Both chambers of the Democratic-controlled General Assembly passed bills on party-line votes that would start sales in May 2025 and tax products at more than 11.5%
RICHMOND, Va. (WRIC) – Virginia Democrats reached a new compromise on a legal retail cannabis market to start recreational sales in May 2025, a proposal met with Republican skepticism that still must face a disinterested Gov. Glenn Youngkin.
The legislation to create an adult-use cannabis market agreed to by state Democrats passed both the Democratic-controlled House of Delegates and Senate along party lines on Wednesday.
It was slightly different than the deal Del. Paul Krizek (D-Fairfax County) and state Sen. Aaron Rouse (D-Virginia Beach) — the two lawmakers who sponsored bills in their respective chambers — announced less than a week before.
Described as the “product of a lot of work” by Del. Krizek, the sponsor of the Virginia House’s version of the bill, the new agreement imposes a higher retail tax rate for cannabis products than the deal shared on Feb. 22.
Instead of the 9% tax in that deal, Krizek said the new agreement between House and Senate Democrats proposes subjecting products to an 11.625% tax rate (8% for the state’s general fund, a 2.5% local option and 1.125% towards K-12 education funding). The higher tax rate, which Krizek called an “eleventh-hour” change, came after Senate Democrats proposed a 17% rate.
Virginia legalized cannabis more than two years ago, allowing people 21 and older to possess small amounts. And while Virginians can buy cannabis at dispensaries through the state’s medical program, there’s no way to buy it for recreational use.
Krizek said Wednesday that the agreement between Democrats would allow the market to be established in “a responsible and thoughtful way. Rouse and Krizek said the compromise would allow lawmakers to avoid sending the bill to a conference committee, which would have set up further talks over its details.
The new legislative compromise was unchanged on when retail sales could begin. It calls for applications for prospective retailers, processors, and other businesses to get licenses to open on Sept. 1, 2024, with the market opening on May 1, 2025.
The start dates, Krizek said, ensure that the medical cannabis industry doesn’t get the head start that lawmakers and cannabis advocates raised concerns over, which Krizek’s initial bill did.
Like the previously announced compromise, Krizek said the proposal comes with “race-neutral” license preferences for micro-businesses that are economically disadvantaged, “including persons who’ve suffered hardship or loss due to this country’s war on marijuana.”
This micro-business program, to be overseen by the Cannabis Control Authority, was slated to get 100% of its funding in the first year from fees collected from licensees under Democrats’ first compromise, Krizek said. The new proposal now calls for 75% of the program’s funding to come from license fees collected from July 2024 to July 2025.
Krizek and other Democrats have framed the proposal to open an adult-use retail cannabis market as a way to combat the illicit market, saying it would help boost public safety by setting rules on buying and testing products.
Republicans who spoke against the legislation Wednesday, like House Minority Leader Todd Gilbert (Shenandoah), called the idea of eliminating the illicit market “laughable,” arguing it would only bolster the illegal market and could have consequences for taxpayers.
“So be careful what you wish for,” Gilbert said before Wednesday’s vote after pointing to a story about California offering $100 million to help its legal cannabis industry.
Sen. Rouse, the sponsor of the Virginia Senate’s bill, said before the Senate’s vote Wednesday that the proposal “does not legalize cannabis” but “regulates an existing market,” a recurring argument made by Democrats and proponents of the effort.
Youngkin has made it clear that he doesn’t want a cannabis retail market in Virginia, but hasn’t directly said whether he would sign, veto or amend the legislation. When asked whether the governor would sign or veto the proposal, Youngkin spokesman Christian Martinez only referred 8News to comments the governor made on the first day of the 2024 General Assembly session.
“I’ve said before, this is an area that I really don’t have any interest in,” Youngkin told reporters on Jan. 10 about opening Virginia up for retail recreational cannabis sales.
With the governor needing to work with Democrats on his priorities, particularly his hopes of bringing a proposed $2 billion sports arena and entertainment district to Alexandria, he could compromise on some of their priorities, like the cannabis market bill and minimum wage hike.
The 2024 legislative session is expected to end on March 9. Youngkin must either sign, veto, propose changes to or leave bills without a signature by April 8 before the General Assembly reconvenes on April 17 to take up his amendments and vetoes.
