The 2021 Virginia General Assembly adopted comprehensive legislation (House Bill 2312; Chapter 551) governing recreational marijuana use and sales within the Commonwealth.  The 2021 legislation authorized a limited number of establishments (up to 400 statewide) for the retail sale of recreational marijuana, subject to certain legislative parameters and subject to various administrative regulations and controls that are currently being developed by Virginia’s Cannabis Control Authority.

All aspects of a retail marijuana sales establishment, including its jurisdictional location, will be licensed by the Virginia Cannabis Control Authority in accordance with the 2021 legislation -- which requires, in part, that such retail sales establishments be geographically dispersed throughout the state.  While the 2021 legislation provided that localities could, through a referendum, “opt-out” as a location for retail marijuana sales, that particular provision of the legislation never took effect, as described in more detail below.  Therefore, there is currently no referendum opportunity to prohibit retail marijuana sales within Town limits.  While the Town cannot altogether prohibit marijuana retail sales establishments, the Town can continue to exercise its zoning authority to regulate the location within the Town of such uses.  Further, it is possible that the 2023 General Assembly will resurrect the referendum option for localities who desire to opt-out as locations for retail marijuana sales.

The 2021 legislation consists of 283 pages, which have not been fully analyzed by Town staff.  These 283 pages include a total of 26 “Enactments,” or legislative changes to the Virginia Code.  Four of the enactments affecting the Town are highlighted in this report, below.  Some of these enactments required further action by the 2022 Virginia General Assembly before they could take effect, as described below:

1.       Retail Sales to Begin January 1, 2024.  Enactment number 13 of the 2021 legislation provides that the sale of retail marijuana shall be permitted on and after January 1, 2024, and provides that this provision shall become effective “in due course.” 

2.       Retail Stores must be Licensed by the State.  Enactment number 11 of the 2021 legislation provides that the Virginia Cannabis Control Authority may begin accepting applications for licenses to open and operate a retail marijuana sales establishment as of July 1, 2023, for sales to occur beginning January 1, 2024.  However, the 2021 legislation also provides that this provision will not become effective unless re-enacted by the 2022 General Assembly, which re-enactment did not occur.  Therefore, this provision authorizing the Virginia Cannabis Control Authority to accept and process license applications beginning July 1, 2023 is void.  If retail sales establishments are to begin operating as anticipated in January of 2024, the 2023 General Assembly will have to adopt new legislation authorizing their licensure.

3.       Localities May Prohibit Retail Sales, by Referendum.  Enactment number 5 of the 2021 legislation provides that, effective July 1, 2022, a locality may hold a referendum, asking voters whether the retail sale of marijuana within the local jurisdiction should be prohibited.  If a majority of the voters vote “no,” then the retail sales shall be permitted and no subsequent referendum on the question will be allowed.  If a majority of the voters vote “yes,” then the retail sales shall be prohibited; a referendum on the same question will be permitted, but not sooner than 4 years after the first referendum.  The referenda process effectively allows localities to opt-out of retail marijuana sales.  However, the 2021 legislation ALSO provided that this enactment would not become effective unless the 2022 General Assembly re-enacted it, which the 2022 General Assembly failed to do.  [The 2022 General Assembly considered re-enactment via Senate Bill 391 (consisting of 231 pages), but the proposed bill was continued to the 2023 General Assembly.]  Therefore, the provision of the 2021 legislation that allowed localities to opt-out of retail marijuana sales is now void and of no effect.    

Because localities have no general authority to conduct a referendum, and because the special authority to conduct a referendum as granted under the 2021 legislation never became effective, localities do not currently possess the authority to hold a referendum on the question of retail marijuana sales.

Legislation granting special authority to localities for a referendum on retail marijuana sales was considered in the 2022 Session of the General Assembly, and was continued to the 2023 General Assembly for further consideration.  If such special authority is granted by the 2023 General Assembly, Staff will return to Town Council for a decision on the referendum option.  

4.       Deadline for Referendum.  Enactment number 23 of the 2021 legislation requires that any referendum conducted on marijuana be held by December 31, 2022.  However, since there is currently no authority to conduct a referendum, the December 31, 2022 deadline established under Enactment 23 has been mooted.

Other items to note from the 2001 legislation: 

A.      Local Sales Tax.  The legislation authorizes the Town to impose, and receive income from, a 3% tax on the retail sale of marijuana that occurs within Town limits.  This is in addition to the 21% tax imposed by the state.

B.      Local Regulation.  Once the retail sales of marijuana is permitted within a locality, the locality may regulate the hours during which retail sales may occur, and may prohibit the consumption of marijuana in public places.  Further, local zoning authority remains intact, under which the location within Town limits of such retail establishments may be regulated.

FUTURE ACTION BY TOWN COUNCIL

The portions of the 2021 legislation that were voided by a lack of action on the part of the 2022 General Assembly will be revisited in the 2023 Session of the General Assembly, which begins in January of 2023.  At that time, Staff will update the Town Council concerning its options relative to retail marijuana sales.  Further, as the Town amends its Zoning Ordinance over the next year, Staff will recommend to the Planning Commission and Town Council that the permissible locations of “licensed retail marijuana sales” be contemplated and identified.  This land use can be removed from the Zoning Ordinance quite easily if a future referendum results in its prohibition.