Virginia Marijuana Sales Legislation Clears House And Senate In Identical Form, One Step Away From Governor’s Desk

The Virginia House of Delegates and Senate approved identical versions of legislation to legalize retail cannabis sales on Wednesday, putting the reform one procedural step away from the governor’s desk—actions that come a day after a committee’s amendments had threatened to upend bicameral agreement on the cannabis issue.

After either of the two chambers signs off on the legal sales bill passed on the opposite floor—a move expected to happen on Thursday—the measure will next proceed to Gov. Glenn Youngkin (R). The governor, however, has previously said he has no interest in moving forward with the Democrat-led plans.

After introducing competing bills—HB 698 and SB 448—at the beginning of the session, Democrats have spent recent weeks working to build consensus on a proposal and arrive at a compromise. After a whirlwind of amendments in various panels and on the chamber floors, that compromise has finally been reached.

“The floor substitute of this Senate Bill 448 is the product of a lot of work,” Del. Paul Krizek (D) said of the measure before the House on Wednesday. He thanked the legislation’s Senate sponsor, Sen. Aaron Rouse (D) “for working with me so that we don’t have to go into conference.”

“We just needed to get these last little bits ironed out,” added Krizek, who is the lead sponsor of the House bill.

While earlier versions of the measures shared many similarities, they differed on key issues such as when retail stores would open, the rate at which sales should be taxed, whether cultivators could grow cannabis outdoors and how social equity would be addressed.

Taxes were the final sticking point before Wednesday’s floor votes.

Under a compromise unveiled last week, both bills were amended to tax marijuana purchases at 9 percent, consisting of a 4.5 percent state tax and an optional local tax of up to 4.5 percent. But a Senate committee this week departed from that compromise, raising the proposed tax rate in HB 698 to just over 17 percent.

Floor substitutes adopted in both chambers Wednesday brought those provisions back into harmony. Now, both bills include a tax rate of 11.625 percent—8 percent for the state, an optional 2.5 percent tax for local governments and the 1.125 percent portion of state sales tax that funds schools.

Both chambers passed the legislation on thin margins and along party lines. Senators approved HB 698 on a 21–18 margin, and the House later voted 51–47 for SB 448.

In the Senate, Rouse joked that he was sorry to drop the nearly 100-page revised bill on colleagues.

“Let me apologize for how thick” the floor substitute is, he said. “This is what we do when we do not want to go to conference.”

Sen. Barbara Favola (D) told the chamber, meanwhile, that “several folks spent many hours working on this bill to bring it to a point where we have a compromise.”

“Parts of this bill we have seen before, probably during the past two or three years,” she said. “The difference is we’ve been able to blend some of the issues that were requested by the medical cannabis growers and also those that really want to bring marijuana to a general retail market.”

“This bill may not be perfect, but it’s pretty good,” continued Favola, who participated in negotiations around the final compromise. “It’s a very, very good framework that I think the governor should consider.”

Here’s what the latest versions of the legislation would do if enacted:

• Retail sales could begin as of May 1, 2025.
• Adults would be able to purchase up to 2.5 ounces of marijuana in a single transaction, or up to an equivalent amount of other cannabis products as determined by regulators.
• A state tax of 11.625 percent would apply to the retail sale of any cannabis product. Of that, 8 percent would go to the state, local governments would get 2.5 percent and 1.125 percent would fund schools.
• The Virginia Cannabis Control Authority would oversee licensing and regulation of the new industry. Its board of directors would have the authority to control possession, sale, transportation, distribution, delivery and testing of marijuana.
• Local governments could ban marijuana establishments, but only if voters first approve an opt-out referendum.
• Locations of retail outlets could not be within 1,000 feet of another marijuana retailer.
• Cultivators would be regulated by space devoted to marijuana cultivation, known as canopy size. Both indoor and outdoor marijuana cultivation would be allowed, though only growers in lower tiers—with lower limits on canopy size—could grow plants outside. Larger growers would need to cultivate plants indoors. Secure greenhouses would qualify as indoor cultivation.
• Only direct, face-to-face transactions would be permitted. The legislation would prohibit the use of other avenues, such as vending machines, drive-through windows, internet-based sales platforms and delivery services.
• Existing medical marijuana providers that enter the adult-use market could apply to open up to five additional retail establishments, which would need to be colocated at their existing licensed facilities.
• Serving sizes would be capped at 10 milligrams THC, with no more than 100 mg THC per package.
• No person could be granted or hold an interest in more than five total licenses, not including transporter licenses.
• People with convictions for felonies or crimes involving moral turpitude within the past seven years would be ineligible to apply for licensing, as would employees of police or sheriff’s departments if they’re responsible for enforcement of the penal, traffic or motor vehicle laws of the commonwealth.
• An equity-focused microbusiness program would grant licenses to entities at least two-thirds owned and directly controlled by eligible applicants, which include people with past cannabis misdemeanors, family members of people with past convictions, military veterans, individuals who’ve lived at least three of the past five years in a “historically economically disadvantaged community,” people who’ve attended schools in those areas and individuals who received a federal Pell grant or attended a college or university where at least 30 percent of students are eligible for Pell grants.
• “Historically economically disadvantaged community” is an area that has recorded marijuana possession offenses at or above 150 percent of the statewide average between 2009 and 2019.
• Tax revenue from the program would first cover the costs of administering and enforcing the state’s cannabis system. After that, 60 percent of remaining funds would go toward supporting the state’s Cannabis Equity Reinvestment Fund, 25 percent would fund substance use disorder treatment and prevention, 10 percent would go to pre-K programs for at-risk children and 5 percent would fund a public health and awareness campaign.
• Adults could also share up to 2.5 ounces with other adults without financial remuneration, though gray-market “gifting” of marijuana as part of another transaction would be punishable as a Class 2 misdemeanor and a Class 1 misdemeanor on second and subsequent offenses.
• A number of other new criminal penalties would be created. Knowingly selling or giving marijuana or marijuana paraphernalia to someone under 21, for example, would be a Class 1 misdemeanor, punishable by up to a year in jail and a maximum $2,500 fine, as would knowingly selling cannabis to someone reasonably believed to be intoxicated. It would also be a Class 1 misdemeanor to advertise the sale of marijuana paraphernalia to people under 21.
• Knowingly obtaining marijuana on behalf of someone under 21 would be a Class 1 misdemeanor.
• People under 21 who possess or use marijuana, or attempt to obtain it, would be subject to a civil penalty of no more than $25 and ordered to enter a substance use disorder treatment and/or education program.
• Illegal cultivation or manufacture of marijuana, not including legal homegrow, would be a Class 6 felony, punishable by up to five years imprisonment and a $2,500 fine.
• People could process homegrown marijuana into products such as edibles, but butane extraction or the use of other volatile solvents would be punishable as a Class 1 misdemeanor.

Republicans during the floor sessions Wednesday said they were skeptical of the latest proposal.

Sen. David Suetterlein (R) said the tax rate in the legislation “concerns me greatly,” arguing that it is “lower than the tax you have to pay for prepared rotisserie chicken” at grocery stores like Kroger.

“I don’t think it’s right that we’re going to continue taxing working families more for rotisserie chicken than we will for cannabis going forward,” he said.

Del. Todd Gilbert (R) meanwhile, claimed that “the idea that any of this is going to get rid of the black market is laughable.”

“In every state that’s legalized it,” he claimed, “the black market is, if anything, more robust, larger and more dominant.”

Gilbert did not cite evidence for the claim, though he pointed to difficulties with the legal rollout in California, where many local governments have banned licensed stores.

Krizek responded that he “wouldn’t be introducing this bill, and I doubt any of us would be voting for it, if we didn’t believe that this could eradicate or put a severe dent in the black market.”

“The fact of the matter is that drug dealers don’t ID. They’re not checking for age. Those products aren’t lab tested for purity or potency. They don’t accurately label them. And they don’t use childproof packaging. This bill mandates all of those things,” he continued. “We need to bring this into a regulatory framework that will protect our children and our commonwealth, and that’s what I’m trying to do here.”

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Even if the legislature does pass a consensus legalization bill this session, it will still have to get past the governor, who has sent mixed messages around legalization. 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 the Democrat-led plans.

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

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.

Following last year’s elections, Democrats took control of both chambers of the legislature.

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.

Meanwhile, the state legislature earlier this week passed a bill that would protect public sector workers, such as government officials and teachers, from being fired for medical marijuana use, sending the measure to the governor’s desk.

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