Virginia lawmakers have reached an agreement to become the 16th state in the nation and the first in the south to legalize adult-use cannabis. After much debate over differing legalization proposals, lawmakers in both the House and Senate passed identical bills, HB 2312 and SB 1406, in late February with a party line vote of 48 to 43 in the House and 20 to 19 in the Senate. The legislation would legalize the use of cannabis for people aged 21 and older once retail markets are established in 2024.
The bill has now gone to Gov. Ralph Northam’s desk. The governor has been vocal with his support for legalization and was a proponent of the bill. He is expected to sign the measure into law, but can also formally recommend amendments, which the legislature would then consider.
A state tax of 21 percent would be implemented in addition to the standard 6 percent state sales tax. The tax would not apply to medical cannabis sales from medical dispensaries. Localities would also be given the option to impose an additional 3 percent tax on cannabis sales.
The bill also calls for 30 percent of cannabis tax revenue to go to a Cannabis Equity Reinvestment Fund aimed at communities that have been historically over-policed for cannabis-related offenses. Taxes would also help fund education and public health programs. Under the legislation, people under the age of 21 who consume or possess the plant would face a $25 civil penalty and have to undergo treatment. The provision to legalize small amounts ahead of 2024 did not end up in the final bill.
Several of the provisions will require a second legislative vote, or “re-enactment”, in 2022. The provisions to legalize cannabis possession and sales on January 1, 2024, and the penalties put in place regarding minor possession of the plant do not require re-enactment. Other new penalties, including brining any cannabis into the state, do require re-enactment.
A new Cannabis Control Authority would be created in July 2021 to regulate the adult-use cannabis market. A five-member Board of Directors would issue regulations, issue fines, and grant, suspend and revoke licenses. The Board will also establish the number of licensees, which could not exceed 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers. It creates two types of cultivation licenses: Class A licenses, which are capped at a certain number of square feet or plants, and Class B licenses, which would be limited to 1% THC. Application fees for cannabis business licenses are still to be determined.
Additionally, the bill would promote inclusion in licensing by prioritizing social equity applicants, giving them preference from July 1, 2023 until January 1, 2024. Regulators will also waive a percent of fees. It will also create Creates a Cannabis Business Equity and Diversity Support Team to identify barriers to inclusion, offer technical assistance, conduct outreach, and develop requirements for diversity, equity, and inclusion plans
Beginning January 1, 2024:
- Adults could securely and discreetly cultivate up to four cannabis plants at their primary residence. (The four-plant cap also applies to households.) Each plant must have a tag with identifying information on the grower.
- Possessing more than an ounce, but no more than one pound, would be punishable by a civil fine of up to $25.
- Possessing more than one pound could result in up to 1-10 years in prison.
- Public consumption carries a civil fine of up to $25 for a first offense. A second offense requires a substance abuse program. Subsequent offenses are fine-only misdemeanors.
- Minors possessing cannabis would be subject to a civil fine of up to $25 plus a required substance abuse education program.
To begin preparing for future adult-use cannabis business opportunities in Virginia, download our Virginia Application Guide & Checklist.