Virginia lawmakers have recently given their final nod to legislation aiming to legalize the retail sale of cannabis, slated to commence from May 1, 2025. This decision, following several weeks of negotiations, now awaits the approval of Governor Glenn Youngkin.
Both the Senate and House of Delegates endorsed similar versions of the measures on Feb. 28, 2024, reconciling differences after amendments from a committee in the Senate threatened to disrupt the agreement between the two chambers. Later, each chamber approved the bills from the other, forwarding them to the governor for potential enactment.
A prior Democratic-led measure from 2021 allowed for the possession, use and restricted cultivation of marijuana in Virginia. However, GOP legislators obstructed the necessary reconstruction of regulations for retail sales when they took control of the governor’s office and the House, which resulted in the creation of illegal establishments to satisfy consumer demand.
Even with legislative approval, retail sales are not guaranteed to be legal. While Youngkin has not stated whether he intends to veto the measure, he made it clear last month that he was not interested in legalizing Democratic-led cannabis sales.
Democrats introduced competing bills (SB 448 and HB 698), but in recent weeks, law makers have worked towards consensus and compromise. This week marked the culmination of multiple amendments in committees and on both floors until a consensus was eventually reached.
While there were some parallels between the prior versions of the laws, there were also notable differences, including the approach to social equality, the taxation rate, the opening time for retail establishments and the authorization for outdoor marijuana growing. The tax issue was the final obstacle before the votes. Last week, a compromise was proposed that would impose a 9% tax on cannabis sales — 4.5% state tax and an optional 4.5% local tax. However, a committee in the Senate broke from the agreement, raising the tax rate in HB 698 to a little more than 17%.
Subsequent floor amendments in both chambers then restored harmony to the tax provisions. As a result, the combined tax rates for both measures are now 11.625% — 8% state tax, 2.5% optional local tax and 1.125% state sales taxes to fund education.
The measures narrowly passed both chambers. The Senate passed HB 698 by a vote of 21 to 18, while the House approved SB 448 by a 51-to-47 vote. The amended measures were later approved by both chambers by the same voting margins.
The entire cannabis industry, including leading companies such as SNDL Inc. (NASDAQ: SNDL), is likely to welcome the eventual launch of recreational marijuana sales in Virginia as that would be a major step forward in rolling back prohibition.
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