Virginia Cannabis Legalization - Part 1
Written by CMG News Contributor, Sebastian Wicker
Virginia’s General Assembly has been debating cannabis legalization for the past 30 days. Both the House and Senate approved their respective bills (HB 2312 & SB 1406) on Friday, February 5th. But before anyone gets too excited, signs point to a longer wait. What was one bill proposed by Governor Northam, (carried by Delegate Herring and Senator Ebbin) has resulted in two competing market structures that must be resolved during the special session in the conference committee.
Both sides agree that:
Virginian’s should be allowed some amount of home grow;
Virginia needs its own department for regulatory oversight (rather than being nested under the ABC or VDAC);
Social equity is a priority and that qualified applicants must own 66% of their license (originally 51%);
You cannot own more than 5 licenses;
10% or more ownership qualifies you as a “principal owner”;
Localities can apply a privilege tax of up to 3%; and,
Adult-use sales won’t start until January 1st, 2024 (originally set for January 1st, 2023).
It’s a brutally short summary of a few hundred pages, but a lot is still subject to change. The Senate has stuck with vertical integration, but left license caps and license types up to the future regulatory board. The House opted for no vertical integration and suggested their own license caps:
Based on a population of 8.5 million, this is a reasonably sized market, to begin with. For comparison, Illinois who recently legalized only allowed for 75 Retail licenses to start. Unfortunately, the House has required all product movement to go through the 25 Wholesalers which puts an enormous amount of control in the hands of a few people. The Governor’s colleagues, however, have made it clear that vertical integration will be in the final bill. This won’t come without a concession so it will be interesting to see what the final trade is.
For those curious about getting into the market, the bills suggest applications will start being accepted on January 1st, 2023. This may change by a few months depending on the future regulatory board, but it’s a good timeframe to plan around. Just keep in mind that you’ll need to qualify as a social equity applicant or have a partner(s) who does. Those qualifications are likely to change before this bill is sent for the Governor’s signature, so there will be a more in-depth analysis once we know the final score.
Sebastian is a Regulatory Compliance Specialist and Technical Writer. He is the Founder and CEO of LTF Consulting, a company that provides project management, licensing, and compliance services to the legalizing cannabis industry. If you would like to contact him directly, you can reach him at firstname.lastname@example.org.