HB 2312 would replace cannabis prohibition with a system to legalize, tax, and regulate cannabis for adults 21 and older. It also includes automatic expungement for low-level past cannabis offenses, establishes a social equity program to promote participation in the legal cannabis industry from those hardest hit by the war on cannabis, and dedicates 30% of tax revenue to a Cannabis Equity Reinvestment Fund.
This summary is based on the January 31, 2021 Courts of Justice Committee substitute.
Adult-Use Legal Possession and Cultivation
Adults who are 21 or older could possess up to one ounce of cannabis, or the equivalent amount of cannabis products, and could gift the same amount to other adults.
Adults could securely and discreetly cultivate up to two mature and two immature cannabis plants at their primary residence. (The four-plant cap also applies to households.) Each plant must have a tag with identifying information on the grower.
Possessing more than an ounce would be punishable by a civil fine of up to $25.
Possessing more than five pounds could result in up to 1-10 years in prison.
Prohibited Conduct
Public consumption carries a civil fine of up to $25 for a first offense. A second offense requires a substance abuse program. Subsequent offenses are fine-only misdemeanors.
Minors possessing cannabis would be subject to a civil fine of up to $25 plus a required substance abuse education program.
Consuming cannabis in a moving motor vehicle would be a fine-only misdemeanor.
Possessing marijuana on school grounds would carry up to six months in jail.
Bringing any cannabis into Virginia would be punishable by up to a year in jail.
Expungement
The bill automatically expunges misdemeanor marijuana offenses by July 1, 2026 and on an ongoing basis thereafter. Employers and educational institutions generally may not require an applicant to disclose information for any automatically expunged charge.
Allows petitions for expungement for felonies five years post-sentence completion.
Business screening services must delete records for expunged convictions.
State Regulation and Licensing, Inclusion, and Equity
A new Cannabis Control Authority would regulate the adult-use cannabis market. A five-member Board of Directors would issue regulations; grant, suspend, or revoke licenses; and issue fines.
The Board would establish the number of licensees, which could not exceed 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers. It would also approve labs. It creates two types of cultivation licenses: Class A licenses, which are capped at a certain number of square feet or plants. Class B would be limited to 1% THC.
No one could have an interest (including managerial) in more than five licenses.
No vertical integration: a person could only hold an interest in one type of license.
Stores must be geographically dispersed and must be more than 1,000 feet apart.
Promotes inclusion in licensing by prioritizing social equity applicants.
The bill defines “social equity applicants”as having 66% or more owners who: have a prior cannabis conviction, have a close relative with a cannabis conviction, live either in an area with disproportionate cannabis arrests or that is economically distressed, or graduated from a Virginia HBCU.
Social equity applicants will be given preference from July 1, 2023 until December 31, 2023. Regulators will waive a percent of fees.
The bill includes a fund for no- and low-interest loans.
Creates a Cannabis Business Equity and Diversity Support Team to identify barriers to inclusion, offer technical assistance, conduct outreach, and develop requirements for diversity plans. Those wanting more than one license must implement such plans.
A new Cannabis Public Health Advisory Council would assess and monitor public health impacts and make recommendations, including about warnings.
The bill includes requirements for seed-to-sale tracking, packaging, and labeling —including for potency and mandating warning labels — and requires state-created information on risks to be available at the point-of-sale. Products could not include nicotine or alcohol. Delivery, internet-based sales, and on-site consumption are banned.
Rules would govern outdoor cultivation, sanitation, testing, and advertising.
Edibles would be limited to five milligrams per serving and 50 milligrams per package.
Timeline
Most of the bill — including legal possession — would take effect on January 1, 2024. (The current penalty for possession of up to an ounce is a civil fine of up to $25.)
Regulations must be promulgated by July 1, 2023.
Sales would begin no earlier than January 1, 2024.
Local Role
Licensing would be entirely at the state level.
Localities can determine hours, implement zoning and land use rules, and prohibit possession of opened cannabis products in public places.
Fees, Taxation, and Revenue
A state tax of 21% at the point of retail sale would be levied, in addition to standard 6% sales taxes. The tax does not apply to medical cannabis sales from medical dispensaries.
Localities could impose a tax of up to 3% on sales to consumers in the municipality.
Fees would be determined by the Board and can be increased based on inflation.
After covering regulatory costs, the revenue would be allocated to: pre-K education for at-risk children (40%); a Cannabis Equity Reinvestment Fund (30%); substance abuse treatment and prevention (25%); and public health programs (5%).
The Cannabis Equity Reinvestment Fund, administered by a 20-member Cannabis Equity Reinvestment Board, would direct funds to:
Scholarship programs for historically marginalized populations, including those who were in foster care and who have been impacted by substance use;
Grants to support jobs training and placement, workplace development, youth mentoring, and reentry services;
Contributing to the state’s Indigent Defense Fund; and
No- and low-interest loans for social equity applicants.
