Editor’s note: A different version of this piece was published in our March 27 print issue before Governor Glenn Youngkin vetoed the relevant bill. The piece has been updated in light of the Governor's veto.
Three-billion dollars — this is the reported value of Virginia's illicit marijuana market. This immense three-billion dollar figure represents a dangerous reality — slews of products and transactions have gone unregulated and have possibly endangered civilians. Beyond this, the figure also represents a potential revenue stream on which Virginia fails to capitalize. In short, the fact that no legitimate market for marijuana exists is not only a missed opportunity, but also a clear failure to address public health and safety. The Virginia General Assembly recently passed the Cannabis Control bill that would help fix our marijuana policy errors. Unfortunately, however, Governor Glenn Youngkin vetoed this bill, only further delaying marijuana’s debut into a legal market. In vetoing the bill, Youngkin failed to seize on a prime opportunity which would have allowed the Commonwealth to generate more revenue and protect Virginians with a fairly regulated market.
While the Commonwealth became the first southern state to legalize growth and possession of marijuana, legislative inaction has allowed the Virginian black market to grow. Current laws in Virginia only allow adults to grow and possess up to an ounce of marijuana, and the retail sale of the substance is prohibited. If this bill had passed, this would have changed — dispensaries would be allowed to open and operate legally in the state. Notably, of the 24 states which have thus far legalized recreational possession of marijuana, Virginia would have been the last to legalize retail distribution, a fact which suggests that this legalization of retail marijuana is long overdue.
Behind the scenes, much of the legislative negotiation for this bill centered around taxation — the final bill would have set the retail tax rate on retail marijuana to 11.625 percent which is lower than the Commonwealth’s own 20 percent state tax on alcoholic spirits. The comparatively low tax rate for retail marijuana would have been notable because commentators have noted that keeping marijuana taxes low helps to ensure that the legal market remains competitive, thus preventing a resurgence of the black market. An additional advantage of creating a legal marijuana industry is the revenue that taxation on marijuana sales can generate. Based on an independent estimate, marijuana sales would have generated over $95 million in tax revenue.
Taxes are never popular — but legislators ensured that the revenue would go to essential needs. For example, the bill, using the tax-based funds, provided for the establishment of new agencies to promote education about drug use in Virginia schools so as to inform children of the dangers and appropriate cautions when consuming drugs. Additionally, revenue would have funded social services for communities or individuals which have been affected by substance abuse. For example, the proposed Virginia Cannabis Equity Business Loan Fund would have dealt in microfinance to assist in the economic growth of communities which have been disproportionately harmed by marijuana’s previous prohibition. Moreover, the bill included language establishing a program to grant licenses to open dispensaries specifically to those from “historically economically disadvantaged communities,” mentioning businesses owned by Pell Grant recipients in particular. These measures would have ensured that the money generated from a legalized marijuana industry will properly address past and present social problems related to drug abuse.
By creating increased tax revenue and working to alleviate the effects of drug abuse, the bill would have also helped protect the health of Virginians. A well-established legal market could have begun pushing back against the ever-growing marijuana black market. And the black market is a matter of public health — states with strong drug black markets often have more violent crime as a result of increased robberies and drug deals gone violently wrong. Moreover, the products trafficked on the black market are not, by any means, guaranteed to be safe. To stem the tide of drug misuse, this new bill would also have created an agency that would regulate labeling and content of marijuana products. This would have ensured that consumers know exactly what they are purchasing — helping, in part, to prevent the spread of fentanyl-laced marijuana.
There was, however, legitimate concern that the bill might actually overregulate the marijuana industry, leading to a resurgence of the black market. This has been the case in other jurisdictions like New York, which taxes marijuana at over four times the rate of the proposed Virginia tax. This has led to a situation in which purchasing from the black market is preferable to most customers. Luckily, the rate proposed by Virginia’s bill was moderate compared to other states. The Virginia state legislature also learned from states like Washington, which endeavored to ensure competition among suppliers by prohibiting retail stores from merging. Virginia planned to take a similar route of encouraging competition — the bill would have limited the number of stores a single entity can own, thereby placing a cap on potential monopolization. The fact, which Virginia has learned by examining other states, is that marijuana is not like any other business and should not be treated as such. By not viewing marijuana as a mere cash-cow, this bill considered the nuances that would have allowed legal marijuana businesses to push back against the growing black market.
In his veto statement, the Governor claimed that the bill would have endangered public safety and failed to adequately tackle the black market. It is fair to say that the bill was certainly a product of compromise and will thus always have shortcomings in the eyes of most. However, the measures this bill provided addresses these issues far better than the current policy, which does nothing at all to protect Virginians. The creation of a legal marijuana industry in Virginia has been ignored for too long, and Youngkin’s failure to sign this bill is further evidence of his unwillingness to put the welfare of Virginians above partisan politics.
Viet Huynh is an opinion columnist who writes about student self-governance for The Cavalier Daily. He can be reached at opinion@cavalierdaily.com.
The opinions expressed in this column are not necessarily those of The Cavalier Daily. Columns represent the views of the authors alone.
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