Legalization of Marijuana is Coming to Virginia – And Sooner Rather Than Later

Effective July 1, 2020, we saw the decriminalization of marijuana in Virginia. Legislation passed then provided for a civil penalty of $25.00 for possession of up to one ounce of marijuana. No arrests could be made and no criminal records could be created. The legislation explicitly sealed past marijuana convictions from employers and school administrators. Later in 2020, legislation was passed which allowed individuals to pre-pay their civil penalties, much like a traffic citation, which eliminated the need to appear in court. Even greater strides were taken by the 2021 Virginia General Assembly. Legislation was enacted to legalize the cultivation, sale and possession of marijuana. The regulatory structure of the legislation will be implemented in stages over the next three years, with certain provisions requiring re-enactment each year.

Beginning on July 1, 2021, it will be legal under state law for adults 21 and older to possess up to one ounce of marijuana, without the intent to distribute. In addition, adults 21 and older are permitted to cultivate up to four marijuana plants per household for personal use at their place of residence. “Household” is defined as those individuals, whether related or not, who live in the same house or other place of residence. Each marijuana plant must not be visible unaided from the public right of way, must be labeled with a tag that includes the individual’s name, driver’s license or identification number and a notation that the marijuana plant is being grown for personal use. Also, precautions must be taken to prevent unauthorized access to the plants by individuals under the age of 21. The legislation allows for “adult sharing” of marijuana which means transferring marijuana between individuals who are 21 years of age or older without renumeration. The legislation prohibits consumption of marijuana or marijuana products in public and by drivers and passengers of motor vehicles.

July 1, 2021 is also the date upon which the Virginia Cannabis Control Authority (the “Authority”) is established. It will be an independent agency of the Commonwealth, overseen by a five-member board, that is tasked with regulating all aspects of marijuana production, distribution, sale and possession in the Commonwealth. The Authority will be vested with numerous duties including, but not limited to, issuing regulations, approving licenses and enforcement. The Authority may adopt regulations as soon as July 1, 2022 but no later than July 1, 2023. During that time period, the Authority will establish a regulatory scheme for the cultivation, wholesaling, distribution and sale of marijuana and marijuana products as well as establish a licensing structure, fees and criteria for social equity license applicants. Application requirements will become available on July 1, 2022. The Authority may begin accepting license applications as soon as July 1, 2023 and full commercial sale of marijuana will begin on July 1, 2024. Social equity applicants, registered hemp processors and pharmaceutical permit processors will be given licensee preferences.

The Authority is vested with the power to issue licenses in four categories: cultivation (up to 450, broken down into Class A and Class B licenses), product manufacturing (up to 60), wholesale (up to 25) and retail (up to 400). There will exist restrictions on vertical integration and on anti-labor activity as well as provisions for geographic disbursement of retail stores. A state tax of 21% will be levied on the retail sale of marijuana and marijuana products. Additionally, any locality may, by ordinance, levy a 3% tax on any sale which is in addition to the 21% state tax. The revenue from legal sales will help fund preschool expansion and programs to redress the harm of racially disparate marijuana enforcement.

The governing body of a locality may, by resolution, petition the circuit court for the locality for a referendum on the question of whether retain marijuana stores should be prohibited in the locality. If a majority of qualified voters vote that retail marijuana stores are allowed, no subsequent referendum may be held within that locality. If a majority of qualified voters vote that retail marijuana stores are not allowed, a referendum on the same question may be held but not earlier than four years following the date of the previous referendum. King George County is the first locality in the Fredericksburg area to publicly discuss prohibiting retail sales of marijuana.

It is important to remember that marijuana is still classified as a Schedule I controlled substance by the federal government. That means it remains a crime to grow, sell and/or use cannabis.

The legislation is detailed, complex and best navigated by those well-versed in the cannabis industry. This article only provides a brief overview of what this area of the law will look like over the course of the next three years. There will be a multitude of business considerations to contemplate not to mention how legalization will affect pre-employment drug screening, CDL licenses, workers’ compensation claims and drug-free workplace mandates. Those interested in applying for any of the types of licenses that will be available or for more information on the subject need experience professionals to help them through the regulatory and licensure process. Ford Richardson is here to help.

Should you have any questions about the issues discussed here or other legal issues, please do not hesitate to contact the lawyers at Ford Richardson.

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