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Tag: Sen. Aaron Rouse

Both sides of Va. recreational cannabis debate tout improved health and safety

RICHMOND — Three years, four sessions and one veto since the first legislative attempt, Virginia still does not have a recreational cannabis market. Potential investors say that makes it hard to plan for the future. Advocates and some politicians say the reasons the governor gave for his recent veto are only exacerbated by preventing recreational cannabis sales.

Gov. Glenn Youngkin recently vetoed House Bill 698 and Senate Bill 448 which would have created a framework for an adult-use, recreational cannabis market.

This session was not the first time the General Assembly acted to create a retail market. Lawmakers passed a bill in 2021, but the part of the bill that would create a recreational market had to also be passed the next year before it became law — which never happened. The part that did not need reenactment legalized simple possession of marijuana.

Republicans gained a House majority in 2022, along with a new governor who was uninterested in creating a cannabis market. Lawmakers skipped over the issue in 2023 and brought it back this year with a legislative Democratic majority.

Del. Paul Krizek, D-Fairfax, and Sen. Aaron Rouse, D-Virginia Beach, worked on a compromise between their two bills, and expressed disappointment over the governor’s vetoes.

“Public servants are obligated to tackle pressing issues, regardless of their origin or culpability. They cannot cherry-pick which problems to address,” Rouse stated.

Youngkin is concerned the illegal market will thrive if a recreational market is established, but other lawmakers believe the lack of a legal market is driving up those numbers.

“States following this path have seen adverse effects on children’s and adolescent’s health and safety, increased gang activity and violent crime, significant deterioration in mental health, decreased road safety, and significant costs associated with retail marijuana that far exceed tax revenue,” Youngkin stated in his veto.

The better approach would be to revisit any discrepancies in enforcement, according to the governor.

“Governor Youngkin’s failure to act allows an already thriving illegal cannabis market to persist, fueling criminal activity and endangering our communities,” Krizek stated in an email. “This veto squandered a vital opportunity to safeguard Virginians and will only exacerbate the proliferation of illicit products.”

Rouse called the governor’s “dismissive stance” toward cannabis sales unacceptable.

The unregulated and untaxed illegal cultivation and distribution of cannabis generates at least over a billion dollars annually in Virginia, according to a 2020 Joint Legislative Audit and Review Commission, or JLARC, report.

As the law currently stands in Virginia, adults over 21 can legally use and possess cannabis for an amount up to 1 ounce. Green-thumb adults are allowed to cultivate four plants at home. Adults can also pay to get medical approval and purchase cannabis through state-approved dispensaries.

Advocates disappointed, say bill was good

Chelsea Higgs Wise is the executive director of Marijuana Justice. She has tread the Capitol steps since 2019 to lobby and inform lawmakers. She testifies in committees about cannabis-related legislation, including equity measures and the modification of cannabis-related offenses.

The Black-led organization’s advocacy work includes a path forward for people who have been incarcerated on marijuana charges, through repeal, repair and rehabilitation. The organization also pushed for social equity programs that help formerly incarcerated people get into the legal cannabis business.

The legislation vetoed by the governor would have legalized it right, Higgs Wise said.

“It includes the equity portions and includes repair for communities and includes certain funds,” she said. “This is what we’ve been promising Virginia.”

The excitement did not last long. A few weeks after the bill passed, it met the governor’s veto pen.

“It’s a grave disappointment that Virginia is going to have to wait for a safe and regulated cannabis market,” Higgs Wise said. “Gov. Youngkin’s obsession with the legacy market is misplaced, but we recognize the need for a regulated market for reinvesting our community.”

Marijuana Justice does not use the term black market, and instead uses “legacy market.”

“The legacy market is thriving, we’ve always had a marijuana market here in Virginia and across the U.S.,” Higgs Wise said. “We don’t need the government to tell us what that is. They’re just coming in now to make a lot of money off of it.”

The Virginia Cannabis Equity Loan Fund would have provided grants, low-interest and zero-interest loans to qualified micro business applicants. The fund was called the social equity license in previous legislation, and Republicans attempted in 2022 to channel the money to other places and eliminate the qualifying provisions.

The micro business provisions were a way for people to get involved with what is anticipated to be a multimillion dollar business, including veterans of the U.S. armed forces as long as they met certain qualifications.

Illegal markets often still thrive in the first few years after a state legalizes cannabis sales. That has to do with equity provisions, or lack thereof, according to Higgs Wise.

“Their people that they know are not selling it, that means it is not in their neighborhood; it’s too expensive,” she said.

The familiar aspect of connecting with the local supplier, often a friend or someone from the community, also does not come with extra fees.

“These are the equity portions that we have to think about for the consumers as well as for the business owners,” Higgs Wise said.

The first year of the recreational market could see sales between $123 million to $206 million, according to JLARC estimates from the bill’s impact statement. By year five, sales were forecast to be between $609 million to just over $1 billion.

Lawmakers settled on a 8% marijuana tax, with sales and use tax at 1.1% percent. Localities had the option to tax up to 2.5%, and include a food and beverage tax.

Recreational marijuana sales could bring in $6.41 million in the first year from the 8% tax alone. By the fifth year, the tax revenue was forecast at $66.41 million.

The legal marijuana market would overtake the illegal market by year four, and have nearly two-thirds of the sales by year five, even with much higher tax rates, JLARC reported in 2020.

JLARC looked at the reported cannabis use rates compared to the use rates of other states to determine this figure.

Higgs Wise said to “rest assured” her organization will be back next year to push for a recreational market.

“For those who want to participate in Virginia’s cannabis industry, we welcome you to join us to fight for a fair and just market,” Higgs Wise said.

Impact on Virginia cannabis companies

Griffin Moon and Dave Bredard launched Chester Cannabis Co. two years ago to sell hemp products that were legal at the time, and had hopes of getting into the cannabis market.

“So that’s definitely the biggest challenge for companies in this industry is all the changing legislation.” Moon said. “You just never know what’s coming.”

Currently, hemp products cannot contain more than 0.3% THC. Moon and Bredard disposed of a number of products after lawmakers cracked down on THC levels in hemp in 2022. Lawmakers sought more regulation of delta-8 sales, according to a report from the Virginia Mercury.

They had to go back to the lab and create a new product line, Moon said.

“It’s hard to kinda set up a business if you can only think of a year or a couple years in advance and set up, you know, five, 10 years down the line,” Moon said. “It’s just hard to think of the future.”

Policy standpoint

Gregory Habeeb, president of Gentry Locke Consulting, represents Virginia’s Cannabis Association. He served as a Republican delegate representing southwestern constituents from 2011-2018.

A roughly $3 billion illegal cannabis market already exists, Habeeb said.

“So the real issue is how we should regulate that market,” Habeeb said. “By passing a bill to regulate it, we can address the public health and safety concerns.”

The illegal market continues to grow, going untaxed, unregulated, with untested products sold, according to Habeeb.

“We’re hearing from law enforcement all over the state that they want something done, it’s time to get it done,” Habeeb said.

Polls continue to show that recreational cannabis is a bipartisan issue. A majority of Virginians support retail sales. Democrats have the most support (70%), followed by Independents (54%) and then Republicans (46%).

“Nobody wants a system where unlicensed drug dealers sell untested, untaxed products,” Habeeb said. “I think there’s going to be some political consequences, as more and more people come around to the idea that we need to regulate this market.”

VCU InSight reporter Mark Jones contributed to this report.

Capital News Service is a program of Virginia Commonwealth University’s Robertson School of Media and Culture. Students in the program provide state government coverage for a variety of media outlets in Virginia. VCU InSight is the school’s broadcast capstone.

Youngkin vetoes cannabis, minimum wage legislation

Virginia Gov. Glenn Youngkin vetoed legislation Thursday that would have put Virginia on the path to a $15 per hour minimum wage and set up a retail cannabis market, killing bills that were important to Democratic state legislators he blamed for torpedoing the $2 billion Alexandria sports arena deal he’d championed.

Amid a deepening partisan divide in Richmond, Republican Youngkin announced six more vetoes Thursday evening, targeting legislation supported by Democratic lawmakers that would have set a $15 per hour minimum wage in Virginia beginning in 2026, as well as a measure that would have established a retail market structure for recreational marijuana sales beginning next year.

The vetoes were hardly a surprise to political observers across the state, as Youngkin had previously signaled his lack of support for a legal cannabis retail market, although legislators from both parties said before this year’s General Assembly session that they have problems with the status quo, in which it’s legal to possess small amounts of marijuana and purchase cannabis products with a doctor’s prescription in licensed dispensaries — and yet the billion-dollar recreational cannabis retail black market remains unregulated and untaxed.

HB 1 and its Virginia State Senate counterpart, SB 1, would have increased the state’s mandatory minimum wage from $12 an hour to $13.50 starting Jan. 1, 2025, and set a $15 per hour minimum wage at the start of 2026. The legislation passed through the General Assembly along party lines this session — with 51 Democrats voting yes, and 49 Republicans voting no in the House of Delegates, and 21-18 in the Senate, with Republican Sen. Mark Peake abstaining.

Youngkin wrote in his veto statement that raising the state’s minimum wage to $15 an hour in less than two years “would implement drastic wage mandates, raise costs on families and small businesses, jeopardize jobs and fail to recognize regional economic differences across Virginia.” He had previously said there was no need for the state to raise the mandatory minimum wage, and that the free market was taking care of the issue.

The Virginia Chamber of Commerce applauded the minimum wage veto, saying in a statement Thursday, “Although Virginia’s economy has recovered strongly from the pandemic, surpassing pre-pandemic employment levels, not all regions of the commonwealth have experienced equal economic growth. Raising the hourly minimum wage to $15 would have led to shuttered businesses and lost jobs, particularly in the areas most in need of strong economic growth and particularly for Virginia’s small businesses.”

However, Sen. Ghazala Hashmi, D-Chesterfield, tweeted Thursday evening that “every working American deserves a living wage. Period,” in reference to the minimum wage veto, and Richmond Mayor Levar Stoney, a Democrat who is running for his party’s nomination for governor, wrote that he has proposed raising city employees’ minimum wage to $20 an hour, adding, “It’s high time our governor stops playing political games and focuses on what our families need to rise to the middle class.”

Cannabis retail legislation

Cannabis bills HB 698 and SB 448 passed mostly along party lines too, although Republicans Del. Chris Obenshain and Sen. Christie New Craig joined Democrats in voting yes. If enacted, the measures would have established a framework to allow legal retail sales of recreational marijuana in Virginia starting May 1, 2025, and issued state licenses to sell marijuana on Sept. 1, 2024.

“The proposed legalization of retail marijuana in the commonwealth endangers Virginians’ health and safety,” Youngkin wrote in his veto statement on the cannabis legislation. “States following this path have seen adverse effects on children’s and adolescents’ health and safety, increased gang activity and violent crime, significant deterioration in mental health, decreased road safety, and significant costs associated with retail marijuana that far exceed tax revenue. It also does not eliminate the illegal black market sale of cannabis, nor guarantee product safety. Addressing the inconsistencies in enforcement and regulation in Virginia’s current laws does not justify expanding access to cannabis, following the failed paths of other states and endangering Virginians’ health and safety.”

The twin bills’ chief sponsors — Sen. Aaron Rouse, D-Virginia Beach, and Del. Paul Krizek, D-Fairfax — blasted the governor’s veto in statements Thursday. “Gov. Youngkin’s dismissive stance towards addressing Virginia’s cannabis sales dilemma is unacceptable. Public servants are obligated to tackle pressing issues, regardless of their origin or culpability. They cannot cherry-pick which problems to address,” Rouse said, while Krizek said the governor’s “failure to act allows an already thriving cannabis market to persist, fueling criminal activity and endangering our communities.”

Thursday’s vetoes came after the legislative scuttling of a $2 billion deal to bring a proposed sports arena in Alexandria, a controversial deal touted by Youngkin as potentially producing 30,000 jobs for the state and billions in economic activity, while critics in the Virginia State Senate — led by Democratic Sen. Louise Lucas, who chairs the powerful Senate Finance & Appropriations Committee — balked at the idea of the state taking on approximately $1.3 billion in debt and establishing a state authority to manage the properties.

Although the deal was still considered alive — at least on paper — until the state’s 2024-26 budget is finalized in April, the Washington Wizards and Capitals’ majority owner, Monumental Sports & Entertainment CEO Ted Leonsis, and Washington, D.C., Mayor Muriel Bowser signed an agreement Thursday that will keep the NBA and NHL teams in the District of Columbia through 2050, putting an end to all negotiations between Monumental, the state and the City of Alexandria.

The arena proposal, while not directly tied to cannabis and minimum wage legislation, became a partisan battleground as Youngkin indicated that he wouldn’t compromise with Democrats on either priority, despite needing their votes to establish the state authority to own the arena and entertainment district. Meanwhile, Lucas blocked Senate Finance Committee votes on legislation that would have created the authority, and the state legislature’s 2024-26 budget amendments dropped all mention of the authority.

In a news conference after the General Assembly’s regular session closed in March without a Senate vote on the arena authority, Youngkin said he didn’t “have any interest in the cannabis legislation. … Bluntly, you want to talk about putting a cannabis shop on every corner. I don’t quite get it.”

Va. legislation details micro business funding criteria for retail cannabis market

RICHMOND — Virginia’s plan for a recreational cannabis market includes a way to help micro businesses, formerly known as the social equity license, get involved with what is anticipated to be a multimillion dollar business — if the plan survives the governor’s desk.

The Virginia Cannabis Equity Loan Fund will provide grants, low-interest and zero-interest loans to qualified micro business licensees, according to legislation passed by the General Assembly.

Del. Paul Krizek, D-Fairfax, and Sen. Aaron Rouse, D-Virginia Beach, reached a compromise between their two measures to create a state cannabis market.

An applicant must meet certain criteria to qualify, including having at least 66% ownership and direct control of the business.

The applicant must either have been convicted or adjudicated of a prior misdemeanor violation for marijuana to qualify.

The applicant could also qualify if they lived at least three of the past five years, or attended at least five years of public school, in a historically economically disadvantaged community.

Another qualification would be if the applicant received a federal Pell Grant or attended for at least two years a college or university where an average of at least 30% of the students are eligible for a federal Pell Grant.

Any veteran of the U.S. armed forces would qualify if they met the 66% ownership and direct control qualification.

The Virginia Cannabis Control Authority board of directors will regulate the application process. The board will also determine what percentage of license fees can be waived and promote participation in the loan program despite the ability to pay such fees, according to the bill.

Either the director of the Office of Diversity, Equity, and Inclusion, or a majority of the members of the Cannabis Equity Reinvestment Board, will sign off on the disbursement of funds.

The General Assembly approved $1.8 million each year, which will transfer to the Cannabis Equity Business Loan Fund in July, if the governor does not appoint a director of the Office of Diversity, Equity, and Inclusion, according to the budget. The governor renamed it the Office of Diversity, Opportunity, and Inclusion in 2022.

“The program will be funded by 100% of the licensing fees collected by the authority in the first year,” Krizek said in a Senate committee meeting for Rehabilitation and Social Services. “After that time, the program will be supported by 60% of the tax revenue from retail sales of marijuana.”

The equity fund will foster business ownership and economic growth within communities that have been affected by the prohibition of cannabis.

“The marijuana market bills are the most promising that we’ve had since 2021,” said Chelsea Higgs Wise, executive director of Marijuana Justice. “It includes the equity portions and includes repair for communities and includes certain funds and this is what we’ve been promising Virginia.”

The loan fund was created by the 2021 General Assembly and given $3 million to help develop an adult-use retail market, the CCA stated in an email. The 2023 General Assembly returned the $3 million back to the general fund, since the recreational cannabis market was not reenacted.

“We have an equity fund already established in statute,” said Sen. Barbara Favola, D-Arlington, at the committee of Rehabilitation and Social Services. “But it needs to be funded to make sure that our micro business really do have access to capital so they can start their cultivation and be able to get to the market.”

The CCA will collaborate with a community development financial institution that provides credit and financial services for disadvantaged communities to help manage the fund.

“We’re really hoping that it will be people of color, folks from certain communities that will be able to take advantage of entering the business and the setups that we’ve put into place,” Higgs Wise said.

Cannabis tax will be 8% and the revenue is estimated to be $6.41 million in 2025 and increase to $77.1 million by 2030, according to the bill’s final fiscal impact statement.

The state will add a 1.115% tax, and a locality can add an extra tax up to 2.5%.

The CCA stated that it could not respond to questions about potential licensing costs, because no adult-use cannabis market exists. Applications would start in September if the bill is signed.

The current application fee for a medical cannabis pharmaceutical processor permit is $18,000. The initial permit fee is $165,000 and the annual renewal fee is $132,000, according to the CCA.

Gov. Glenn Youngkin has stated many times that he’s not interested in signing the adult-use market legislation. He has issued 80 vetoes as of March 26, although some are duplicate bills. When asked about the cannabis bill on March 14, Youngkin told a Virginia Mercury reporter that he would read it and that it is a long bill.

Youngkin has until April 8 to take action on all bills that cleared the General Assembly. The legislature will reconvene on April 17 to review his changes, but Democrats do not have the super majority needed to overturn a veto.

Capital News Service is a program of Virginia Commonwealth University’s Robertson School of Media and Culture. Students in the program provide state government coverage for a variety of media outlets in Virginia.