Virginia Legislature’s changeover spurs hopes for adult-use marijuana sales

When Democrats officially retake full control of the Virginia General Assembly in January, newly sworn-in lawmakers will take with them to Richmond renewed hopes the first state in the South to legalize marijuana possession can finally launch an adult-use market that is projected to top $1 billion in sales within a few years.

But one very difficult obstacle remains: Republican Gov. Glenn Youngkin, who is said to have national political ambitions and zero interest in setting up a legal marketplace.

In the state’s brief legislative session last winter and spring, Youngkin blocked legislation that could have launched legal adult-use cultivation and sales in summer 2024.

But in a rebuke to Youngkin’s broader agenda, including a strict abortion-restriction proposal, Democrats retained control of the state Senate and retook the House of Delegates in November.

However, Democrats’ razor-thin, veto-vulnerable majorities in both Assembly chambers mean the future of legal adult-use cannabis remains in Youngkin’s hands.

“What Democrats controlling both chambers does is creates a path to the governor’s desk for an adult-use retail sales bill,” said JM Pedini, development director of the National Organization for the Reform of Marijuana Laws and executive director of NORML’s efforts in Virginia.

“But,” Pedini added, “without the supermajority required to overturn a veto, any serious legislation must be both pragmatic and palatable in order to succeed.”

And what is “pragmatic and palatable” in the eyes of Youngkin remains to be seen.

Path to flower

Virginia legalized adult-use cannabis in 2021, with the first legal sales originally scheduled for Jan. 1, 2024.

With 8.6 million people, Virginia’s appetite for legal marijuana is expected to be healthy, with $475 million in legal sales projected in the first year, doubling to more than $1 billion by year three, according to the 2023 MJBiz Factbook.

However, the legalization bill signed into law by then-Gov. Ralph Northam, a Democrat, required lawmakers to pass another adult-use measure.

And since Republicans retook the state House of Delegates – the Legislature’s lower chamber – in 2021, bipartisan efforts to pass an recreational marijuana bill have failed.

Republican proposals to set up an adult-use market last year were quashed at Youngkin’s direction, sources told MJBizDaily.

Since then, Youngkin has been near-silent on the issue, even as unlicensed delivery services and increasingly brazen “gifting” stores that sell cannabis for almost half the cost charged at Virginia’s legal medical marijuana dispensaries proliferate across the state.

Last summer, Joseph Guthrie, commissioner of the Virginia Department of Agriculture and Consumer Services, said that Youngkin “is not interested in any further moves towards legalization of adult recreational use marijuana.”

“So I wouldn’t expect that during his administration,” Guthrie said.

Sources close to Virginia’s political establishment told MJBizDaily that Youngkin is dead set against anything resembling a social equity plan that might see preferential treatment for racial minorities.

That would be consistent with national Republicans, many of whom see social equity programs as a sop to Democratic Party-run big cities, as well as Youngkin’s participation in a wider conservative culture war on “wokeness.”

At the same time, political winds might have shifted.

Observers point to the recent decisive legalization victory in Ohio – a state the Cook Political Report classifies as more Republican-leaning than Virginia – as a clear signal that marijuana reform is a bipartisan issue popular with voters across the country’s increasingly polarized partisan divide.

Critics also point out that the growth of Virginia’s illicit market to an estimated $2.4 billion, according to New Frontier Data, happened on Youngkin’s watch.

“This is now a broader issue of public health and safety,” said Trent Woloveck, the chief strategy director of Jushi Holdings, a marijuana multistate operator that holds one of Virginia’s five “pharmaceutical processor permits,” which allow vertical integration within a “health service area” defined by state health regulators.

“I think there is opportunity to have a bipartisan bill that garners support in both chambers,” Woloveck said.

And in the meantime, any delays only help “cartels and organized crime,” he added.

Likely sponsor

It’s still unclear what framework for legal cannabis sales might please Republican lawmakers as well as Youngkin, who last year signed into law a bill severely restricting sales of hemp-derived intoxicating cannabinoids.

Democratic state Sen. Adam Ebbin, whose 30^th District includes most of Washington DC suburb Alexandria, sponsored a bill last year that would have seen Virginia regulators permit cultivation and retailers in time for legal sales to begin by July 2024.

That bill passed the Democratic-controlled Senate only to die in the House.

In a recent phone interview, Ebbin told MJBizDaily he plans to introduce another bill this cycle, but Youngkin “has not been particularly outspoken on what he would accept.”

“But,” Ebbin added, “he’s given some signs of what he doesn’t like, and we’re aware of them.”

“My focus right now is on allowing the legal sale of legal, tested products to adults – and to combat the black market a bit.’”

Ebbin said he wishes he “could promise that it’s something that’s signed into law this coming year. It may be, or it may take more time than that.”

“It’s already taken more time than I’d have liked to have seen,” he added.

In the meantime, there’s a possibility that expanded medical marijuana sales could serve as an interim solution, though market dynamics might thwart that option.

Though doctors in Virginia can recommend cannabis for any ailment, medical marijuana businesses are more strictly regulated than in most states.

Regulations allow up to five “pharmaceutical processors” in the state, though only four licenses are active.

Several major MSOs are in Virginia: Chicago-based Green Thumb Industries, which acquired locally owned Dharma Pharmaceuticals in 2021; Jushi, which bought Dalitso in 2019; and The Cannabist Co., formerly Columbia Care.

Green Leaf Medical of Virginia holds the fourth license.

A fifth license, initially awarded to Chicago-based MSO PharmaCann and later purchased by MedMen Enterprises, was revoked.

After a yearslong legal battle, a court earlier this year ruled the revocation was legal.

A recent state-commissioned report noted that Virginia MMJ patients can expect to pay twice the price per-gram than they might on the state’s illicit market or at legal retailers in Maryland.

“Based on the track record thus far, we’re not overly optimistic that we’re going to see adult-use legalization come out of the Legislature this year,” said Adam Goers, senior vice president for public policy at The Cannabist Co.

“But we will be working to pass adult-use sales no matter what the odds, because there is an urgency to make sure adults 21 and up can purchase legal product.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.