Will Virginia’s Towns And Counties Opt-Out of Retail Weed?


Note: This story was first published by District Fray Magazine as part of a collaboration with The Outlaw Report on Take Me Down to Cannabis City, an insider’s guide to the legalization of cannabis in Virginia.

Weed shops are at Virginia’s doorstep, but not everyone is rolling out the welcome mat.

As state regulators prepare to launch a legal cannabis market, local jurisdictions will have one chance to opt out of retail sales before they start in 2024. Under Virginia’s new cannabis laws, localities will have a short window to hold public referendums on whether to allow recreational dispensaries within their boundaries.

The vote, to be decided by simple majority, can only take place after July 1, 2022 and must be certified before the end of 2022. The timeframe gives cannabis companies a chance to set up their businesses before the licensing process starts.

Experts say banning legal cannabis sales at the local level won’t be easy and could come with significant downsides for localities — from missing out on new tax revenue to shoring up the existing illegal market.

To be clear, a “Yes” vote in a local referendum would only block retail sales — not override other new state law provisions. Legal possession and home cultivation will remain legal in every locality.

“It’s literally nothing else — not medical, not cultivation, not manufacturing, not possession, not wholesale,” says Jenn Michelle Pedini, development director of the National Organization for the Reform of Marijuana Laws (NORML).

Pedini, who also serves as executive director of the state affiliate Virginia NORML, says state laws on banning retail sales are highly specific. Laws even prescribe language to use in a referendum, which prevents localities from posing questions in a way that could skew the vote.

“It’s entirely prescribed by legislation,” Pedini says.

Section § 4.1-629 of the Virginia code says the referendum question must be: “Shall the operation of retail marijuana stores be prohibited in [name of locality]?”

It’s hard to predict exactly how many counties, cities or towns will turn down retail sales, but polling indicates bans will probably be more of an exception than a rule. Before legalization passed, a poll by Christopher Newport University found 69% of Virginians were in favor of it, though respondents expressed different degrees of support.

However, in a survey of local officials by government watchdog Joint Legislative Audit and Review Commission (JLARC), one-third of respondents were unable to say whether their jurisdictions would ban retail sales.

“Generally, local officials in the state’s populous Northern Virginia region indicated their localities would probably allow commercial marijuana,” JLARC reported in a recent survey. “Rural localities in the Southwestern and Southern Virginia regions generally responded they would probably prohibit it.”

JLARC also found opinions on pot vary sharply within regions themselves, with some counties wanting to prohibit retail pot and large cities wanting to allow it. Some officials — mostly in conservative, majority-white jurisdictions — have griped about legalization in public hearings, spreading what experts say are unfounded fears that a regulated cannabis market will lead to a surge in crime.

In May, some Democrats on the executive board of Loudoun County — a once rural jurisdiction that is now a sprawling business hub — expressed concerns about taxing recreational cannabis, framing the issue as a question of ethics.

“Legalizing marijuana is done for one reason, and one reason only: to get tax money,” Loudoun County Chair Phyllis Randall says. “I do not believe we should be getting tax money from an addictive substance.”

The same month in King George County, where 59% voted for Donald Trump in 2020, chair of the county’s board of supervisors Annie Cupka directed the county attorney to find ways to keep cannabis illegal — despite legalization. Pedini cautioned that elected officials’ views don’t always reflect what constituents want.

“One city councilperson’s opinion about the location of retail dispensaries doesn’t determine their location,” Pedini says, adding that NORML regularly receives inquiries from residents concerned their leaders will block retail cannabis.

Banning cannabis sales could be self-defeating financially. Localities that opt out won’t see a cent of the $230 million in annual tax dollars that Virginia’s legal pot market is expected to generate within five years of launching.

“[If] you opt out, you do not get any funding,” Pedini says.

The new legislation even gives localities an option to raise taxes an additional 3% on top of other local cannabis taxes. And while the link between legal pot and violent crime has become a standard talking point for anti-cannabis pundits, there’s little evidence the two are connected. A 2019 study published by the National Institute of Justice found crime rates didn’t budge after Colorado and Washington state passed laws to legalize the drug.

“There were no statistically significant long-term effects of recreational cannabis laws, or the initiation of retail sales on violent or property crime rates in these states,” the researchers write.

On the contrary, experts worry banning legal sales could shore up the illicit cannabis market, incentivizing dealers to purchase pot in one jurisdiction — only to sell at a higher price where retail sales are banned.

“Localities that enacted prohibitions would likely continue to have illegal markets operating in their jurisdictions,” JLARC reports. “Illegal markets could grow even larger following legalization.”

Research indicates harsh drug laws in Virginia have done little to stem the commonwealth’s illegal cannabis trade. According to New Frontier Data, Virginia’s market for illegal pot was worth $1.8 billion in 2020, making it the fourth largest in the nation.

“Legalization does not bring cannabis to Virginia,” Pedini says. “It’s already here, and it’s widespread.”

But that hasn’t stopped some politicians, like GOP gubernatorial candidate Glenn Youngkin, from drumming up fear and doubt about legalization. The businessman, a political neophyte who has never run for public office, earned three Pinocchios from The Washington Post for claims that states with legalized retail sales have seen disappointing tax revenue.

“Do not count on the revenue from legalized marijuana to amount to anything,” Youngkin said at a public forum in February. “It hasn’t worked in Colorado, it hasn’t worked in California, it hasn’t worked in Oregon. This has been a false advertisement.”

Pedini says politicians should keep facts in mind when considering legalization.

“I think it’s really a lack of understanding of the policy principles behind legalization that leads to these knee jerk reactions,” they say.

Regardless, the decision on whether to ban retail sales isn’t up to politicians.

“It’s up to the voter,” Pedini says.


Featured Business Member: