Details On Virginia Marijuana Sales Compromise Offer Emerge As Lawmakers Work To Close Gaps Between Competing Bills

Details about a proposed compromise bill to legalize retail cannabis in Virginia are beginning to emerge ahead of a planned negotiation session set for Thursday.

While not yet final, the compromise offer—meant to bridge gaps between two competing measures passed last week by the House and Senate—would eliminate provisions in the current House bill that would allow some businesses to launch sales earlier than others while also slightly pushing back the timeline for when the recreational market would open.

Del. Paul Krizek (D), the lead sponsor of HB 698, confirmed some details of the proposed compromise to Marijuana Moment via email on Wednesday.

Under the revised plan, Krizek said, retailers would be able to open for business as soon as March 1 of next year—a slight delay compared to his current bill, which would let existing medical marijuana operators, five hemp businesses and up to 60 microbusinesses start sales on January 1, 2025. Under that plan, additional retailers wouldn’t be licensed until later in the year.

Another topic expected to be taken up during Thursday’s closed-door negotiations include social equity. In the current House bill, an accelerator program would provide $400,000 in startup capital to dozens of equity-focused microbusinesses. Existing medical marijuana providers would each need to provide $2.4 million toward those businesses in order to open for adult-use sales on January 1.

Justice advocates say those equity provisions are crucial, but others are concerned the details could prompt a veto from Gov. Glenn Youngkin (R).

“We have agreed to the start date but need to see the crafting of the equity language to ensure that it is not setting up to be an automatic governor veto,” Jason Blanchette, president of the Virginia Cannabis Association, told Marijuana Moment on Wednesday.

The compromise is expected to attempt to preserve funding for equity businesses but draw money from state resources rather than medical marijuana operators.

Others have noted that Sen. Aaron Rouse (D), lead sponsor of the Senate legal sales bill, SB 448, could still reject the proposed compromise from the House.

“Sen. Rouse has been pretty clear that he doesn’t want an incubation model where the medical providers are directly funding micro-businesses,” lobbyist Greg Habeeb told local news outlet Cardinal News, which first reported the negotiated March 1 start date.

“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,” added Habeeb, who’s also a former Republican member of the state’s House of Delegates.

Rouse’s office has not responded to multiple requests for comment from Marijuana Moment in recent weeks.

House minority leader Del. Todd Gilbert (R), meanwhile, has emphasized that the governor will likely veto any Democrat-led bill—a prediction shared by some legalization advocates.

“The governor said he is not interested in signing a bill like that, and it sounded definitive,” Gilbert told Cardinal News. “This should end all the speculation of what’s going to happen, regardless of how the votes turn out.”

While the governor has not explicitly said he’ll veto a retail marijuana bill, he signaled last month that he doesn’t have “any interest” in legalizing sales under either of the Democrat-led plans.

When he was first elected, however, Youngkin said he was “not against” allowing commercial sales categorically.

JM Pedini, development director for the advocacy organization NORML and executive director of the group’s Virginia chapter, told Marijuana Moment earlier this week that as negotiations on legal sales proceed, supporters will need to craft a proposal that is palatable to Youngkin and GOP lawmakers.

“Hopefully, the compromise will be able to garner bipartisan support,” Pedini said. “A bill that passes without any Republican votes is as good as dead on arrival at Gov. Youngkin’s desk.”

But Gilbert doesn’t seem interested in even considering the current proposals, telling Cardinal News that dealmaking around legal sales “is between the governor and Democrats.”

Here are some of the key ways the two bills differ in their approaches to regulated cannabis sales:

• Priority licensing: The House bill would allow some licensees to open sooner than other applicants. Specifically, it would let medical marijuana operators, up to 60 equity-focused microbusinesses and up to five hemp businesses to begin legal sales on January 1, 2025, while other operators would have to wait until July 2025 to obtain licenses. The Senate bill, by contrast, would not allow any group of retailers to have an early start on sales.
• Timing: Under the House bill, some retailers would be able to open retail marijuana stores on January 1, 2025, with licensing of eligible businesses beginning in July of this year. Licensing of other retailers, however, would not begin until July 2025. The Senate bill would also begin licensing stores as soon as July of this year but would not allow retail sales to begin until after January 1, 2025.
• Social equity: Both bills have provisions that provide some advantage to people from so-called “historically economically disadvantaged areas” that have been disproportionately policed for marijuana in the past. But the House measure includes specific provisions that would prioritize licensing of people with past cannabis convictions, as well as their family members. The House measure would also provide $400,000 in startup capital, as well as other business support, to each of 30 equity-owned microbusinesses. Medical marijuana providers would be required to pay those funds to microbusinesses in order to be eligible to open for sales in January.
• Tax rates: The House bill would tax marijuana at a rate of up to 9 percent, split between state and optional local taxes. The Senate bill would create a maximum tax rate of nearly double that—17.5 percent—which would consist of a 12.5 percent state excise tax, up to a 3.5 percent local tax that municipalities could impose and the 1.125 percent portion of Virginia’s sales tax that funds K–12 education.
• Outdoor cultivation: Outdoor grows would be banned entirely under the House bill, while the Senate bill would allow smaller cultivators to grow outdoors. Larger grows under both bills would be required to be indoors.
• Criminal penalties: Justice reform advocates had preferred the House bill over the Senate’s ever since the Senate version was amended to include a mandatory minimum penalty in some cases. That provision has since been removed, however. Currently both measures create new criminal charges for marijuana-related activity, but the House bill contains more restrictive language and more severe penalties in some cases.

Use, possession and limited cultivation of cannabis by adults is already legal in Virginia, the result of a Democrat-led proposal approved by lawmakers in 2021. But Republicans, after winning control of the House and governor’s office later that year, subsequently blocked the required reenactment of a regulatory framework for retail sales. Since then, illicit stores have sprung up to meet consumer demand.

Asked about the possibility of a veto, Krizek told Marijuana Moment in an interview Tuesday that his job is to craft the best possible legislation, not concern himself with how the governor might receive it.

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“I don’t craft bills based on what I think the governor is going to do,” he said. “All I can do is try to craft the best legislation possible and hope that it’s compelling enough that the governor would would either sign it or…just let it become law.”

If Youngkin does veto a legal sales bill, however, Krizek said he’ll push the issue again next year.

“Yes,” he told Marijuana Moment.” I will keep bringing this back until we pass a bill that does what we’re trying to do.”

A sales bill did advance through the Democratic-controlled Senate last session, but it stalled in committee in the House, which at the time had a GOP majority.

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Photo courtesy of Chris Wallis // Side Pocket Images.