Recreational Marijuana in Virginia

electricity cost is a major factor in the location of indoor grow houses, in states where recreational marijuana is legal
electricity cost is a major factor in the location of indoor grow houses, in states where recreational marijuana is legal
Source: State of Colorado, Energy Use in the Colorado Cannabis Industry (p.8)

The Virginia General Assembly legalized use of marijuana for medical purposes in 1979, and expanded such use in 2015 and 2018. The laws protected patients from prosecution if they had a recommendation from a doctor that marijuana was medically advised. By the end of 2018, some form of medical marijuana use was legal in 46 states, and broad access to the drug under a doctor's guidance was available in 33 states.

In 2017, a Quinnipiac poll indicated that the 59% of the people in Virginia supported legalizing recreational use, while 35% percent were opposed. After the November, 2018 elections, recreational use had been legalized in the District of Columbia and 10 states, but at that time recreational use was allowed in no state closer to Virginia than Massachusetts.

Decriminalization of possession of up to one ounce in Virginia occurred in 2020. The possession of up to an ounce could be punished only as a civil penality, similar to a traffic ticket. An ounce could be used to create about 50 joints for smoking.

Actual legalization of marijuana possession for recreational use occurred in 2021, in a compromise that did not authorize sale for recreational use. Possession of up to one ounce was legalized, while a civil penalty could be imposed for possession between one ounce and up to a pound. Posession of over a pound, which indicated a person had stockpiled marijuana for dealing rather than using, remained a felony crime.

In 2022, the legislature backtracked and lowered the threshold for non-criminal possession. Possession of an amount between four ounces and one pound was redefined as a misdemeanor crime, not a civil offense.

The General Assembly did set a schedule in 2021 for authorizing a full-scale commercial system for growing and selling marijuana by the start of 2024. Since sale was not legalized, the legislature approved the right to grow four plants in each house. The Joint Legislative Audit and Review Commission calculated in 2020 that just two plants could accommodate the desires of moderately heavy users for tetrahydrocannabinol (THC):1

Two plants grown at home can typically yield eight to 16 ounces of marijuana per year (though some growers can yield significantly more), which would be enough for a moderately heavy user. Extending the limit to four to six plants per person would give home cultivators a buffer against crop failures and also account for any male plants that may need to be removed. (Male plants are often disposed of because they do not produce THC-rich flower buds.)

In the 2018 legislative session, a bill to decriminalize possession of small amounts of marijuana for recreational use was killed in the Senate Courts of Justice Committee. The vote was clearly partisan. All six Democrats voted in favor, while all nine Republicans opposed decriminalization.2

The political divide reflected the urban-rural divide of Republican and Democratic elected officials, and the different socio-economic character of urban districts represented by Democrats vs. rural districts represented by Republicans. Urban districts had higher percentages of minority voters, and they were arrested for marijuana possession at significantly higher rates than whites.

Virginia has no mechanism for a citizen-initiated referendum, so legalization for recreational use required approval by the General Assembly. Legalization proposals had to be approved first in the Courts of Justice committee of the House of Delegates and the State Senate. Recreational use proposals were blocked in the 2020 session of the General Assembly, which chose to focus instead on decriminalization bills.

In 2020, the legislature ultimately decriminalized possession of up to one ounce of marijuana, hash, or oil concentrates. Those convicted of possession of marijuana had been at risk of 30 days in jail and a $500 fine, while possession of hash or other concentrates was a felony. Efforts by local prosecutors to dismiss all possession cases had been blocked by Virginia judges, who determined such an approach would be an abuse of prosecutorial discretion.

Though recreational marijuana use was not legalized, possession became a civil offense equivalent to a minor traffic violation, with just a $25 penalty. The new law did not eliminate the threat of selective enforcement against minorities based on a law enforcement officer's claim of smelling marijuana before initiating a search, but did eliminate the risk of going to jail for possession of small amounts of marijuana for personal use. In 2018, there had been 29,000 arrests, up from 20,000 in 2008.

In addition to many of the 2018 arrests, charges filed in previous years were also resolved in court cases that year. In 2018, more than 46,000 cases involving marijuana possession were prosecuted in General District Courts across Virginia. In the court system that year, only traffic-related cases exceeded the number of marijuana cases handled.

Some of those cases were not resolved that year, but of the nearly 35,000 cases completed nearly 20,000 people were convicted. African-Americans constituted 19% of the state's population in 2018, but were charged in 49% of the marijuana possession cases and convicted in 51%.

prosecutions and convictions for marijuana  possession had a disproportionate impact on the African-American population in 2018
prosecutions and convictions for marijuana possession had a disproportionate impact on the African-American population in 2018
Source: VCU Capital News Service and WWBT, Virginia prosecuted 46,000+ marijuana cases in 2018 (December 12, 2019)

The 2020 legislation was bipartisan. Decriminalization passed in the House of Delegates by 56-36 vote, and in the Senate by 27-12.

One side effect of decriminalization is that K-9 dogs trained to sniff out marijuana became surplus. The dogs had been imprinted to find that one drug, and could not be retrained. If K-9 signaled a law enforcement officer that a car had marijuana but the officer then found guns or other evidence of a felony, then a search based on just a civil crime might be invalidated and the case dismissed. The Virginia State Police retired 13 dogs, and trained new ones to detect Ecstasy (MDMA) cocaine, heroine and methamphetamines.

In Tazewell County, the two trained K-9's were sold to another state where possession had not been decriminalized. Two new dogs were purchased and trained to detect narcotics, and also to track and apprehend people. Cumberland County disbanded its K-9 unit, rather than spend up to $15,000 to acquire and train a new dog.

The sheriff elected in Prince Edward County in 2019 had emphasized in his campaign how he planned to restart the county's K-9 program. The county retired one of its two trained dogs, but donated the other to the Piedmont Regional Jail. Inmates were not allowed to possess cannabis, so searches by trained dogs were still appropriate there.

Though new dogs could be acquired which were not trained to signal their handler when smelling marijuana, early retirement took a toll on the old dogs. One handler who adopted his K-9 described him as suffering initially:3

I definitely noticed a change in his behavior. You could almost say that he was depressed... He would see me come downstairs, and I would be in my uniform, and he'd start getting excited, spinning around. He knew it was time to work. I'd come downstairs and go out the back door, and he wouldn't get to go with me. It kind of wore on him, but he's starting to come around more now.

after decriminalization of marijuana in 2020, K-9's trained to spot the drug became surplus
after decriminalization of marijuana in 2020, K-9's trained to spot the drug became surplus
Source: US Marine Corps, PMO K9 division maintains readiness with night training

Decriminalization was expected reduce the racial bias of law enforcement in Virginia. The Drug Policy Alliance concluded, after examining marijuana-related arrest between 2003-2013, that racial disparity was increasing:4

Police throughout Virginia have been enforcing marijuana laws in racially disparate ways that have steadily increased the arrest of black people much more so than the arrests of white people...

... In 2003 black Virginians comprised 39% of marijuana possession arrests but only 20% of the state population. In 2013 black Virginians accounted for nearly half (47%) of possession arrests but remained only 20% of the state population.

Statistics on marijuana-related arrests between 2010-2016 revealed a clear distinction based on race. Blacks were three times more likely to be arrested than whites, even though whites and blacks were using marijuana at equal rates. Law enforcement personnel evidently targeted 20% of the state's population more intensely.

There were dramatic differences in the average overall arrest rates between localities. Emporia and Colonial Heights made over 1,500 arrests per 1,000 people living within those jurisdictions, while police in Charlottesville made only 25 arrests/1,000 people. There were 589 arrests/1,000 residents in the City of Fairfax, but the similar City of Falls Church had only 51 arrests/1,000.5

arrest rates vary dramatically by race and by jurisdiction
arrest rates vary dramatically by race and by jurisdiction
Source: Blue Virginia blog, New Study: Marijuana Arrests, Racial Disparity in Those Arrests, Increase Sharply in Virginia

The opportunities to create jobs by legalizing recreational marijuana was another incentive for legislative action. Commercial marijuana growing and processing grew rapidly in other states after legalization for recreational use. Virginia legislators saw new tax revenues grow in states that legalized recreational use.

By 2019, there was a widespread assumption that Virginia would be legalizing full recreational use of marijuana soon. In the 2020 election, four more states legalized recreational use, bringing the national total to 15. Members of the General Assembly predicted that the 2021 House of Delegates would authorize recreational use, but passage in the State Senate was not assured. The voting was expected to be bi-partisan, with members of both parties lined up as opponents vs. supporters of legalization.

Governor Northam announced his support for legalizing recreational use two months before the 2021 General Assembly opened. Previously, he had only advocated for decriminalization. He spoke out after release of a report from the Joint Legislative Audit and Review Commission (JLARC) suggested that legalization could generate $300 million in annual sales tax revenue, if the total tax on marijuana (including sales tax) was between 25%-30%.

after the Joint Legislative Audit and Review Commission (JLARC) reported on possible tax revenues, Gov. Northam endorsed legalization of recreational use in November 2020
after the Joint Legislative Audit and Review Commission (JLARC) reported on possible tax revenues, Gov. Northam endorsed legalization of recreational use in November 2020
Source: Joint Legislative Audit and Review Commission (JLARC), Key Considerations for Marijuana Legalization

One commentator noted in 2019 that delay in legalization would handicap the future marijuana growers within the state:6

This is starting to look like the days of banking deregulation. While Virginia's hapless state government slept North Carolina's did not. The result? A whole lot of banks in Charlotte rather than Richmond. Virginia needs to accept that states like Colorado have made legal marijuana a success and move on. One possibility would be to restrict Virginia's approved grow sites to impoverished rural areas. Implement an excise tax and spend that tax on education in those impoverished rural areas. Otherwise, when the inevitable legalization happens in Virginia, the stoners in NoVa and hipsters in Richmond will be vapeing Colorado grass instead of Virginia weed.

After Federal legalization, many states will try to develop "grow houses," growing and processing marijuana to meet projected demand. Grow houses are energy intensive, requiring 10 times the energy per square foot compared to a typical office building. Two or three grow houses can create the demand equivalent to a data center. Locating a grow house in an existing developed area may require that the electrical grid be modified to accommodate the increased demand, including upgrades to transformers.

Successful grow houses may have to produce cannabis at $300/pound. Energy efficiency could be the factor that determines where the lowest-cost marijuana can be produced. A grow house is an artificial environment, and they may end up being where electrical costs are lowest and not where day length is longest or soil is best.7

Colorado businesses benefitted from "green tourism" after the state legalized recreational use in 2014. State law required growing, processing, and sale within the state's boundaries, but customers could cross state lines and come to Colorado to purchase and use marijuana. In 2017, revenue from cannabis sales exceeded alcohol sales in Aspen. After legalization in California, companies advertised California, "wine and weed" tours.8

Because the Federal government did not legalize recreational use, each state operated as a separate market, an island of opportunity. So many growers in Oregon started legalized businesses that the state ended up with an excess supply. Retail prices dropped 50%, from $14/gram in 2015 to $7/gram in 2017.

The Craft Cannabis Alliance pushed the Oregon legislature to authorize wholesale shipments to other states where marijuana use had been legalized. Oregon growers would benefit from access to a wider market, expanding their customer base. The executive director of the business association complained:9

There are plenty of markets that would be thrilled to have world-class cannabis... But prohibition keeps us from sending it into those markets.

The Craft Cannabis Alliance in Oregon was anticipating that the US Congress would change Federal law.

So long as marijuana was listed under the Controlled Substances Act as a Schedule I drug, with "high potential for abuse and the potential to create severe psychological and/or physical dependence," growing, processing, selling, and using marijuana was a Federal crime.10

If the US Congress changed the law, however, the state-based barriers to doing business would drop. The competitive position of growers in Colorado, Oregon, and California would be enhanced by expanding the market.

the products from cannabis flowers attract tourists to Colorado
the products from cannabis flowers attract tourists to Colorado
Source: Colorado Department of Agriculture, Industrial Hemp

Because Virginia was not one of the first states to legalize recreational marijuana, growers remained underground and sellers operated in a black market. No Virginia-based strains developed a broad, brand name recognition and no Virginia-based growers developed a broad reputation for a quality product. Virginia ceded the business growth opportunity, because it was "late to market" compared to other states.

The Virginia wine industry has demonstrated the time and effort required to create a market for a locally-grown and locally-processed agricultural product in Virginia. The wine industry required decades to overcome the general public's perception that good wine came from California and Europe, and to get customers to say "make mine Virginia wine."11

cannabis buds produce the oils, terpenes and other flavoring agents that define the commercially-valuable differences between different strains
cannabis buds produce the oils, terpenes and other flavoring agents that define the commercially-valuable differences between different strains
Source: State of Colorado, Energy Use in the Colorado Cannabis Industry (p.10)

The banking industry has demonstrated the impact on Virginia corporations when state barriers to commerce are loosened by changes in Federal law. During the deregulation initiatives of the 1980's, Virginia was slow to allow banks to expand with branches, protecting small-town banks from competition with bigger banks based in the urban areas.

North Carolina provided easier opportunities for its banks to expand. They gained experience acquiring and integrating smaller banks into larger corporations. When a 1985 Supreme Court decision liberalized interstate banking, North Carolina banks were better prepared for competition. Virginia banks were swallowed up, and corporate headquarters were moved to Charlotte.12

If the Federal government legalizes recreational marijuana use, then a few large growers are likely to dominate the wholesale market. Just as a few bourbon distilleries are concentrated near the clean water of limestone formations in Kentucky and Tennessee, one region could become the primary center of marijuana production.

Though Colorado legalized recreational use first, the Emerald Triangle of Northern California and Southern Oregon is a top contender for primacy in the marijuana business. Individuals operating outdoor farms and indoor "grow houses" there have learned from decades of experience how to breed specific strains and extract preferred oils from cannabis plants.

growing industrial hemp outdoors in Colorado includes acquiring water rights for irrigation
growing industrial hemp outdoors in Colorado includes acquiring water rights for irrigation
Source: Colorado Department of Agriculture, Industrial Hemp

In addition to being a center of practical experience, the Northern California and Southern Oregon region also offers low electricity costs and a mild climate that reduces heating/cooling costs. Grow houses there can be "mixed," with windows opened at suitable times to allow air circulation.

Federal legalization could create a shift in marijuana production that mimics the shift in computer storage and processing to the cloud. When companies first automated their operations in the 1980's and 1990's, they built small computer centers in their local offices. Later, even small companies shifted their data storage and processing to a relatively few data centers, shutting down the small computer centers within the company-owned buildings.

Marijuana growing also started in the 1960's with small, decentralized operations. Fragmenting the farming and processing operations minimized the risk of discovery by law enforcement officials, and minimized the initial investment required by marijuana capitalists to initiate their start-ups.

If legalized, larger and more cost-effective grow houses are likely to replace most of the black market indoor growing operations scattered in garages, basements, barns, and warehouses. Illegal and small facilities may disappear as investors finance larger facilities that benefit from economies of scale.

Legal grow houses will also require extra capital to meet regulatory requirements such as monitoring of pesticide applications, product testing, and security. Since each plant is worth thousands of dollars, theft is a constant risk for marijuana-producing operations. To reassure investors that product will not be diverted, grow operations may implement security that exceeds the requirements established by official laws and regulations.

outdoor grow operations require security to prevent theft, and simple screening/fencing is not adequate
outdoor grow operations require security to prevent theft, and simple screening/fencing is not adequate
Source: San Bernardino Sheriff's Department, Search Warrants - Outdoor Marijuana Grow (Phelan/Pinon Hills, June 21, 2018)

Acreage and electricity requirements of grow houses resemble those of data centers filled with computer servers. Just a few processing plants near centralized grow houses could create the majority of the tetrahydrocannabinol (THC), the primary psychoactive ingredient in marijuana that produces the "high," and the non-psychoactive cannabidiol (CBD) thought to provide health benefits, needed to meet demand of a national and even international market.

Assuming Federal legalization, grow houses that produce the least expensive cannabis-related materials will capture a substantial part of the market. There will be a substantial demand from processors for low-cost cannabis-derived oils that can be infused in edibles and other items. Generic products sold in stores will compete primarily on cost, in contrast to brand name products.

Even branded marijuana products may seek the lowest-cost raw material. Packaging, advertising, celebrity endorsements, and other branding efforts can entice customers to purchase marijuana products without evaluating the source of the marijuana. The marketing of liquor may serve as a model, where companies price and advertise products based on aspects other than the source of the alcohol.

Advertising the health effects of various cannabis-derived products can be done without highlighting the source of the cannabidiol (CBD). For users seeking psychoactive effects, customers may not discriminate based on the specific strain from which the material was produced so long as the percentage of tetrahydrocannabinol (THC) is adequate.

Assuming Federal law changes, Virginia growers and processors still will have difficulty competing with Colorado or the Northern California/Southern Oregon region for production within indoor grow houses. Virginia facilities could be located in low-cost areas such as Mecklenburg County, which has already attracted a Microsoft data center. The milder climate of Hampton Roads There is less probability of placing grow houses near the data centers in the "Internet Alley" of Loudoun County, due to the high cost of land near the fast internet connections there.

Virginia has a better opportunity to compete in the outdoor grow market, for items with tetrahydrocannabinol (THC) that will be smoked. Marijuana plants are affected by the combination of soil, slope, aspect, elevation, and climate, just as grapes for wines are shaped by the terroir in which they grow.

plants from outdoor grow operations are affected more by local soil and climate than plants from indoor grow houses
plants from outdoor grow operations are affected more by local soil and climate than plants from indoor grow houses
Source: State of Colorado, Energy Use in the Colorado Cannabis Industry (p.25)

There may be a niche market for marijuana affected by specific geographic factors. Indoor grow operations are affected by location, especially mixed grow houses that open windows and allow local microorganisms to circulate in the air, but site-specific factors will have the greatest impact on outdoor marijuana farms.

Tourists might be enticed to visit places where Virginia-grown products are grown and processed, comparable to wineries. "Cannacultural areas" could be defined, comparable to the viticultural areas created for marketing Virginia wines. If the cannabis equivalent of wine snobs is large enough, Virginia farmers could develop outdoor grow operations and retail outlets despite the competition from outside the state.

Creating what could become a $1.8 billion industry created new economic opportunities. In other states, the business owners in the marijuana industry were 80% white, so Virginia legislators explored how to provide capital or incentives to expand diversity together with legalization. Elected officials also considered the impacts of expunging previous convictions for simple possession, since blacks had 350% greater risk to be convicted that whites.

The 2021 legalization debate in the General Assembly focused on three issues:13

How the state should address past criminal convictions, what steps the state should take to make sure Black entrepreneurs have a chance to make money in the legal marketplace and how the state should spend the estimated $300 million in annual new tax revenue that market is expected to generate.

One force driving the legislature to legalization was the availability of recreational marijuana in the District of Columbia, and perhaps soon in Maryland and possibly West Virginia. For decades residents of Virginia had purchased alcohol in the District, where prices were lower, and brought bottles back across the Potomac River. Possession of marijuana without medical authorization remained illegal in Virginia at the start of the 2021 General Assembly, but there would be minimal impacts if a customer brought marijuana from DC into Virginia. In 2020, the legislature had decriminalized possession; those caught would pay just a $25 fine.

As the 2021 General Assembly considered legalization, a commentator noted that the loss of tax revenue would affect their decision:14

...lots of Virginians use marijuana today and many of those Virginians are likely to go to D.C., Maryland or even West Virginia to buy their pot once those jurisdictions legalize recreational use and establish retail operations. No tax revenue will accrue to Virginia, it will all go to the neighboring jurisdictions.

The legislators struggled to pass the legalization, including proposals to expunge old criminal records for marijuana possession and to ensure some form of equity in the issuance of licenses. The legislation included a priority for issuing licenses to those who had a conviction for a marijuana-related crime, to people who had graduated from a Historically Black College and University (HBCU) in Virginia.

The General Assembly made a clear commitment to authorize sale of marijuana for recreational use starting in 2024, and the new Virginia Cannabis Control Authority will regulate the new retail marketplace. Fundamental decisions on how to license manufacture and distribution of recreational marijuana were postponed until a future session of the General Assembly. In addition, possession was not legalized. The $25 fine was retained to deter creation of a wide-open market with no oversight for the three years required to establish state-enforced rules.

The delay between legalizing recreational use and establishing legal recreational sales reflected the difficulty in identifying how to prioritizing licenses. In Illinois, the legislature created a lottery system with preferences designed so members of minority communities, women and veterans would win a high percentage of the 500 licenses to be awarded.

Lawsuits delayed the awards for two years. While non-traditional applicants had to wait for the lottery process, the state allowed medical marijuana businesses to expand into retail recreational sales. The medical marijuana businesses were primarily white-owned companies, so the social equity goals of the Illinois legislature were not met initially.15

the Northern Virginia growing, processing, and sale facility for medical marijuana in 2021
the Northern Virginia growing, processing, and sale facility for medical marijuana in 2021

Delay in full legalization of marijuana for recreational use created opportunities for entrepreneurs willing to exploit regulatory confusion and gaps. The 2018 Farm Bill authorized use of hemp byproducts, limiting use only of hemp products which contained Delta-9-THC. Virginia lawmakers omitted limits on use of products with Delta-8-THC, which has a psychoactive effect but was less intoxicating than Delta-9-THC. Sellers of the synthetic marijuana exploited the legal loophole, mimicking how "K2" and "spice" were sold until banned by the 2012 Synthetic Drug Abuse Prevention Act.

By 2021, it was common to see shelves at gas stations and various stores selling not just cannabidiol (CBD), but also other marijuana-related products suggesting they would offer a psychoactive effect. Standard hemp buds with less than 0.3% tetrahydrocannabinol (THC) were sprayed with Delta-8-THC, and that byproduct was manufactured into edibles such as gummies and cartridges for vaping.

The Delta-8-THC sprayed on the hemp was not extracted from the plant; natural concentrations were too low. Instead, the chemical was synthesized in a laboratory from cannabidiol (CBD) in an unregulated process. There was no safety data regarding possible byproducts for customers to consider before purchase. A Virginia Commonwealth University professsor noted the lack of basic consumer health and safety data for a product that would be taken internally:16

You cannot trust the label... It can also contain all of these other chemicals like solvents and acids that would be dangerous for the consumer to take. So these Delta-8 products are not quality tested... You're trusting the shop who manufacturer the product to tell you what is in the product. That is the fox watching the hen house.

One consumer of a Delta-8 product was surprised by the effect:17

I ate a whole gummy... And I was like, "Whoa, it just feels like the real thing."

Unlike Virginia, many states which had legalized marijuana for recreational use allowed no loophole for Delta-8-THC products to be sold without state taxation or regulation for quality control, including unsafe additives. A lawyer for the industry claimed they were all byproducts authorized under the 2018 Farm Bill, and were legal even in states which did not allow recreational marijuana sales:18

Delta 8, if it is derived from hemp, or extracted from hemp, that is considered hemp... Adding another wrinkle, a lot of labs do not have the capability of delineating between Delta 8 and Delta 9.

sales outlets and advertising for Delta-8 products were a common sight in Virgina in 2021
sales outlets and advertising for Delta-8 products were a common sight in Virgina in 2021

That claim ignored the 2020 decision by the Drug Enforcement Administration that synthetically-derived tetrahydrocannabinols were not legalized by the 2018 Farm Bill which authorized production of industrial hemp products. Manufacturing Delta-8-THC required chemical synthesis of cannabidiol (CBD) in a laboratory, so the Federal agency ruling made Delta-8-THC a Schedule I controlled substance. In addition, the Federal Analog Act could also be interpreted to make Delta-8-THC illegal.

By 2021, at least 18 states had banned chemically synthesizing Delta-8-THC products. The authorization was under review in four states, while Delta-8-THC products remained legal in 28 states and the District of Columbia.

Because Virginia failed to clearly ban Delta-8-THC products, they remained readily available in retail stores. Because there were no regulations regarding the quality or materials within Delta-8 products, and little understanding of whether synthesis created toxic or harmful byproducts, hospitals struggled to understand how to respond when children ingested Delta-8-THC by accident and suffered negative reactions. in October 2021, the Attorney General issued a warning:19

...about the dangers of cannabis edibles and hemp derivatives in packaging designed to look like well-known snack foods and candy, which are marketed towards children. These products are unregulated, illegal, and may be extremely dangerous, especially if they are ingested by children.

unregulated marijuana was packaged to resemble standard commercial products
unregulated marijuana was packaged to resemble standard commercial products
Source: Virginia Attorney General, Attorney General Herring Warns Against Unregulated, Illegal Cannabis Products Sold In Look-Alike Packaging

The 2021 debate in the General Assembly to completely legalize marijuana for recreational use was complex. The legislature ultimately legalized possession of no more than one ounce, and retained the low $25 civil penalty for possession of more than an ounce but less than a pound. Up to four marijuana plants could be grown inside a house, but no mechanism was authorized for purchase of marijuana seeds or seedlings or for purchase of up to an ounce of processed marijuana.

Legislators struggled to how the Virginia Cannabis Control Authority should consider social equity when deciding which licenses to grant, and to use licenses to facilitate economic development in areas disproportionately policed for marijuana crimes. Debates concentrated on making it a priority to grant licenses to communities affected by drug crime enforcement, using profits for reparations, exempting cannabis businesses from right-to-work laws, repealing mandatory minimum sentences, and expunging records for past drug convictions. Proposals to schedule resentencing hearings for people already incarcerated on certain marijuana charges were not included in the 2021 legislation.

The final legislation authorized the Virginia Cannabis Control Authority to issue licenses for:
- 400 retail marijuana stores
- 25 marijuana wholesalers
- 60 marijuana manufacturing facilities
- 450 marijuana cultivation facilities

The legislators sought to limit vertical integration to small businesses, in response to concerns that existing industrial hemp processors and medical marijuana growers would have an unfair advantage. Companies licensed by the Board of Pharmacy to grow, process, and sell medical marijuana were authorized to obtain one license to sell marijuana for recreational purposes and to then sell that product at all authorized dispensaries, but only after paying a $1 million fee and submitting a diversity, equity, and inclusion plan to the Cannabis Business Equity and Diversity Support Team.

Key legislators viewed the enforcement of marijuana laws and the "War of Drugs" initiated by President Nixon as a vehicle to punish anti-Vietnam War leftists and people of color. They searched for agreement among a majority of legislators on how to to direct benefits from legalization to areas and groups of people which had been disadvantaged by selective law enforcement.

between 2003 - 2014, marijuana possession arrests increased 76% in Virginia while decreasing overall at the national level
between 2003 - 2014, marijuana possession arrests increased 76% in Virginia while decreasing overall at the national level
Source: Drug Policy Alliance, Racial Disparities in Marijuana Arrests in Virginia (2003-2013) (Figure 1, p.3)

No consensus on the sales process was reached, leading to creation of the Virginia Cannabis Control Authority, Cannabis Public Health Advisory Council and the Cannabis Equity Reinvestment Board to "complete regulations, implement a social equity program, and issue business licenses." The Cannabis Equity Reinvestment Board was given responsibility to manage the Cannabis Equity Reinvestment Fund, using marijuana tax revenues to enhance communities that were disproportionately affected by drug law enforcement.

The disagreements among legislators also led to potential delay of full leglization until 2024. One legislator concerned about how social equity would be considered when issuing licenses said:20

I don't know if I'd call it an equity program... I'd call it a give-a-criminal-a-company program.

A Republican legislator from a Southside district flipped the equity argument, which traditionally was advanced by Democratic legislators representing urban areas. He proposed that people living in economically distressed areas be designated as "social equity" applicants. Since most of the economically distressed areas in Virginia were rural counties, that approach would have prioritized a different set of applicants. A story in Cardinal News said:21

Think of it as rural affirmative action.

if living in an economically distressed area qualified somone as a social equity applicant, then rural areas would have been prioritized for recreational marijuana licenses
if living in an economically distressed area qualified somone as a social equity applicant, then rural areas would have been prioritized for recreational marijuana licenses
Source: Virginia Economic Development Partnership (VEDP), Virginia Investment Performance Grant (VIP)

Delay gave Virginia officials time to evaluate the different approaches used by Colorado, Washington, California, and other states. The "lessons learned" could help in designing a sales program which met different goals, including addressing the inequities of past enforcement of marijuana laws. The delay also provided time to establish procedures for ensuring market competitiveness for new licensees. If companies with existing licenses to sell medical marijuana were allowed to retail marijuana for recreational use, then the incumbents would have a "head start."

California offered one example of limting the opportunities to sell legally. The state imposed tight regulations limiting chemical residues in legal marijuana,established high tax rates, and allowed local jurisdictios to block the opening of dispensaries within their city/county boundaries. California ended up with a very small number of legal outlets, selling recreational marijuana at a price so high that the illegal market continued to thrive. Unlicensed outlets openly sold cheaper products, because no cultivation or excise taxes had been paid and state-mandated quality control measures were ignored.

legislators in 2021 delayed full legalization of recreational marijuana, and tasked the Virginia Cannabis Control Authority to propose regulations for commercial sales that would address social equity
legislators in 2021 delayed full legalization of recreational marijuana, and tasked the Virginia Cannabis Control Authority to propose regulations for commercial sales that would address social equity
Source: Commonwealth of Virginia, Cannabis in Virginia: Frequently Asked Questions (FAQ)

The bill initially approved by the legislators did not authorize possession for recreational use until 2024, so there was the potential for 30 month of arrests for acquiring a product that the state planned to legalize for sale. The governor amended the initial bill to accelerate the legalization date to July 1, 2021, largely in response to concerns about inequity in policing:22

...from 2010 to 2019 the average arrest rate of Black Virginians for marijuana possession was more than three times higher than that of white residents for the same crime—6.3 per 1,000 Black individuals and 1.8 per white people. This is despite the fact that Black Virginians use marijuana at similar rates as white residents. The conviction rate was also higher for Black individuals.

Getting the legalization language adopted involved multiple compromises within the House of Delegates and State Senate. Both houses passed a bill that they recognized as seriously flawed in order to give Governor Northam an opportunity to propose amendments which would resolve remaining differences. Two Republicans in the State Senate dropped their support when hey saw the amendments.

The governor's amendments were adopted on a partisan vote; no Republicans voted in favor. Because one Democrat in the State Senate voted against the governor's proposed changes, the Lieutenant Governor cast a rare tie-breaking vote to adopt the amendments on a 21-20 decision.23

legalization of marijuana possession for recreational use was a major news story in April, 2021
legalization of marijuana possession for recreational use was a major news story in April, 202

One man invited to witness Governor Northam signing the bill to legalize recreational use was a "marijuana martyr." Back in 1974, Roger Trenton Davis had been sentenced to 40 years for possession of nine ounces of marijuana by a jury in Wythe County Circuit Court. Rolling Stone magazine highlighted his sentence as an example of excessive punishment, noting that the maximum sentence at the time on a conviction for child molestation was just five years. The U.S. Supreme Court upheld the 40-year sentence, but Davis was released on parole in 1984.

Governor Northam's actions and the General Assembly's legislation included provisions for reducing the impact of arrest and conviction for possession and sale of marijuana in the past. Charges for possession were sealed in 2020, reducing the potential for employers to discriminate in hiring. Charges for misdemeanor possession with intent to distribute were sealed in 2021, and the state established a process to petition a court to seal seal felony records related to marijuana.

The 2021 law still allowed employers to test for marijuana use and discriminate against hiring users, including punishment for those who tested positive. Some companies such as the Virginia Commonwealth University (VCU) Health System dropped their pre-hire drug screening process, but continued to prohibit being under the influence while at work. Tests were likely to reveal tetrahydrocannabinol (THC) even weeks after use, but a positive result could affect job prospects - particularly in businesses with Federal contracts, since the Federal restrictions were not affected by changes in Virginia law. Amazon continued pre-screening for marijuana use only for positions involving the US Department of Transportation, such as delivery drivers.

Chesterfield County decided that even medical marijuana use by employees would remain prohibited, and continued its random drug testing program. Dominion Resources announced and HCA Healthcare that they planned to maintain their zero-tolerance policy regarding substances banned by the Federal government in the Drug Free Workforce Act, with no exception for marijuana. Even after Altria Group Inc. purchased a company which sold medicinal and recreational cannabis in Canada, it planned to continue post-accident screening of hourly manufacturing employees to help assess if marijuana use was a factor.

Colleges in Virginia continued to ban use of marijuana, fearing that authorization would lead to cuts in Federal funding for violating the Drug-Free Schools and Communities Act. Students could smoke a joint at an off-campus apartment, but not in an on-campus dormitory.

College disciplinary action was legitimate for using marijuana only on college property. Colleges advertising themselves as a drug-free campus could not punish students for posession on a city-owned sidewalk outside a college-owned residence hall. Possession in a city sidewalk was legal, but public use was still illegal. City police could punish students for smoking marijuana on a city sidewalk, since recreational use was legal only in a private setting.

College athletes faced even tighter restrictions. The National Collegiate Athletic Association (NCAA) still arranged for random drug tests, and athletes testing positive for cannabinoids or narcotics lost the right to play for 50% of the season.

In addition, authorization to grow up to four marijuana plants at home did not extend to people living in Federally-subsidized housing. They were still prohibited from growing marijuana, since state legalization had no impact on Federal government regulations. A high percentage of residents in subsidized housing were people of color, so racial discrimination related to marijuana use still continued.24

in 2021, the General Assembly legalized growing marijuana at home
in 2021, the General Assembly legalized growing marijuana at home
Source: Commonwealth of Virginia, Cannabis in Virginia: Frequently Asked Questions (FAQ)

Though sale of marijuana for recreational use would not be legalized until 2024, one business in Winchester planned ahead. Celebrity's Hemp Dispensary opened on June 26, 2021 as a store selling hemp and cannabidiol (CBD) products that were legal. The owner was a state-certified hemp producer and processor, and intended to get licensed to produce products with tetrahydrocannabinol (THC). She was building the business in anticipation of being able to sell recreational marijuana as soon as possible.25

Stores opened across the state to educate and supply home growers. Though the sales of seeds, plants, and marijuana products for recreational use remained banned until 2024, there was a market for hydroponic equipment, grow lights, potting mix, and "how to" guidance. Chains quickly emerged; for example, Happy Trees opened stores in Petersburg, Fredericksburg, and Richmond.26

Violators of the relaxed constraints on possession were still arrested after July 1. A Chesterfield man was charged with felonies in August, 2021, after the person sharing his house reported he was growing too much marijuana. Police found over 50 marijuana plants plus 1.5 pounds of bagged material that they suspected to be processed marijuana. The grow operation far exceeded the legal number of plants, and possession of a pound or more was still a felony.27

The 2022 General Assembly failed to pass legislation that would speed up the 2024 date for legal sales of marijuana for recreational use.

Between 2021-2022, partisan control of the House of Delegates had shifted to the Republican Party. New committee chairs were responsible for guiding legislation that largely mirrored proposals which Democrats had sponsored the previous year except for one key issue. In 2022, proposals to ensure equity blocked full legalization from being enacted. Advocates such as the organization Marijuana Justice sought to shape the new licensing process so members of minority communities, with less access to capital, could compete against the medical marijuana businesses and idustrial hemp processors seeking to gain early dominance in the market.

In a House of Delegates subcommittee, the one bill that would have created a retail sales program died on a party-line vote. Advocates noted that illicit sales networks would expand unless a regulated market was established. However, a Republican leader claimed the issues were too complicated to resolve in the 60-day legislative session:28

It was kind of like buying a really old car... You knew it had some problems, but then the more you get under the hood, the worse and worse it gets. And it's just going to take more work than what we can do in one session to fix this thing.

Democratic delegates who supported legalization in 2022 responded that the 5-3 partisan vote killing the bill would increase illegal sales in school yards and gas stations, rather than advance law and order. By one estimate, Virginia had the fourth-largest illicit market in the United States. One delegate disappointed by the delay commented:29

We are basically providing a year for the growth and strengthening of the illicit market.

The 2022 General Assembly sought to close the Delta-8-THC loophole created when the US Congress passed the 2018 Farm Bill. The legislature approved SB 591, which redefined "marijuana" to include:30

...any substance containing a total tetrahydrocannabinol concentration that exceeds 0.3 percent or more than 0.25 milligram of tetrahydrocannabinol per serving or more than one milligram per package... The bill defines "tetrahydrocannabinol" to include any naturally occurring or synthetic tetrahydrocannabinol, including its salts, isomers, or salts of isomers.

The 2022 General Assembly did manage to pass a bill to regulate Delta-8 and other synthetic marijuana products. It authorized all synthetic THC products for sale with some regulations and lab-testing requirements, but continued to restrict sale of natural marijuana products not modified in a laboratory. One opponent commented:31

We are legalizing retail marijuana. Straight up. It's just that we're going to call it hemp.

The legislature also altered recreational marijuana use, acting through the budget process after legislation failed to get approval. Over 90% of the members of the State Senate and 75% of the members of the House of Delegates had supported a ban on making marijuana products in the shapes of a human, animal, vehicle, or fruit, designed to be attractive to children.

However, the governor returned the bill with a proposal to make possession of two ounces up to one pound of marijuana a misdemeanor. This was similar to what the Joint Legislative Audit and Review Commission (JLARC) had recommended in its 2020 study of marijuana legalization. The legislators initially refused to make possession of less than a pound a criminal offense again. The two houses rejected the governor's proposal and killed the popular legislation.

The governor then cut a deal with the three legislators who negotiated with him on reconciling state budget proposals, which were $3 billion apart. The governor amended the budget to re-criminalize possession of four or more ounces up to a pound, making that a Class 3 misdemeanor with a $500 fine. A second conviction would be a Class 2 misdemeanor with a penalty of up to $1,000 fine and possible jail time.

Perhaps an even greater punishment was that a person convicted of a misdemeanor for possessing more than four ounces would have a criminal record. That record would limit their ability to get a job or affordable housing. /p>

The results surprised the other 97 legislators, who were forced to approve the new criminal provision for possession rather than reject the entire budget. Time pressure was tight; the deal was announced just 30 days before the start of the next fiscal year.32

Since four plants could produce as much as a pound of marijuana, the 2022 change in the law created a risk that someone legally growing four plants at home could be arrested and convicted of a misdemeanor. One solution for home growers would be to put seeds into pots at different times and harvest one plant every three months, so the product would be used up before the next harvest.

Hemp in Virginia

Medical Marijuana in Virginia

stores to support growing four marijuana plants at home opened in 2021 across Virginia
stores to support growing four marijuana plants at home opened in 2021 across Virginia
Source: Happy Trees, About

Links

References

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