By: Michael Lehr

In 1970, former President Richard Nixon signed the Controlled Substances Act, outlining five “schedules” of drugs, with schedule 1 considered the most dangerous. Among the list include heroin, LSD, MDMA (also known as “ecstasy”), and a surprising – arguably more docile –member, marijuana. The very next year, Nixon infamously declared a “war on drugs,” stating that drug abuse was “public enemy number one.” While few across the country embrace the decriminalization or legality of addictive and dangerous drugs, such as heroin, citizens across the political and socio-economic spectrum grew to question if marijuana should remain on the list. State legislatures across the U.S. answered that question with a resounding “no” over the last decade. Since Colorado and Washington first legalized the recreational use of cannabis in 2012, an avalanche (pun intended) of other states soon followed.

As of March 2021, all but six states either decriminalized marijuana or allow it for medical or recreational use. Since 1979, Virginia has allowed medical professionals to prescribe marijuana and CBD oil to patients for the treatment of cancer and glaucoma. Va. Code § 18.1-251.1. Jumping aboard the new wave of cannabis-related laws, Virginia decriminalized marijuana in 2020, meaning that possession of one ounce or less of marijuana results in a civil penalty up to $25, with no jail time nor a criminal record. Va. Code § 250.1. However, since regaining the statehouse following the 2020 elections, Virginia Democrats led the charge to fully legalize marijuana for recreational use in the Commonwealth.

On February 27, 2021, the Virginia General Assembly passed Senate Bill 1406, which eliminates criminal penalties for the simple possession of marijuana for persons 21 years of age. The bill passed the house 47 – 44 and by an even narrower margin, 20 – 19 in the Senate. The bill also creates the Virginia Cannabis Control Authority (“CCA”) to establish a regulatory and licensing structure for the manufacture, distribution, and retail sale of cannabis in Virginia – mirroring Virginia’s Alcohol Beverage Control Authority (the “ABC”), which controls alcohol in the state. The original text of the bill proposed legalizing simple possession of marijuana in 2024, but due to pressure from citizens across the Commonwealth, the final version allows possession and use beginning July 1, 2021. Governor, Ralph Northam, signed the bill into law on April 21, 2021.

While some may see this as a win for the pro-marijuana lobby, key proponents of the bill note that this is but the first step in a lengthy process to full legalization. Individuals 21 and older may possess up to one ounce on their person and grow up to four plants at their home—though these plants must be kept from public view and be “tagged” with an identification or driver’s license number and state that they are strictly for personal use. However, commercial sales may not begin until 2024, leaving the current penalty in place for the next three years. Additionally, while this new law allows for immediate personal use beginning July 1, 2021, the process is only beginning for those seeking to expunge marijuana-related charges from their criminal records. Thus, while many recreational users celebrate what they see as back-to-back wins, others are beginning the long process of regaining an aspect of their lives, which won’t magically happen on July 1.

Over the next three years, the CCA will begin the arduous process of creating a structure for licensing the manufacture, distribution, and retail sale of marijuana. Thankfully the ABC’s decades of experience will likely serve as a helpful starting point, but nevertheless, the task is great. Once the CCA promulgates the rules and regulations for marijuana sales, expect a massive influx of investors seeking to cash in on the new market. Importantly, Virginia sits to benefit handsomely from this arrangement which will bring in millions of new tax revenue. The final bill includes a 21% excise tax on marijuana sales and allows municipalities to add an additional 3 percent tax on retailers on top of existing sales taxes.

Virginia is neither the first nor the last state to legalize marijuana, but it is part of a fast-growing trend in the U.S. As such, Dunlap Bennett & Ludwig is ready to assist anyone seeking to join this new market and navigate the licensing process.

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Tom Dunlap is a partner at Dunlap Bennett & Ludwig. Tom’s practice focuses on patent, trademark, trade secret, commercial, entertainment law, business, government contracts disputes, litigation, and transactions. Tom has authored numerous books and appeared on national television and radio, including Fox, Sundance T.V., and NPR, speaking on various subjects in his fields of practice. In addition to the state and federal courts of D.C., VA, and M.D., he is a member of the Federal Courts in Puerto Rico, Colorado, and Texas, as well as the Court of Federal Claims, the Federal Circuit, where he has recently argued and won three appellate matters, the Veteran’s Court of Appeals, and the United States Supreme Court, where he was lead counsel on a False Claims Act case (See United States ex rel. Carter v. Halliburton Co.) and in the T.C. Heartland LLC v. Kraft Foods Group Brands LLC (U.S. May 22, 2017) (No. 16-341) case involving jurisdiction in patent infringement cases. Other recent litigation victories where Tom served as lead trial counsel include a $12,317,500 verdict in Zuru v Telebrands et al. (EDTX 2017) (patent infringement) and a $2,600,000 verdict in DPX Gear v Prince et al. (Loudoun Circuit Court 2017) (breach of contract & fraud).

To learn how Mr. Dunlap can assist you with your legal needs, click here.

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