If Virginia legalizes marijuana, sales could generate up to $300 million in annual state tax revenue and create 11,000 jobs, according to a Joint Legislative Audit & Review Commission (JLARC) report issued Monday. But legalizing the drug would not be without hurdles.
While the marijuana use was decriminalized in Virginia this year and the state’s first medical cannabis dispensary opened in Bristol last month, Virginia still has some distance to go to establish a legal and commercial marijuana market — and to reap its tax revenue benefits.
Gov. Ralph Northam, however, is pushing to legalize marijuana for recreational use in Virginia, according to a Monday Associated Press report. “Legalizing marijuana will happen in Virginia,” Northam said, according to the AP.
“Our commonwealth has an opportunity to be the first state in the South to take this step, and we will lead with a focus on equity, public health and public safety,” Northam said in a statement released later Monday. “I look forward to working with the General Assembly to get this right.” In July, possession of marijuana was decriminalized in Virginia, with only a $25 civil fine as the maximum penalty for people caught with an ounce or less.
The JLARC report released Monday notes that aside from necessary General Assembly actions to completely legalize marijuana, establishing a well-regulated commercial market to sell marijuana products would take two or more years to get up and running, and cost between $8 million and $20 million, including prevention efforts, social equity programs and regulatory agency establishment.
The General Assembly this year commissioned JLARC to conduct a study about how Virginia could legalize marijuana. Before considering commercial market specifications, the General Assembly would need to determine the scope of legalization, including setting limits on the amount of the drug a person could possess and determining the legal age for use.
JLARC recommended that the General Assembly could consider legislation to issue licenses for marijuana cultivation, processing, distribution, retail sales and testing, among other recommendations pertaining to public health and safety concerning marijuana use. To achieve this, JLARC recommends that all commercial marijuana operations be licensed by the state. This could be done using one of three models: a government-controlled distribution and retail model; a model in which vertical integration of operations is allowed; and one in which vertical integration of operations is prohibited.
A government-controlled model would leave an authority in charge of distribution and retail sales, similar to how the Alcoholic Beverage Control (ABC) operates in Virginia. Since the legal market would be competing with the existing illegal market, a vertical integration market could work best for competition, JLARC notes.
Vertical integration would allow a business to grow, process, distribute and sell its own marijuana products. “This approach could promote a more efficient legal market that best competes with the illegal market and most likely would result in the lowest prices for consumers,” the JLARC report states.
A model without vertical integration (similar to that currently used by Washington state) would require distribution and retail sales be handled by another party….
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