage marks a significant milestone for cannabis reform in Virginia, which became the first state in the South to legalize cannabis for adult use in 2021, but without a provision for commercial sales. The bill is the result of a compromise between the House and the Senate, which had different versions of the legislation, such as the number of licenses, the role of local governments, and the inclusion of existing operators.
However, the bill’s fate is still uncertain, as it awaits the signature of Governor Glenn Youngkin, a Republican who has expressed opposition to cannabis legalization in the past. Youngkin has not indicated whether he will sign, veto, or amend the bill, and he has until March 31, 2024, to make a decision. If he vetoes the bill, the legislature could override his veto with a two-thirds majority vote in each chamber.
The Industry Reaction
The cannabis industry and advocates have welcomed the bill’s passage, but also urged the governor to sign it without delay. They argue that the bill would create a safe, regulated, and equitable market that would generate jobs, revenue, and social justice for the state.
“This bill is a historic step forward for cannabis policy in Virginia and the nation,” said Steve Hawkins, executive director of the Marijuana Policy Project, a national advocacy group. “We urge Governor Youngkin to respect the will of the voters and the legislature, and sign this bill into law as soon as possible.”
