Two lawmakers sponsoring rival proposals that would create a legal adult-use cannabis market in Virginia appear to have reached an agreement on one of the measures’ biggest sticking points: the start date for medical marijuana companies and microbusinesses to begin selling their product, and who gets to go first.
Once details will be hashed out over the coming days, the compromise would allow all retailers to get into the cannabis business by March 1, 2025 — three months later than originally planned — giving the Cannabis Control Authority more time to set up a market. And it would level the playing field for all businesses, big and small.
Del. Paul Krizek, D-Fairfax County, who sponsored the legislation in the House, said in an interview Tuesday that he has agreed to align a provision in his HB 698 relating to start times with that in SB 448, a proposal by Sen. Aaron Rouse, D-Virginia Beach.
In its current form, Krizek’s measure would give the six existing medical companies a six-month head start, allowing them to start selling on July 1 of this year. Each would be required to provide grants of up to $400,000 to six micro-businesses and to help those businesses get established through acceleration programs, which would follow on Jan. 1, 2025.
Rouse, however, has been pushing back against that provision, arguing that it would give the marijuana companies an unfair advantage over smaller companies and startups.
“One of my biggest factors is not allowing pharmaceutical companies to get their head start to monopolize the industry, because if that were to happen, you would lessen that equity part that is so needed. You would actually leave a smaller piece of the pie for those who historically only fed on the crumbs,” Rouse said in an interview last week.
Krizek said Tuesday that it was never his intention to give the medical companies an unfair advantage, but that he wanted to create a system that benefited the smaller businesses. “We don’t want anybody to have a head start, we want to make sure that everybody starts at the same time,” he said.
“It is really important to my caucus that we are taking care of those individuals and families who have been directly impacted by the war on drugs and who were having their lives upended,” Krizek said. “This bill will be a chance for them to be able to start their own business and be part of a successful venture selling cannabis in a safe and regulated market.”
Greg Habeeb, a former Republican member of the House of Delegates from Salem and an attorney and lobbyist who helped draft Rouse’s bill, called the latest negotiations “a good sign of the General Assembly’s commitment” to the legislation, and said that by trying to drive this conversation, lawmakers wouldn’t just leave it up to a conference committee to broker a deal.
“Nobody gets input in a conference committee,” Habeeb said. “But if you’re doing it this way, the bills will go through the committee process, and that’s a very healthy way of doing it.” If successful, two identical bills would be heading to the governor’s desk before the legislature adjourns in March.
However, removing the head start for the medical companies in Krizek’s proposal would eliminate the so-called incubation program, which was set up to provide grants and training programs for smaller businesses and new entrepreneurs in historically disadvantaged communities seeking to get into the market.
“Senator Rouse has been pretty clear that he doesn’t want an incubation model where the medical providers are directly funding micro-businesses,” Habeeb said. “What the elected officials have expressed is an agreement that we ought to have a way to support those small businesses, but agreed that it shouldn’t be driven by one market player.”
Instead, the Cannabis Control Authority could charge the top tier cultivators additional fees and create an accelerator program, Habeeb said. And the $20 million in funding for the agency proposed by House Democrats in the biennial state budget could also go toward funding startups.
Krizek said that between the proposed general fund allocation for the authority, taxes and licensing fees, enough resources would be available to help micro-businesses get started.
“And not just cash, but also training and everything else. A lot of that the CCA can do, so I think we’re really close,” he said.
Habeeb remains hopeful that the legislation, in its final form, could win over more Republicans, who so far have shown little enthusiasm for the efforts from Democrats to deliver a clean cannabis bill.
“These bills have potential to pick up more Republicans along the way,” Habeeb said. “There is still a long way to go, this isn’t a final decision, but my clients are not investing time and money in some type of academic exercise, they would like to put forward a piece of legislation and then try to convince the governor’s office why it makes Virginia better.”
But Del. Todd Gilbert, R-Shenandoah County, the House minority leader, on Tuesday remained unmoved by the proposals. “The governor said he is not interested in signing a bill like that, and it sounded definitive,” Gilbert said, referring to remarks from Gov. Glenn Youngkin last month. “This should end all the speculation of what’s going to happen, regardless of how the votes turn out.”
However, some political observers have said that Youngkin might use some of the more contentious bills that Democrats are sending his way — including cannabis legislation — as bargaining chips for what could advance as his administration’s legacy project: the proposed sports arena in Northern Virginia that would become home to the NBA’s Washington Wizards and the NHL’s Washington Capitals.
“That deal is between the governor and Democrats,” Gilbert said.