Governor Northam Work Group Proposes Legalizing Recreational Marijuana in Virginia

January 12, 2021

In a state in which legalization of marijuana seemed very unlikely just a few years ago, it now appears to be on the brink of becoming a reality.  Governor Northam’s Marijuana Legalization Work Group issued a report on November 30, 2020 finding that laws criminalizing marijuana largely targeted minority groups, pointing to the fact that minority groups were disproportionately the subject of arrests for possession and distribution of marijuana over the years.  As a result, Governor Northam has made social justice central to his legalization initiative in the Commonwealth.  Northam’s Work Group report set forth a plan for full legalization of recreational marijuana for adult use in the next 18 to 24 months.  As a first step, included in the Governor’s proposed amendments to the state budget released on December 16, are significant allocations of funds for the automatic expungement of misdemeanor marijuana convictions for all Virginians.

The traditionally conservative Commonwealth of Virginia officially decriminalized minor possession of pot this past spring.  In October, the first dispensaries for medical marijuana opened in Virginia.  In November 2020, after the election cycle was completed, Governor Northam indicated his intent to move to legalize marijuana for adult recreational use during the 2021 General Assembly session, along with proposals to remediate what he described as the historical use of marijuana criminal laws to disproportionally target minority populations.  His proposal was timed with the release of the Joint Legislative Audit and Review Commission report on legalization in Virginia, which had been prepared at the General Assembly’s direction.  Both reports made extensive recommendations and presented options for the Commonwealth’s public officials to move toward the legalization of marijuana for adult recreational use.

The Governor’s Work Group proposed creating a state regulatory body to govern the entire industry from top to bottom.  This “Cannabis Cabinet” would make decisions about licensing, growing, processing, distribution, and the regulation of wholesale and retail transactions.  The Work Group recommended that taxation of the product should occur at the retail level, thus placing the tax burden on the consumer who wants the product.  Additionally, the work group’s report highlights the need to address the issue of driving while impaired by THC.  Testing marijuana impairment currently is extremely difficult, as well as highly subjective.  A path forward for law enforcement to safely regulate the roads of the Commonwealth will be a critical priority of the General Assembly.

From a regulatory perspective, the Commonwealth has to decide on whether to allow retailers to also be producers and distributors, in a “vertical integration” model, or as the Joint Legislative Audit and Review Commission report suggests, ensure more small businesses can compete within the new marijuana marketplace by not allowing vertical integration.  Critics of a vertical integration model argue that it would likely facilitate large conglomerates’ ability to dominate the fledgling industry. 

Another one of Northam’s goals is to undo the effect of decades of discriminatory laws by giving minority communities control over a large portion of the nascent marijuana industries.  He also proposes widespread expungement of drug convictions, especially for possession, to address the long-term effects of what he characterizes as systemically racist laws.

Unlike in New Jersey, where voters voted to legalize marijuana for adult recreational use by wide margins, Virginia voters have not voted on their preference for legalization for marijuana.  Northam’s study estimates that a fully matured recreational marijuana industry could generate as much as $274 million in annual tax revenues within five years of legalization.

It remains to be seen whether and when the Virginia General Assembly decides to embrace the Working Group recommendations and adds the Commonwealth to the growing list of states that have legalized recreational marijuana.

The Regulated Substances Blog is intended to keep readers current on developments regarding medical cannabis legalization and regulation and is not intended to be legal advice. If you have any further questions regarding the above, please contact David W. Clarke (dclarke@eckertseamans.com), Robert J. Gastner (rgastner@eckertseamans.com), or Benjamin A. Beliles (bbeliles@eckertseamans.com).

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Robert J. Gastner Photo Washington, D.C.

Robert J. Gastner

Member - Washington, D.C.

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