Virginia’s Republican-controlled House of Delegates has consistently killed Senate-passed marijuana reform bills this session, and the latest legislation to be stopped in its tracks is a modest proposal to let medical cannabis businesses make certain state-level tax deductions.
A House Finance subcommittee on Friday rejected the Senate-approved proposal to give the cannabis industry tax relief that they’re barred from receiving at the federal level under the Internal Revenue Service (IRS) code known as 280E.
This comes days after the chamber separately killed a measure to start adult-use marijuana sales, as well as legislation to create a psilocybin advisory board while rescheduling the psychedelic.
While advocates weren’t necessarily surprised to see Republican lawmakers quash the sales and psychedelic proposals given its record and political makeup, the fact that the House panel voted to lay on the table the 280E relief measure in a 4-2 vote underscored the seemingly intractable challenges for reform in the chamber, even for a typically GOP-supported concept like tax relief.
It likely didn’t help that a representative from Gov. Glenn Youngkin’s (R) administration testified against the proposal.
As the chair of the Finance subcommittee pointed out during Friday’s hearing, a House companion of the cannabis tax measure also failed to advance through the committee process in time for a legislative deadline.
Sen. Adam Ebbin (D), sponsor of his chamber’s version, tried to negotiate with the chair and request that the legislation be referred to another committee. But in the end, a House member’s motion to lay on the table was quickly accepted.
The now-defeated legislation sought to decouple Virginia’s marijuana industry from the federal tax code, as lawmakers in several states like New Jersey, New York and Pennsylvania have moved to do.
The text of the bill said there would be an exception from IRS tax code related to “the prohibition on utilizing tax deductions for ordinary and necessary expenditures made in connection with carrying on a trade or business licensed in Virginia…to deal in medical cannabis under § 280E of the Internal Revenue Code.”
That exception would have applied to each taxable year starting January 1, 2023.
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Meanwhile, on Tuesday, a House General Laws subcommittee defeated Senate-passed cannabis commerce legislation, which was also sponsored by Ebbin, along party lines in a 5-3 vote.
There have been open questions about how the state legislature would address cannabis sales for adults in the 2023 session after lawmakers approved a possession legalization bill in 2021. That legislation included sales provisions but they were subject to reenactment, and lawmakers in 2022 did not act on the issue under the new Republican governor and GOP-controlled House.
The House has since been a sticking point for advocates, with legislators largely divided on how to proceed with a possible commercial market.
“This is the third consecutive session in which the General Assembly has failed to take control of Virginia’s marijuana market, and Governor Youngkin’s lack of direction is the reason these bills did not advance to the floor in the House this session,” JM Pedini, NORML Development Director, told Marijuana Moment.
“Let’s be clear, Virginia has already done the work, not only in carefully examining over two decades of real-world experience from other states, but also by successfully regulating medical cannabis right here at home,” they said. “There’s no reinventing the wheel here, Virginia already knows how to regulate cannabis.”
“The question is not should Virginia legalize marijuana. That happened in 2021,” Pedini, who also leads Virginia NORML, added. “The only question before Governor Youngkin and the General Assembly now is how long do you want to continue ceding control of cannabis in the Commonwealth to unregulated illicit operators?”
With respect to psychedelics, a Virginia House panel also rejected a separate measure last month to legalize psilocybin for therapeutic use for people with serious conditions who obtain a doctor’s recommendation.
The House General Laws subcommittee recently defeated a proposal to create a “Cannabis Incubator Project” in the state meant to support social equity objectives and small marijuana businesses.