By: Dunlap Bennett & Ludwig
On July 1, 2021, Virginia became the first southern state to legalize adult recreational use of marijuana. It was a big step for the Old Dominion, but nowhere near a final step, as cannabis business clients have quickly realized.
The Virginia legislation – which legalized adult possession of up to one ounce of cannabis and set broad parameters for future licensing and taxation – kept sales illegal until 2024. That “go but wait” approach created anticipation mixed with unease for business owners wishing to take part in Virginia’s other green economy.
As clients look for guidance, it is important to understand the bounds of the current legislation while cautioning all seeking answers that everyone in the cannabis world is standing on shifting sands as they await detailed guidance from the Governor’s Cannabis Control Authority (CCA). When uncertainty regarding the CCA’s efforts mix with general uncertainty about administration changes, it is often easier to advise clients about the unknowns rather than the knowns. Attorneys can provide general guidance and update clients as regulatory plans solidify:
What Changed on July 1?
Adult recreational use went from being decriminalized in the Commonwealth to being legal. Simple possession and home cultivation became legal – as well as sharing of small amounts of cannabis provided there is no compensation or contemporaneous commercial transaction.
What Didn’t Change?
Possession of over one ounce of cannabis is still illegal, and all sales are illegal. With Virginia’s decriminalization efforts of recent years, that means that possession of amounts between one and sixteen ounces is punishable by way of a civil penalty (fine) rather than prosecution. How strictly prohibitions will be enforced is an open question; however, all clients wishing to take part in the cannabis commercial world once the CCA acts would be well-advised to pay close attention to what is and isn’t legal at this point.
What Do We Know About How Sales Will Work?
Not a lot, though the legislation signed by the Governor set out the numbers most business owners are concerned about. 21 – 6 – 3. Retail sales will be taxed at 21%. That amount will be on top of the 6% sales tax already charged in the state. Additionally, localities will be able to charge a 3% fee on sales.
How Will Licensing Work?
There will be a tiered licensing system with licensing for cultivators, testers, wholesalers, and retailers. Applications for licensing will be provided by the state, and applications will not be accepted until 2023.
Outside of those broad parameters, an attorney representing cannabis clients would be well-served to keep up to date with changing regulations and take this opportunity to advise clients generally as to best business practices so they are well-positioned to take advantage of what promises to be a tremendous, if uncertain, business opportunity.
https://www.cannabis.virginia.gov/
https://lis.virginia.gov/cgi-bin/legp604.exe?212+sum+HB2312
To learn more about Dunlap Bennett & Ludwig, contact us by calling 800-747-9354 or by emailing clientservices@dbllawyers.com.
