By Brandon Martin
Following the legalization of recreational marijuana, set to take limited effect July 1, lawmakers are providing more details about what the legislation entails.
During an April 20 post-legislative update with the Martinsville-Henry County Chamber of Commerce, delegates spoke about the passage of the law which makes Virginia the first state in the south to legalize marijuana for recreational purposes, and the 16th state overall.
Del. Les Adams, R-Chatham, said the bill was more than 300 pages long.
“The governor’s top priority this year, which I thought was way out of line, was legalizing marijuana,” Adams said. “The bill that came out was hundreds of pages long. It was unlike anything that you typically see in Virginia legislation. It was more of a type of omnibus bill that created this whole new regulatory scheme.”
Adams said the original legislation was to take effect after a three-year period.
“That was the bill that passed in the regular session,” Adams said. “By the time we had come back for the reconvening session, the governor had sent the bill back wanting an immediate legalization component. The explanation for that was lacking. It just seems there were some members that wanted that in the majority, went to the governor and insisted on it and they got it.”
Now, marijuana will become legal for possession “before this system of regulation can catch up” Adams said. “I don’t think that is good for society. I don’t think that is good if you are a parent, like I am. There are new challenges that you face and that’s now going to be on top of the challenges that we’ve had from the governor’s executive orders that have limited people’s ability to engage in business and to go on with their lives.”
Del. Danny Marshall, R-Danville, said he opposed the legislation for different reasons than his last vote to decriminalize the drug.
“In 2020, the General Assembly passed a bill for the decriminalization for marijuana,” Marshall said. “I voted for that. There was a significant difference between what was in 2020 and what happened here in 2021.”
With decriminalization, Marshall said possession of marijuana would only amount to “a small fine.”
He said his biggest concern came from the potential for increased impaired driving.
“If someone is driving a car and gets pulled over, there is an instant test that you can get on the side of the road” that “you can see if someone is impaired,” Marshall said. “The problem is we have tinkered with that number over a number of years for alcohol. The problem with marijuana is that if someone is high on marijuana and gets pulled over, there is no instant test to see if that person is impaired.”
Marshall said the plan, as proposed, “is just not well thought out at all.”
For instance, Marshall said Virginians will be allowed to grow up to four plants of marijuana.
“You cannot sell it, you cannot give it away or etc.,” Marshall said. “The real question is ‘how do you grow those four plants? Where do the plants come from? Who do the seeds come from?’ You have to get those from out-of-state, and once you go out-of-state to get those, they have legalization in D.C., but if you are transporting those plants or seeds across the border, then you’ve committed a federal crime.”
During a separate webinar by Gentry Locke Consulting, other law consultants expanded on the interplay between federal and state law enforcement.
Greg Habeeb, former member of the Virginia House of Delegates and partner at Gentry Locke, said “we have to acknowledge that cannabis remains a Schedule I drug under DEA guidelines.”
This means that under federal law, the “possession, consumption, manufacture, and cultivation of cannabis” is still illegal.
Under previous administrations, Habeeb said the policy was to not pursue any investigations into cannabis use if it was legal under state law.
“We haven’t really seen a major change in federal action,” Habeeb said, adding “the Biden administration has not issued a formal policy out of DOJ” but it has been indicated that staff “doesn’t think it’s the federal government’s job” to be investigating and prosecuting marijuana cases.
Habeeb said this doesn’t mean that the federal government is completely hands off with marijuana.
“There are many ways the federal government will continue to regulate and oversee the cannabis industry,” Habeeb said.
Patrice Lewis, government affairs specialist for Gentry Locke, gave an overview of the new laws relevant to Virginians.
Beginning July 1, “it is legal to possess up to an ounce of marijuana and also cultivate up to four plants in the home,” Lewis said. “However, widespread sale and distribution of marijuana is not permitted until July 2024.”
When referencing marijuana, Lewis said “we are talking about the seeds all the way to processed and manufactured marijuana.”
Another point to note is public consumption is still prohibited under the law.
“You’ll still receive a fine if you do have public consumption of marijuana,” she said.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) is warning gun owners about the implications of marijuana use on Second Amendment protections.
ATF states that under federal law, it is prohibited for any person who is “an unlawful user of or addicted to any controlled substance” from shipping, transporting, receiving, or possessing firearms or ammunition.
Further, it is unlawful for any person to sell or otherwise dispose of any firearm or ammunition to any person “knowing or having reasonable cause to believe that such person is an unlawful user of or addicted to a controlled substance.”
Virginia Cannabis Control Authority
The authority is a five-member board, selected by the Governor, which serves terms of up to five years but no more than two consecutive terms.
“Anybody that is interested in becoming a board member cannot be an active licensee,” Lewis said.
Lewis said the authority is independent and responsible “for everything from cultivation to processing and distribution” of cannabis, to include licensing.
There are four licenses granted by the cannabis authority: cultivation, product manufacturing, wholesale and retail.
“There are a limited number of those licenses,” Lewis said, adding that the push for diversity under the legislation includes further restrictions to account for vertical integration (multiple licenses within different categories), geographical disbursement, and social equity among applicants.
Getting into the cannabis industry doesn’t come cheap, according to Lewis, who said there are fees, a potential combined 24 percent state and local tax.
Lewis said the authority has “a broad discretion” over the industry “so it behooves anyone interested in getting into this industry to get to know the board so that they understand but also because they are able to have their voices heard when they are putting together the regulations.”
Licensing
Matthew Moran, director of government affairs for Gentry Locke, spoke about the specific requirements for licensing.
“A cultivation facility license essentially applies to anyone that wants to cultivate, label and package retail marijuana, immature marijuana plants, marijuana seeds, or anything that deals with the original growing of the cannabis plant is related to a cultivation license,” Moran said.
Cultivation license holders can then transfer to the other three license holder types.
“Product manufacturing is very different from paraphernalia,” Moran said. “When we use the term product manufacturing, we are talking specifically about marijuana products. Products that are blended, infused, compounded or prepared.”
This applies to edibles and oils, he added.
“Marijuana wholesale licenses are for facility license holders that are able to take possession of retail marijuana, retail marijuana products, mature marijuana plants, and marijuana seeds from a cultivation facility or a manufacturing facility and then transfer it to another wholesaler or to a retail facility,” Moran said.
The final license type, retail, is the most commonly sought license, Moran said. “It’s the front of the industry. The shops you would imagine seeing pop up.”
Retailers can “take possession of marijuana from a cultivator, wholesaler” any of the products already mentioned.
There are only a certain number of each license which can be granted by the authority, Moran said. There are 450 cultivation licenses, 60 product manufacturing licenses, 25 wholesale licenses and 400 retail licenses.
“This is a very limited market,” Moran said. “These are going to be very competitive licenses.”
Compared to markets in Oregon and Colorado which have roughly 16.5 and 14.1 retail shops per 100,000 people respectively, the Commonwealth will only have 4.7 retail shops per 100,000 people.
Restrictions and Requirements
“Individuals holding ABC licenses of any kind may or may not be denied licensure.” Moran said. “We know that the General Assembly intends, at the retail level, for there not to be co-location between ABC license holders and cannabis retail shops.”
Additionally, Moran said previously convicted felons would be barred from licensure.
There also are restrictions on where the facilities can be operated. These restrictions include near schools, hospitals, parks, and child daycare centers.
“The application is going to have to disclose the real estate where the cultivation facility, product manufacturing facility, wholesale or warehouse distribution center, or retail facility is located in association with the license,” Moran said. “It’s a very, very important part of the application process.”
Generally, licenses will be issued to applicants in only one of the categories.
Timeline
The process for full legalization will begin this year with the establishment of the Virginia Cannabis Control Authority.
“It’s going to take some time before the actual authority is up and running,” Lewis said. “They are expecting regulations will happen next year. Then another year before they can accept licenses, and another year before we are allowed to see the sale of marijuana within the state of Virginia.”
Lewis said those interested in the industry “should start now” because the timeline could be expedited.
Local Referendum
Lewis said localities can petition the circuit court to have a referendum added to the November ballot which says “shall the operation of retail marijuana stores be prohibited” in the respective locality.
“If a majority of people vote ‘no,’ that it shall not be prohibited, then there are no more referendums that are allowed and 60 days afterwards, they can start the retail sales at that locality,” Lewis said. “If they say ‘yes,’ that means that it is prohibited, and you have another additional four years before you are able to have another referendum on the ballot.”
According to Lewis, some localities have already discussed adding the provision to the ballot this year.
“If you are thinking about retail marijuana in your locality, if you are supporting that, it is imperative that you start now, the conversations with local government as well as start some grassroots lobbying,” she said.
County Administrator Tim Hall said he was aware of the passage about the local referendum.
“There’s been no discussion yet, either among staff or with the Board of Supervisors, on how to proceed,” he said. “I’m sure that discussion will take place at some point.”
