The governor of Virginia said on Monday that he wants the state to legalize marijuana and will work with lawmakers to pass a reform bill in 2021. His comments come on the same day that a legislative commission tasked with studying the issue issued recommendations to lawmakers on how a legal cannabis market could be structured.
Gov. Ralph Northam (D) campaigned on simple decriminalization, a policy he signed into law earlier this year, but until now had never previously taken a stand on broader adult-use legalization.
“We are going to move forward with the legalization of marijuana in Virginia. I support this and I’m committed to doing in the right way,” he said during a briefing, adding that it’s “not going to happen overnight.”
“Marijuana laws have been based originally in discrimination and undoing these harms means things like social equity licenses, access to capital, community reinvestment and sealing or expunging people’s prior records,” Northam said.
The time has come to legalize marijuana in our Commonwealth, and Virginia will get this right.https://t.co/cmfqiAhW56
— Ralph Northam (@GovernorVA) November 16, 2020
That’s consistent with the analysis put forward in a report by the Joint Legislative Audit and Review Commission (JLARC) on Monday. The panel made recommendations on the policy change from a number of angles—including economic, social equity and public health. Members drew from the experiences of other states that have enacted legalization, as well as existing research into the topic.
Although the panel did not formally recommend whether legislators should pursue legalization, they noted the projected tax revenue the Commonwealth could bring in and possible restorative justice policies that could help repair the damages of the drug war if the state were to enact the reform.
JLARC was tasked with conducting the study and issuing recommendations as part of a resolution approved by the legislature earlier this year.
“If Virginia legalizes marijuana, the General Assembly would need to make several policy choices,” the commission said in its report. “The General Assembly would need to determine legal limits on the amount of marijuana an individual could possess; where marijuana could legally be smoked or consumed; the legal age for marijuana use; and whether to allow individuals to grow their own plants. Legislators would also need to determine whether to adjust existing penalties for illegal distribution and possession above the legal amount.”
The panel made 45 recommendations and also gave lawmakers 29 “policy options” related to legalizing cannabis. They based the recommendations on interviews with more than 100 stakeholders and more than 200 prior studies on the issue.
Here are some of the main findings:
-By legalizing marijuana, the state would see an 84 percent reduction in cannabis-related arrests.
-If the state enacted the reform and taxed marijuana sales at a rate of 25-30 percent, it could bring in $154-308 million in revenue annually five years after implementation.
-The cannabis program could also create upwards of 11,000 jobs by year five.
Virginia's legal marijuana industry could create 11,000 jobs by year 5, though the estimate fails to account for the ancillary opportunities expansion to legal adult-use wold provide. pic.twitter.com/2P5qTNKjh2
— Virginia NORML (@VANORML) November 16, 2020
-Social equity in the industry could be promoted using a variety of tactics. For example, Virginia could use some tax revenue to support reinvestment programs for communities most impacted by the drug war. Legislators could also prevent vertical integration and provide loans for small businesses.
-The commission said their review of studies on legalization in other states shows that more people would consume marijuana, but evidence indicates that youth use would remain the same, if not decline.
-Local jurisdictions should have “substantial authority” over how to regulate, or whether to allow, cannabis facilities. That includes allowing them to set licensing caps on marijuana retailers.
-Members agreed that the industry should be privatized, rather than having the state control it.
-Legislators should wait to set up the basic market infrastructure prior to deciding on whether to allow cannabis delivery services or on-site consumption.
-Allowing home cultivation would provide a low-cost access option for consumers and, if lawmakers provide for it, they should set a two-to-six plant limit per adult.
-JLARC also said that the legislature should establish restrictions on marijuana labeling and advertising to deter youth consumption.
“I’d like to emphasize that we were directed to look at how Virginia could legalize marijuana and create a commercial market,” Mark Gribbin, JLARC’s project manager for this report, said during a presentation on Monday. “We’re not asserting if that should be done.”
Northam’s office, in a press release, said that he is “working closely with lawmakers to finalize legislation” to legalize cannabis ahead of the 2021 session that begins in January.
He said the proposal will need to address social, racial equity and economic equity. It also must protect public health, limit young people’s access to cannabis, align with the state’s Indoor Clean Air Act and include data collection components to track implementation.
Last week, top Virginia lawmakers signaled that legal cannabis could have enough support to be enacted in 2021.
House Majority Leader Charniele Herring (D) said there is a “good chance” it could happen, and Senate Majority Leader Dick Saslaw (D) put the odds at “slightly better than 50-50.”
Meanwhile, legislation to stop police from searching people or seizing property based solely on the smell of marijuana in Virginia is set to take effect after lawmakers adopted recommended changes from the governor this month.
Also during the recently concluded special session, Northam signed another bill that will allow people issued summonses for cannabis offenses under the state’s new decriminalization law to prepay their civil penalty rather than having show up in court.
Together, when enacted, the two new reforms will build upon the measure to decriminalize cannabis that the governor signed earlier this year during the regular legislative session, which makes it so possession of up to one ounce of marijuana is punishable by a $25 fine with no threat of jail time and no criminal record.
But not all proposed reforms advanced.
Lawmakers were ultimately not able to reach an agreement during the special session on legislation to provide expungements for prior cannabis convictions that had appeared destined for Northam’s desk after passing either chamber in differing forms. The issue died in conference.
A bill to legalize marijuana possession was filed for the special session by a delegate who is running to replace the term-limited Northam as governor in 2021, but it did not advance out of the committee to which it was referred.
Meanwhile, former Gov. Terry McAuliffe (D), who is considering running again next year, endorsed Northam’s call for legal cannabis in a tweet.
Criminalization of marijuana has disproportionately impacted Black & Brown Virginians for far too long. Legalization will:
👍start to unravel years of inequities
👍 generate hundreds of millions $$ for VA
👍 create thousands of jobs
— Terry McAuliffe (@TerryMcAuliffe) November 16, 2020
Attorney General Mark Herring (D), who had considered a run for governor but has decided to seek another term in his current office, said that the new JLARC report “just confirms what I have long been saying – Virginia needs to allow legal, regulated adult use of marijuana as a matter of public safety, justice, equity, and economic opportunity.”
This JLARC report just confirms what I have long been saying – Virginia needs to allow legal, regulated adult use of marijuana as a matter of public safety, justice, equity, and economic opportunity https://t.co/dna8YgW1zf
— Mark Herring (@MarkHerringVA) November 16, 2020
During this year’s regular legislative session, the governor and lawmakers also expanded Virginia’s limited medical cannabis program in addition to enacting the decriminalization law.
Beyond the JLARC study, several executive agencies—including “the Secretaries of Agriculture and Forestry, Finance, Health and Human Resources, and Public Safety and Homeland Security—have formed a work group that is also studying the potential implications of legalization, and their report is due by the end of this month. That action is required under the approved decriminalization bill.
“It comes as no surprise that Governor Northam has announced his support for legalizing the responsible use of cannabis by adults,” NORML Development Director Jenn Michelle Pedini, told Marijuana Moment.
“Governor Northam has always been thoughtful in his approach to cannabis policy,” Pedini, who also serves as the executive director of Virginia NORML and is a member of the Virginia Marijuana Legalization Work Group, said. “NORML appreciates that social equity, racial equity and economic equity are among his top considerations for legalization. We look forward to continuing our work with the administration and the legislature to ‘get this right.'”
Photo courtesy of Brian Shamblen.
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
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It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: