correction
A previous version of this article incorrectly reported that the marijuana bills passed on party-line votes in both chambers of the Virginia General Assembly. They passed on mostly party-line votes in both chambers. The article has been corrected.
RICHMOND — Democrats who control the Virginia House of Delegates and state Senate agreed Wednesday on a framework establishing a legal market for recreational marijuana, teeing up the issue for Gov. Glenn Youngkin (R), who has not signaled whether he will sign, veto or amend the bills.
As passed on mostly party-line votes in both chambers Wednesday, the measures would have the marketplace up and running by May 2025, administered by a state Cannabis Control Authority. Retail sales would be taxed at a rate of 11.625 percent — higher than the 9 percent tax rate in nearby Maryland.
“This is one of the most monumental pieces of legislation that we’ve ever had before us,” House Minority Leader Todd Gilbert (R-Shenandoah) said in floor debate before casting a vote against the bill.
Del. Paul E. Krizek (D-Fairfax), sponsor of the House version, said it would create the market “in a responsible and thoughtful way. And we’ve done so because it’s time to give Virginia’s $3 billion illicit market a run for its money.”
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The General Assembly legalized adult possession of small amounts of recreational marijuana in 2021, when Democrats were last in charge, but it put off the complicated task of establishing a regulated marketplace. Nothing got done in two years of Republican majorities in the House, but this year’s Democratic leaders — newly empowered by wins in last fall’s elections — vowed to address the topic.
Earlier this year, the House and Senate had passed separate measures that were slightly different from one another, but reconciled them into one compromise form.
The Senate passed the measure 21-18, with one Democrat absent and one Republican, Sen. Christie New Craig (Chesapeake), in favor. The substitute bill landed on Senate desks Wednesday afternoon in the form of a 185-page floor substitute, the salmon-colored pages still warm from the printer. Sen. Aaron R. Rouse (D-Virginia Beach), who carried the Senate version of the bill, apologized for the thickness of the document — which as a substitute, encompassed the new version in its entirety; more typically, the body is just considering a list of amendments.
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“This is what we do when we don’t want to go to conference,” he said.
Sen. David R. Suetterlein (R-Roanoke) said he was “very open to the concept” of the bill but objected to the last-minute substitute, saying he thought that was not a good way to do business. He also objected to the tax rate, which is lower than the 13.5 percent charged for prepared foods in Richmond grocery stores. “A working family shouldn’t have a higher tax rate on their rotisserie chicken than cannabis,” he said afterward.
“The bill may not be perfect, but it’s pretty good — a very, very good framework that I think the governor should consider,” Sen. Barbara A. Favola (D-Arlington) said.
The House version had aimed for a lower tax rate of 9 percent — Krizek said it was to compete with Maryland — while the Senate version set a rate of 12 percent and eventually kicked it up to 17 percent, looking to bring in more revenue. They compromised; the bills passed Wednesday set the state portion of the tax at 8 percent, plus a 2.5 percent local option and 1.125 percent sales and use tax that sends revenue to K-12 education.
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Under the plan, businesses could apply for licenses to test, cultivate, process, transport or sell cannabis products by Sept. 1. The system is designed to give small businesses a chance to compete with large corporations, with some of the license fees funding a “microbusiness support program,” and to boost retailers in neighborhoods that were disproportionately affected by the war on drugs, Krizek said.
Gilbert warned Wednesday that other states that legalized recreational sales struggled to displace the black market for marijuana, which operates without taxes, regulations or restrictions. In California, he said, taxpayers wound up having to bail out the legal marijuana industry to the tune of $100 million. “So be careful what you wish for,” he said.
“I 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,” Krizek said, pointing out that it would require testing for potency, strict labeling and childproof packaging.
The measures are headed to an uncertain fate with Youngkin. He has not directly threatened to veto them, but he said in January that “I just don’t have a lot of interest in pressing forward with marijuana legislation.”
Asked Wednesday whether Youngkin’s position has changed, a spokesman for the governor referred a reporter to his earlier statements.
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