The next phase of Virginia’s recreational marijuana retail market took a step forward last week. The Senate finance committee at its Thursday meeting approved allowing the state’s existing medical cannabis operators to jumpstart adult-use sales next year.
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, reports Richmond Biz Sense.
Starting Sales A Year Early?
Under Sen. Adam Ebbin’s Senate Bill 313, the state’s medical marijuana operators would be able to start to sell adult-use Cannabis on Jan. 1, 2023. The adult-use retail market is currently set to kick off a full year later than that.
The legislation would limit early sales only to the state’s current medical marijuana dispensaries, 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. It had initially called for industrial hemp processors to likewise be able to get in on the action early and had set the participation fee at a million bucks.
But hemp processors got the ax and the fee increased to $6 million as the bill worked its way through Senate committees this month.
“I Did Have Hemp In There Originally”
Ebbin said hemp processors were removed because medical marijuana 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 attorney Greg Habeeb at that meeting criticized the removal of hemp processors from the bill. Habeeb characterized the move 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. He added that most of his clients are food-grade certified.
Four Active Medical Operators Eligible
The legislation would limit medical operators to 80,000 square feet of cultivation space in existing facilities for retail marijuana. Medical operators will sell adult-use Cannabis out of existing growing-and-processing facilities as well as the five satellite dispensaries allowed under Virginia’s medical program.
Virginia has four active, eligible medical operators. They are 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 must create incubator programs if they embark on early sales. These incubators establish small independent Cannabis businesses that qualify as social equity applicants.
Adult-Use Cannabis Sales Taxed At 21%
The bill would tax adult-use Cannabis sales at 21 percent. That tax and the fee revenue would flow to the Cannabis Control Authority.
Those funds will go to loans for startup marijuana businesses qualifying as social equity applicants.
Local governments also have the option to tax Cannabis another 3 percent. The early-sales legislation would sunset with the rollout of the market.
Creating The Legal Market
Before the adult-use sales can begin, elements creating that legal market must be “reenacted.” Ebbin’s Senate Bill 391 does 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. It allows the Cannabis Control Authority to determine the number of licenses permitted for most marijuana business types.
The exception would be retail dispensaries, which SB 391 would cap at 400 licenses.
Social Equity Definition Narrowed
Lawmakers tweaked the definition of social equity applicants in the bill. It narrows the definition in ways intended to focus the bill’s measures to support startup Cannabis businesses operated by people most affected by marijuana law enforcement.
In the House of Delegates, several marijuana bills, including a House version of reenactment from Dels. Michael Webert and William Wampler and a bill requiring local referendums before marijuana retailers could open, have yet to roll forward.
GOP House Majority Leader Terry Kilgore said last week he didn’t expect the House would have time to vote on the legislation before Tuesday. That’s the deadline for both the House and Senate to pass them to the other chamber before the governor’s consideration.
But any inaction in the House won’t prevent both chambers from voting on SB 391. Kilgore the caucus will wait for the Democrat-controlled Senate to send its own bill over, reports 13 News Now.