The House of Delegates on Friday gave preliminary approval to legislation that would create an adult-use cannabis market in Virginia. HB 698, sponsored by Del. Paul Krizek, D-Fairfax County, advanced on a voice vote and is now slated for a third and final floor vote on Monday.
“We only get one shot at growing a retail market in an orderly fashion, and we have to get it right. For that reason this bill establishes a realistic starting date and it increases the number of licensees incrementally,” Krizek said on the House floor Friday.
Democrats legalized the possession of recreational marijuana in the commonwealth in 2021, but the state has upheld a prohibition on regulated sales and purchases, effectively creating an illicit market that has skyrocketed from $1.8 billion a year to $2.4 billion in 2023, according to New Frontier, a group that studies the cannabis industry.
Krizek’s proposal, which has undergone several changes in the last few weeks, would issue licenses to allow up to 60 microbusinesses that currently are not among the state-sanctioned sellers of medical cannabis to start cultivation by July 1 in preparation for retail sales beginning Jan. 1, 2025.
On the same date, five medical marijuana companies would also be allowed to begin retail sales, and they would be required to provide grants of up to $400,000 to six micro-businesses each and help those businesses get established through acceleration programs.
“Even the product that they sell to these micros has to be at cost, they can’t make any money from that,” Krizek said, referring to the medical marijuana businesses. All other retailers would be allowed to begin sales on July 1, 2025, and small hemp producers would get expedited consideration for retail marijuana licenses.
Krizek said that his legislation includes “many safeguards to prevent monopolization,” adding that based on collections from Maryland’s legal cannabis market, a Virginia adult-use marketplace could raise around $15 million in tax revenue in the first six months and potentially $50 million in the first year.
“And the bill doesn’t create any mandatory minimums, but it does have misdemeanors for things like selling to minors, selling without a license, diverting product or violating certain regulations,” Krizek said.
Republicans, however, remain skeptical of the legislation, and they have shown little open support after Gov. Glenn Youngkin told reporters last month that “this is an area that I really don’t have any interest in.”
On the House floor Friday, Del. Rob Bloxom, R-Accomack County, expressed concern with the provision in Krizek’s bill allowing localities to opt out of a legal cannabis market if each of the 17 incorporated towns in two counties in his district were permitted to hold a voter referendum on the issue.
“I don’t need to have two towns on the Eastern Shore become distributors of marijuana to the rest of the county that doesn’t want it. I just have trouble with that,” Bloxom said.
Krizek responded that referendums simply offer localities an option to participate in the market or decide against it. “If that’s what they want to do, they have that option here,” he said.
But the fate of Krizek’s proposal remains unclear even if it makes it out of the House next week, because a companion bill in the Senate, sponsored by Sen. Adam Ebbin, D-Alexandria, was incorporated into a rival measure by Sen. Aaron Rouse, D-Virginia Beach, due to concern by social equity advocates that it would give medical cannabis producers an unfair advantage.
Rouse’s SB 448, which is slated for a floor vote in the Senate next week, would legalize cannabis sales starting on Jan. 1, 2025, and allow all medical marijuana companies already operating in Virginia and new businesses to begin at the same time.
But Rouse’s legislation also faced pushback from marijuana advocacy groups and opponents alike when lawmakers rewrote the code to align the penalties for the unlicensed sale of cannabis products with those that apply to alcohol.