The next phase of Virginia’s recreational marijuana retail market took a step forward last week.
Legislation that would allow the state’s existing medical cannabis operators to jumpstart recreational sales next year was approved by the Senate’s finance committee at its Thursday meeting.
The committee also pushed forward a bill that would enact the formal launch of the broader recreational marijuana market on Jan. 1, 2024.
Both pieces of legislation now head to the full Senate for a vote to take place by Tuesday.
Under Sen. Adam Ebbin’s Senate Bill 313, the state’s medical marijuana operators would be able to start to sell recreational pot Jan. 1, 2023, a full year before the retail market is currently slated to launch for everyone else.
The legislation would limit early sales only to the state’s current medical cannabis operators and require them to pay a $6 million fee each to participate.
Those changes are among the tweaks to the initial iteration of SB 313, which had called for industrial hemp processors to likewise be able to get in on the action early and had initially set the participation fee at $1 million.
But hemp processors got the ax and the fee increased to $6 million as the bill worked its way through Senate committees this month.
Ebbin told the Senate rehabilitation and social services committee earlier this month that industrial hemp processors were removed because medical cannabis companies have more experience making products for human consumption.
“In terms of the standards for human ingestion and quality control … they’ve got the vast experience,” Ebbin said. “I did have hemp in there originally but they wouldn’t be quite as ready.”
Hemp industry lobbyist and Gentry Locke attorney Greg Habeeb at that meeting criticized the removal of hemp processors from the bill as shutting local players out of the market.
“These are the Virginia businesses, the Virginia farmers, in this market and what we’re doing is preferring out-of-state businesses,” Habeeb said, and added most of his clients are food-grade certified.
The legislation would limit medical operators to 80,000 square feet of cultivation space in their existing facilities for retail cannabis. Medical operators would sell recreational marijuana out of their existing growing-and-processing facilities as well as the five satellite dispensaries they are allowed under the state’s medical program.
Virginia has four active medical operators: Green Leaf Medical (Richmond area), Columbia Care (eastern Virginia), Jushi Holdings (Northern Virginia) and Green Thumb Industries (southwestern Virginia). Columbia Care owns Green Leaf.
Medical operators that embark on early sales would be required to create incubator programs to establish small independent marijuana businesses that qualify as social equity applicants.
The bill would tax recreational marijuana sales at 21 percent. That tax and the fee revenue would flow to the Cannabis Control Authority to create a loan program for startup cannabis businesses that qualify as social equity applicants.
Local governments would also have the option to tax the marijuana another 3 percent. The early-sales legislation would sunset with the rollout of the market.
The elements of last year’s marijuana legalization legislation related to the creation of the legal market must be reenacted before the market can formally open, and Ebbin’s Senate Bill 391 aims to do just that.
SB 391 likewise passed through the Senate finance committee last week. Ebbin’s reenactment bill does away with most business license caps included in last year’s legislation, allowing the Cannabis Control Authority to determine the number of licenses permitted for most cannabis business types. The exception would be retail stores, which SB 391 would cap at 400 licenses.
The bill also tweaks how social equity candidates would be defined, narrowing the definition in ways intended to focus the bill’s measures to support startup marijuana businesses operated by people most affected by marijuana law enforcement.
Over on the House of Delegates side, several marijuana-related bills, including a House version of reenactment sponsored by Dels. Michael Webert and William Wampler and a bill that would require local referendums before marijuana retailers could open, have yet to roll forward.
House Majority Leader Terry Kilgore told The Associated Press last week that he expected the House wouldn’t have time to vote on its marijuana legislation before Tuesday, the deadline for both the House and Senate to vote on their respective bills in order to pass them along to the other chamber ahead of the governor’s final consideration.
However, any inaction in the House would not prevent SB 391 from moving forward and being voted on by both chambers.