Done right, legal pot could bring social equity and opportunity to Virginia

Virginia owes much to a smokable weed.

Look no farther than the ceiling of the state Capitol Rotunda to see painted representations of garlands of the golden-brown leaf that was essential to Virginia’s founding 400 years ago.

The Virginia Company of London, chartered as a joint stock company, encountered lean times in the early years after it established a foothold at Jamestown. Tobacco was one of its few success stories. The crop flourished in the fertile loam and sunny summers along the James River. Across the Atlantic, demand became insatiable for what was called the “joviall weed,” the “precious stink” and the “chopping herbe of hell,” according to “Virginia: The New Dominion” by historian and editor Virginius Dabney. It remained a leading cash crop in Virginia through the 20th century.

On July 1, another smokable weed, once damned by the establishment, is expected to become legal for adult recreational use. And 2½ years later, the legal commercial cultivation, processing and sale of marijuana would begin in Virginia.

The final say on that comes Wednesday when the Virginia General Assembly is expected to adopt amendments Gov. Ralph Northam made to a bill passed during the winter legislative session that at long last legalized ganja in the Old Dominion.

When all is said and done, personal use and possession as well as home cultivation of a limited number of plants will be the law. As initially passed by the House and Senate, the bill would have delayed reefer legalization until 2024. Civil rights advocates argued that such a delay would only prolong the time during which Black Virginians are cited for possession of the ubiquitous substance at four times the rate of Whites.

The governor listened and amended it to move up the effective date of legalization. His revisions allow a household to grow up to four plants for their private use but postpones commercial production of pot until 2024 to give policymakers more time to establish the regulatory infrastructure for the budding industry.

His recommended changes also hasten the timetable for sealing records of past pot possession misdemeanors and allow those with felony marijuana convictions to petition courts for their expunction.

“Virginia will become the 15th state to legalize marijuana — and these changes will ensure we do it with a focus on public safety, public health and social justice,” Northam said in a statement summarizing his amendments to the bill.

The United States has a long and silly history of marijuana hysteria dating to the Depression Era and the release of the unintentionally hilarious 1936 B-movie “Reefer Madness.” As the counterculture left embraced it in the 1960s and ’70s, state and federal authorities responded with a crackdown still evident today.

“It was done because they couldn’t criminalize being Black or being against the Vietnam War, but they could criminalize cannabis, and that’s what they did,” said Amber Littlejohn, a lawyer and executive director of the Minority Cannabis Business Association.

It has stayed that way, especially in communities of color. While arrest statistics imply that pot use was more prevalent in those communities, anyone who has ever attended a Grateful Dead or Willie Nelson concert knows better.

Among the findings of an American Civil Liberties Union report last year was that FBI data showed that American police in 2018 made more arrests for marijuana violations than all violent crimes combined.

Now, legalization in Virginia – reflecting a stunning shift for the historically conservative General Assembly – appears to have a smooth path to enactment this week when lawmakers consider Northam’s amendments. In addition to the support of Democratic majorities in the House and Senate, the governor’s amendments won over two Republican senators, as The Mercury’s Ned Oliver reported last week.

The legislation was born out of social equity concerns. Not only had minorities and economically disadvantaged groups been jailed and fined disproportionately for decades, records of youthful pot possession arrests on otherwise innocuous records burdened young people competing for top jobs, college scholarships, security clearances and loans. Cleansing those stains from their records at least improves their chances to realize their potential to contribute more fully to Virginia’s economy.

A benefit not as widely discussed is the potential for economic development and the tax revenue the commonwealth can realize from a robust cannabis industry.

A report last November by the General Assembly’s investigative arm, the Joint Legislative Audit and Review Committee, found that the marijuana industry could eventually create more than 18,000 Virginia jobs.

The same report projects that the state’s sales tax paired with a 25 percent marijuana tax could, within five years after commercial production and sales commence, generate up to $308 million in state revenue annually. A 20 percent marijuana tax, JLARC projects, would yield more than $250 million a year.

Medical marijuana businesses already know the potential for growth with legalized adult use in Virginia. Companies like Parallel, a global cannabis products developer and marketer, have a head start over newcomers who want to compete in the recreational use market.

While 2024 sounds like a long wait, Virginia needs to move expeditiously not only to stand up its cannabis industry regulatory authority but to also assure opportunities for those entering the field, particularly small, minority and women-owned ventures, said Sam Schwartz, Parallel’s vice president for government relations.

“The most important one right now is access to capital,” Schwartz said. “We’re not allowed to have traditional banking relationships, so if you couple access to capital for being a cannabis business to traditional challenges of access to capital in minority communities, it’s almost impossible for a minority entrepreneur to get the capital it takes to start a cannabis business.”

Financing for marijuana businesses is tough because while more states legalize cannabis, it’s still nominally illegal under federal law. Federally chartered banks won’t make loans. Some state-chartered banks as well as venture capital and private equity firms will extend capital, but many remain squeamish, said Rebecca Gwilt, executive director of the Virginia Cannabis Industry Association and a lawyer who advises cannabis business clients.

“There are very few investment banks that will play in this space because of the federal government’s posture on cannabis,” she said. “So there are … Canadian investment banks that are doing stateside deals. But there are a small number of them, and if you don’t have access to those relationships it can be difficult for you to raise capital.”

The lingering federal prohibition also presents operational confines that prohibit operations across state lines. Richmond lobbyist Tray Adams of McGuireWoods Consulting said that creates an inefficient and confusing state-by-state patchwork of differing and sometimes contradictory laws and regulatory requirements. He lobbies for Curaleaf Holdings Inc., a cannabis products company that operates 101 retail dispensaries in 23 states.

“The variety of state plans and processes really point to an eventual federal resolution of the issue,” Adams said.

If what Virginia is doing really is about social justice, it’s incumbent on state policymakers to act swiftly to ensure that the groups most disadvantaged by decades of harsh prohibition share in the opportunities that legalization affords, said Littlejohn, whose organization advocates for the inclusion of minority entrepreneurs in the commercial marijuana industry.

Among other things, that could include state assistance in the form of low- or no-interest start-up capital, educational resources, help in navigating the maze of zoning and regulatory issues as well as legal and technical assistance in filing complicated applications for cannabis business licenses – something that Littlejohn says commonly exceeds $100,000.

“When you’re looking at something that so directly targeted a group of people based on race, it’s really important to try to undo the harms of something we are continuing to do wrong,” she said.