Virginia: The Road to Adult Use Cannabis Legalization

The Virginia General Assembly is currently considering adult use cannabis legalization this session. Governor Northam has made it a priority. The legislative black caucus has endorsed it and the legislative sponsors in both chambers are senior members of their caucuses.

However, there remain a few hurdles to passing this legislation.

First, the adult use legislation does not guarantee adult use cannabis licenses to the existing medical cannabis operators in the Commonwealth. This is an issue. These medical operators are licensed and are currently growing cannabis and have started to sell to the medical population. They should be able to share in the future Virginia adult use cannabis program to ensure continuity of the medical program and its medical population. Moreover, these operators have an existing infrastructure in place that would allow them to carry over their operations into the adult use market place ensuring a quick and seamless transition to the adult use program while not leaving behind any medical patients. There have been some concerns among progressive members in the House of Delegates in particular that worry about “big cannabis” overtaking and running the cannabis programs in Virginia. This is inaccurate thinking. The Virginia adult use program is modeled largely on the Illinois adult use model. For the most part, Illinois has transitioned into an adult use regulatory program quite well. In that process, Illinois has seen its existing medical operators also become adult use operators while smaller “craft” style adult use licenses and social equity licenses thrive. The point being – you can have a strong adult use marketplace with both small and big operators as well as ensuring licenses to social equity applicants.

Another sticking point remains around the prospect of mandating the regulatory structure of “vertical integration”. This refers to the state requiring all cannabis operators to be able to carry out all aspects of the cannabis business from cultivation to extraction to distribution and retail. Vertical integration can be a very good model in terms of the state’s ability to regulate and keeping costs generally low for patients and consumers but it can pose some concerns around creating distinct monopolies and the notion of creating “big cannabis” as outlined above. If the concern is about having too few operators involved, Virginia legislators should strike a middle ground where they can allow smaller operators into the process while allowing for a few distinct numbers of vertical operators. Many states, such as Pennsylvania have followed this approach and looks to be working reasonably well.

Finally, there has been much discussion about the timing of implementing the adult use program and when to remove criminal penalties associated with cannabis. The main argument for delay is to allow the state and the regulatory agencies that would regulate cannabis the necessary time to promulgate key rules and regulations. Again, a middle ground can be reached with this approach. For example, remove the criminal penalties associated with cannabis to be removed July of this year and potentially implement a delay for the adult use program so it can come online without a hitch.
Having worked for both Senator Mark Warner and Governor Terry McAuliffe, I have always been impressed with the state legislature’s ability to compromise and find common ground to enact rational, middle of the road and responsible legislation. These are important policy decisions and there is no right answer. Virginia will likely come to consensus and pass an adult use. Will it be perfect and make everyone involved pleased? No. However, as my former boss Senator Warner would say, if both sides were not 100% thrilled with the outcome, you have usually done something right. Hopefully, Virginia will continue to follow this approach in terms of cannabis legalization.

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