On February 28, the Virginia Normal Meeting handed Home Invoice No. 698, which might legalize the sale of leisure marijuana at retail within the Commonwealth. Now he's headed to Governor Glenn Youngkin's desk, the place his future is unsure. On this weblog put up, we spotlight key provisions of the proposed framework in relation to licensing, charges, testing and labelling.
Authorized Marijuana in Virginia: Background
Grownup possession and sharing of marijuana authorized in Virginia by 2021, however the present legislation forbid most practices resemble gross sales transactions. A number of statutory sections exist already within the Virginia Code associated to the event of a leisure market, however aren’t in impact. These provisions had been set to enter into drive provided that they had been re-enacted by the 2022 Normal Meeting session – nevertheless, they weren’t.
Administered by the Virginia Hashish Management Authority
Along with introducing completely new provisions, HB 698 builds on dormant provisions by repealing and amending a number of key sections. The invoice permits the Virginia Hashish Management Authority (VCCA) to control the leisure marijuana market.
As beneath the dormant provisions, the invoice directs VCCA to develop and preserve a “seed-to-sale” monitoring system that tracks marijuana from the seed or seedling stage till it’s bought. to a buyer in a marijuana retailer. This monitoring system knowledgeable VCCA's utility of the provisions mentioned under.
Licensing Framework and Desire for “Micro Enterprises”
VCCA will set up an utility course of for the license of marijuana institutions – a time period that features marijuana cultivation amenities, marijuana testing amenities, marijuana processing amenities, marijuana transporters and marijuana warehouses. Working with out the suitable license constitutes a Class 6 felony.
The invoice additionally units out the situations beneath which VCCA should or could refuse to grant a license, or droop or revoke an current license. It additionally offers the procedures for appeals of such denials, suspensions and revocations.
So-called “micro companies” will obtain preferential remedy within the licensing course of, lowered utility and licensing charges, entry to a low-interest business mortgage program, and waiver of necessities to show proof of funds. The “micro-enterprise license” provisions will exchange the “social fairness license” provisions from the dormant provisions.
A “micro enterprise” applicant is one which has no less than 66% possession and direct management of the enterprise, and one of many following applies:
(i) The applicant has been convicted or adjudicated delinquent of any offense beneath Virginia legislation associated to:
- The unlawful manufacture, sale, supply or distribution of marijuana;
- Possession with intent to fabricate, promote, give or distribute marijuana; o
- Easy possession of marijuana or marijuana paraphernalia.
(ii) The applicant is the dad or mum, baby, sibling, or partner of an individual who has been convicted or adjudged delinquent for any of the crimes listed above in article (i).
(iii) The applicant has resided for no less than three of the previous 5 years in a “traditionally economically deprived group.”
(iv) The applicant has attended a public elementary or secondary college positioned in a “traditionally economically deprived group” for no less than 5 years.
(v) The applicant has acquired a federal Pell Grant or has attended a university or college for no less than two years through which no less than 30% of the scholars, on common, are eligible for a federal Pell Grant.
(vi) The applicant is a veteran of america armed forces.
The invoice defines “traditionally economically deprived group” to incorporate (a) jurisdictions through which marijuana possession offenses occurred at greater than 150% of the state common between 2009 and 2019, based on Census Bureau knowledge from america; and (b) “underutilized business areas” as outlined by federal legislation.
Kinds of Licenses
Marijuana Cultivation Crops
These licenses authorize a facility to (i) develop, label and bundle marijuana; (ii) buy or take possession of marijuana crops and seeds from different cultivation amenities; and (iii) switch possession of or promote marijuana, immature marijuana crops, and marijuana seeds to marijuana retail shops, marijuana transporters, different marijuana cultivation amenities, or marijuana processing amenities. The invoice establishes 5 ranges of cultivation licenses, permitting indoor cultivation with most cover sizes starting from 2,000 to 70,000 sq. toes.
Marijuana processing crops
These licenses will authorize a facility to (i) course of, label and bundle marijuana and marijuana merchandise; (ii) buy or take possession of marijuana from a marijuana cultivation facility or different marijuana processing facility; (iii) switch possession of and promote marijuana and marijuana merchandise to marijuana warehouses, different marijuana processing amenities, or marijuana transporters.
Marijuana shops
These licenses will authorize a retailer to (i) buy or take possession of marijuana, marijuana merchandise, immature marijuana crops, or marijuana seeds from a marijuana cultivation facility or a marijuana processing facility; (ii) taking possession of marijuana, marijuana merchandise, immature marijuana crops, or marijuana seeds from a marijuana transporter; and (iii) promote marijuana, marijuana merchandise, immature marijuana crops, or marijuana seeds to shoppers on premises permitted by VCCA.
Supply service, Web gross sales, drive-throughs and merchandising machines shall not be permitted beneath this license. The invoice particularly offers that retail marijuana outlets can solely promote marijuana, marijuana merchandise, immature marijuana crops and marijuana seeds to shoppers in a direct, face-to-face change. As well as, the invoice limits client gross sales to 2.5 ounces per particular person per transaction restrict (or an equal quantity of marijuana merchandise decided by VCCA).
Marijuana transporters
These licenses will authorize the licensee to (i) take possession of marijuana, marijuana merchandise, immature marijuana crops, and marijuana seeds from a marijuana cultivation facility, a marijuana processing facility, a retail marijuana retailer, or one other transporter of marijuana; (ii) switch possession of marijuana, marijuana merchandise, immature marijuana crops, and marijuana seeds to a marijuana cultivation facility, a marijuana processing facility, a retail marijuana retailer, or one other marijuana transporter ; and (iii) transporting marijuana, marijuana merchandise, immature marijuana crops, and marijuana seeds from one licensed facility to a different.
Marijuana testing amenities
These licenses approved the licensee to develop, analysis, or take a look at marijuana, marijuana merchandise, and different substances. They might develop, analysis, or take a look at marijuana and marijuana merchandise for themselves, one other licensee, or an individual who intends to make use of the marijuana or marijuana product for private use as permitted by state legislation.
Taxes: State, Gross sales and Use, and Native
The invoice would impose an 8% tax on the sale of any marijuana, marijuana merchandise, or marijuana paraphernalia in Virginia — not together with gross sales between marijuana institutions. State gross sales and use taxes apply to the sale of such gadgets at a charge of 1.125%. Localities would even have the choice of imposing a further 2.5% tax on these gross sales. The vendor of marijuana, marijuana merchandise, or marijuana paraphernalia could be liable for amassing these taxes and submitting a month-to-month return with cost.
Marijuana testing
HB 698 would require VCCA to determine a testing program for marijuana and marijuana merchandise that may require licensees to submit a consultant pattern of their marijuana or marijuana product earlier than promoting or distributing it. The take a look at determines whether or not the pattern exceeds the utmost allowed quantity of sure dangerous constituents, comparable to heavy metals, microbiological contaminants, mycotoxins and chemical pesticide residues.
Labeling and packaging
Marijuana and marijuana merchandise provided on the market to shoppers require labels exhibiting the kind of marijuana or marijuana product, license numbers of the varied marijuana institutions concerned, internet weight, all elements, data associated to the extraction chemical compounds used, directions to be used, a selected assertion. that the product can solely be bought to adults no less than 21 years of age, a common image for marijuana, and a certificates of study from a licensed marijuana testing facility indicating the full focus of THC in it. The invoice would additionally enable VCCA to determine further labeling necessities.
Regulation by Location
The invoice authorizes Virginia localities to utterly ban marijuana shops or to control the hours of the day through which such shops can promote marijuana or marijuana merchandise. The invoice expressly prohibits localities from adopting some other ordinances or prohibitions associated to the cultivation, processing, possession, sale, distribution, dealing with, transportation, consumption, use, promoting or meting out of marijuana .
Referendum on Retail Marijuana Shops
Localities can decide whether or not retail marijuana shops are allowed to function of their respective jurisdictions. A locality might, by decision, petition the native circuit court docket for a referendum on the difficulty. The vote should be taken inside 90 days of the circuit court docket's order to proceed with the referendum. If the bulk votes to ban outlets promoting marijuana, the ban shall be efficient on January 1 of the next 12 months.
Gross sales time ordinances
Localities can decide whether or not retail marijuana shops are allowed to function of their respective jurisdictions. A locality might, by decision, petition the native circuit court docket for a referendum on the difficulty. The vote should be taken inside 90 days of the circuit court docket's order to proceed with the referendum. Importantly, any such referendum should be held, and the outcomes should be licensed, by December 31. No native referendum on this subject shall be allowed after January 1, 2025, besides within the case of a referendum that follows a referendum beforehand held in 2024, through which the bulk voted to ban marijuana outlets. If the bulk votes to ban marijuana shops, the ban will go into impact on January 1, 2025.
What it means
Whether or not HB 698 is signed into legislation or not, its passage by the Virginia Normal Meeting is a big signal of legislative assist to determine a functioning leisure market within the Commonwealth. Potential business entrants ought to watch this invoice, as its passage represents a big step in the direction of a leisure market.
Our Hashish Apply offers recommendation on points associated to relevant federal and state legislation. Marijuana stays an unlawful managed substance beneath federal legislation.
