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Partisan divisions cloud future of Virginia’s legal weed industry

A lack of legislative action caused by competing priorities in the state House and Senate could give the black market a boost.

RICHMOND, Va. (CN) — A state Senate subcommittee lobbed an opening volley in the political war over the future of Virginia’s legal marijuana industry Wednesday.

The vote to advance a temporary legal retail option to its next step sets the stage for a divided legislature to compromise on a legal market or cede control to the black market and a handful of medicinal providers. 

At issue is the future of a large 2021 legalization bill passed with Democratic control of both chambers and the governor's mansion. The law included a myriad of social equity measures — opposed unanimously by Republicans — to be implemented over a three-year timeline, creating a new regulated market by 2024. But it also included a reenactment clause which requires this year’s General Assembly – now split with Republicans in control of the House of Delegates – to approve another round of laws to fully realize a marketplace. 

Besides the retail bill, two other pieces of marijuana legislation complicate the 2022 effort. Simple possession and personal cultivation were legalized independent of last year’s market bill, and a series of earlier measures opened up a limited medicinal market to a handful of pharmaceutical producers by legalizing botanical cannabis, the flower product most are familiar with, for medicinal purposes.

Now, absent a legal retail market, legislators from both sides of the aisle are vying to speed up the process to stop the growing black market from gaining too much ground and forcing taxes and regulations on future legal weed businesses that Virginians won't pay. 

"The overriding top-tier concern is that we have to have a regulatory structure in place for retail sales that does not encourage the black market," said Garren Shipley, a spokesperson for GOP House Leader Todd Gilbert, in early January. But Gilbert’s chamber has yet to hold hearings on a bill laying out the steps to achieve that goal. 

The Senate Committee on Rehabilitation and Social Services, meanwhile, offered a first glimpse at how the Democrat-controlled chamber plans to address the issue during a meeting Wednesday morning.

First there’s a transitional bill, one that addresses the urgent need for market development while leaving the door open for better regulation in the future. Democratic Senator Adam Ebbin’s bill, which the committee advanced on a party-line vote, would open up retail through existing pharmaceutical companies in January 2023.

Notably, Ebbin’s bill started with inclusions for the state’s farmers. That need was illustrated during public comment when Dinwiddie farmer Anthony Jones spoke in support of the original language.

“I can put these genetics [seeds] into organic ground which will give me the chance to catch up,” he said during the two-hour hearing, pointing to the early market spots the pharmaceutical companies got through medicinal legislation.

Jones said he also hoped to be among the applicants of the 2021 minority business carve-out, which seeks to offer social equity to Black and brown Virginians who have long been subject to uneven marijuana law enforcement. 

But Ebbin's bill was ultimately rolled in with Republican Senator Siobhan S. Dunnavant's transitional bill, and farmers' role in the process was removed. 

“There are many obstacles for Virginians getting medical marijuana,” said Dunnavant, a practicing physician and longtime medicinal marijuana advocate. “They’re subject to untested and uncontrolled marijuana.”

She suggested the pharmaceutical operations were as clean as hospitals and they could get quick, high quality and safe products to those in need.

“We can solve that problem with this bill,” she said. 

The exclusion of agribusiness was a nonstarter for Gentry Lock Consulting President Greg Habeeb, who represented the state’s hemp farmers during Wednesday’s hearing. 

“We oppose any bill that allows priority access to a select groups of people, in this case pharmaceutical processors,” he told committee members. 

In an interview after the hearing, Habeeb said he thinks the exclusion of farmers is part of a broader division developing between the chambers. 

While the Senate appeared to favor pharmaceutical companies, the House's proposed omnibus legislation favors farmers. The Senate is seeking to increase taxes and fees while the House wants to reduce them. And while the Senate is prioritizing the social equity carve-outs, the House is more interested in a race-blind, market-driven approach. 

“They couldn’t be moving away from each other faster,” said Habeeb, a former state lawmaker.

The growing separation might be strategic, said one legislative aid close to the situation who asked not to be named.

Both chambers will have to pass their respective bills, but they’ll end up in the other’s lap before heading to conference committee. That’s where negotiations will happen and where those divisions could be whittled away to form a future legal market. 

What social equity offerings and stipulations for farmers will survive during those bargaining sessions remains to be seen. 

Habeeb’s past work in the House makes him think there might not be much of an appetite from Republicans to fix a problem they argue Democrats created. 

“The only thing worse than no bill is a bad bill,” he said, noting that pressure to regulate could inspire something worse and unpassable. And it's not clear if, absent a successful vote by the end of 2022, either party would suffer for it. 

The winners in the no-legislation scenario, the legislative aid said, are sellers in the black market who could “consolidate their control while the eventual market would have to deal with taxation.”

The future of a legal weed market in Virginia remains unsure, but there’s still hope that something will pass. Chief among the hopeful is JM Pedini, executive director of Virginia’s chapter of the National Organization for the Reform of Marijuana Laws, known as Virginia NORML.

“At some point, the legalization conversation has to prioritize consumers,” Pedini said after Wednesday’s hearing, suggesting Virginians want a market that is both safe and legal. They also pointed to Gilbert’s black market concerns, which are shared by new Republican Governor Glenn Youngkin, as grounds for some future compromise. 

“Far too often the debate focuses on who gets to make money first or next off of them,” Pedini added. 

Habeeb is staying hopeful too. He said his hemp-farming clients are fine with social equity measures as long as they can get a role in the business early. 

“Virginia agriculture is a hurting industry and this is an opportunity to get a piece of a growing industry,” he said. “We want to make sure they’re included.”

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