Virginia lawmakers on Saturday narrowly endorsed compromise legislation to legalize a commercial marijuana recreational program that could generate nearly $ 1.5 billion in annual sales within five years of its scheduled launch on Jan. 1, 2024.
But there is a catch: the passed measure contains a clause put forward by the Senate that requires the General Assembly to readjust a number of provisions of the bill in 2022, including those that list the regulatory and market structure such as licensing.
Virginia would be the 16th state in the country and the first in the south to legalize adult marijuana once Governor Ralph Northam signs the bill, as is expected of him.
Democrat Northam promised to push for adult legalization during this term.
The House of Representatives passed Compromise Law 47-44, while the Senate passed Measure 20-19.
“Virginia lawmakers are proving that it is possible to work quickly to pass laws that not only legalize cannabis but also remove the disproportionate harm caused by decades of prohibition,” said Steve Hawkins, executive director of marijuana Policy Project, in a statement.
“Virginia is on the verge of becoming the 16th state to end the cannabis ban and replace it with sensible legalization and regulation for adults 21 and older. ”
In a compromise reached by lawmakers in a conference committee, lawmakers agreed to set up an independent agency, the Virginia Cannabis Control Authority, to oversee a market for adult use. This agency will meet this summer.
The measure also sets a date for the law to be passed on January 1, 2024. Retail sales would then begin as long as lawmakers reinstated the provisions that would enable a commercial market.
House Majority Leader Charniele Herring, an Alexandria Democrat, announced Saturday during the legislature that she and others will fight to ensure that Virginia legalization is not overturned. The provisions on social justice contained in the bill will have to be passed again next year.
Legalization in Virginia reflects the ripple effect occurring along the east coast after New Jersey voters approved adult marijuana on November 3.
The Virginia House of Representatives and the state Senate passed two separate legalization bills earlier this month, so a conference committee had to resolve the differences.
Marijuana Business Daily predicts Virginia’s adult sales will be between $ 400 and $ 500 million for the first full year of the program and between $ 1.2 and $ 1.4 billion for the fifth year.
Projections are based on no changes in the federal government’s legal stance on marijuana.
The legislation emphasizes licensing options for small and minority-owned local businesses.
A planned launch in 2024 would take place a year later than Northam wanted.
However, the state has ample time to set up the cannabis control agency and advisory board to oversee the market and develop a legal framework.
Subject to re-enactment next year, the legislation agreed by the Conference Committee would put a cap on licenses in the various sectors of the industry:
- Retail stores, 400
- Wholesaler, 25
- Production facilities, 60
- Cultivation equipment, 450
The measure also includes the following provisions:
- Vertical integration would be limited to small businesses.
- Social equity licenses would be distributed early in the licensing process. Qualified applicants would have to hold at least 66% of the shares in the company. The recipients would have access to low-interest loans to overcome the hurdle of raising capital.
- The sale of adult marijuana products is taxed at 21% on top of the standard government sales tax of 6%. The municipalities could charge an additional 3%.
Virginia only launched a commercial medical cannabis market last October.
Five vertical medical marijuana operators were approved, each dominating a separate area.
MMJ operators include three multi-state companies – Columbia Care, based in New York, Jushi Holdings, which is based in Florida, and Green Leaf Medical, which is based in Maryland – as well as a Virginia-based company called Dharma Pharmaceuticals.
A license is vacant after Los Angeles-based MedMen Enterprises, which was experiencing financial problems, was forced to give up its approval.
The Marijuana Business Factbook predicts that MMJ pharmacy sales in Virginia will be between $ 9 million and $ 11 million in 2021.
But the market could get a big boost later this year after Virginia lawmakers recently passed a law authorizing smokable flowers.
Jeff Smith can be contacted at [email protected].