On July 1, 2021, Virginia became the first state in the South to legalize marijuana for adults 21 and older. The legislation passed by the Virginia General Assembly allows for personal possession of up to one ounce of cannabis and cultivation of up to four plants per household for personal use.
That same legislation provided for retail marijuana sales to begin in 2024. Currently, retail sales of cannabis is legal for medical patients only, via licensed dispensaries. Though legislative speed bumps may delay the time frame, if all goes smoothly, Virginia is poised to make retail sales of recreational cannabis legal in 2024.
But it’s complicated. For non-federally regulated business owners, the wide mix of marijuana legalization on state and federal levels can make it tricky to navigate workplace drug policies. Adding to the confusion are the many legal gray areas and limited regulatory guidance surrounding the establishment of cannabis-adjacent businesses.
To complement our research, we asked three Top Lawyers who have subject matter expertise to contribute their perspectives. We thank Ms. Charlene Morring of Morring Law PLLC in Norfolk and Newport News, and also the duo of Diane P. Toscano Esq., founder of Toscano Law Group in Virginia Beach, and Deb Yeng Collins Esq., founder of Yeng Collins Law PLLC in Norfolk, who collaborated to provide us with thoughtful answers to vexing questions. Some responses have been edited for length and clarity.
CoVa BIZ: What are the most current estimates of what the retail sale of marijuana along with related ancillary businesses and services might mean for Virginia’s economy?
Charlene Morring: In 2021, the global market was roughly $28 billion. Multiple industry sources believe that market may reach $197.75 billion by 2028. While I am hesitant to predict exact numbers for Virginia, I am thinking that original estimates of around $3.2 billion are accurate. Though the market can be both aggressive and volatile, the growth of ancillary businesses, in addition to the tax revenue make the original estimates seem reasonable.
CoVa BIZ: Is Virginia still looking at 2024 to legalize retail sales? Some media reports indicate this timeframe may be optimistic.
Diane P. Toscano and Deb Yeng Collins:
When the General Assembly first decriminalized simple possession of marijuana and allowed for home cultivation of up to four marijuana plants in its 2021 session, that same legislation provided for retail marijuana sales to begin in 2024 pending a reenactment. However, political control of the House of Delegates and Governor’s Mansion has changed hands since the initial legislation; and Republican and Democratic leaders have different ideas about retail sales. For the initial 2024 timeline still to work, the General Assembly would have to pass comprehensive bipartisan legislation this coming January when it convenes again. However, the issue remains hotly contested and—with all 140 seats in the General Assembly up for election in fall of 2023—compromise appears unlikely. But because Virginia has already taken steps toward legalization, the issue will continue to dominate policy discussions.
CoVa BIZ: The laws surrounding cannabis use and the workplace can be confusing. What can businesses do to navigate the current legal environment and also prepare for what’s coming?
Toscano and Collins: The cannabis regulatory environment is complicated given the differences between federal and state law on the subject. Business owners must remember that even if Virginia and other states have decriminalized simple possession or legalized recreational marijuana, its possession and use remain a federal crime. This is particularly relevant to our military personnel and other federal employees in the region who may face a zero-tolerance policy at work.
And while there has been a lot of attention on recent dramatic changes to Virginia law, there has also been incremental change at the federal level that indicates federal policy is shifting toward decriminalization. For example, President Biden recently issued an executive order pardoning all prior federal offenses of simple marijuana possession, and he signed bipartisan legislation expanding research into medical marijuana.
The best thing a responsible business can do to ensure compliance in the workplace is to retain an experienced employment attorney to help the business develop a customized drug and alcohol policy as well as a disability accommodation policy. Then, those policies need to be legally reviewed and updated on an annual or more frequent basis as needed, depending on the changing legal landscape.
CoVa BIZ: As employers review their drug policies to ensure compliance with relevant laws, what things should they keep in mind concerning unregulated CBD products where higher levels of THC might show up in a drug test, and for those employees using medical marijuana to help them manage an underlying condition?
Toscano and Collins: Employers should primarily be concerned about their obligations to reasonably accommodate medical marijuana users, how to address employees who are suspected of being impaired at work, staying compliant with industry regulations for employees in safety-sensitive positions, and whether to have and how to administer a drug testing program.
Employers must keep in mind that Virginia law protects medical marijuana cardholders by prohibiting employers from terminating, disciplining or otherwise discriminating against an employee for lawful use of cannabis oil. Federal and state disability laws also require employers to engage in an interactive process to determine whether an employee needs a reasonable accommodation for an underlying condition if it’s a disability.
A reasonable accommodation may very well relate to the employee’s lawful use of medical marijuana. These inquiries are very fact-dependent, so it’s important for a business’ disability accommodation policy to describe its reasonable accommodation process for determining whether an accommodation is reasonable under the circumstances. Importantly, both the employer and employee are obligated to engage in good faith in an interactive dialogue about possible reasonable accommodations.
Employers in the government contracting industry should be aware that Virginia’s medical marijuana law contains carve-outs that excuse some businesses from compliance, if complying would put them in violation of federal law or in breach of their federal contract. But this can only be determined on a case-by-case basis, so federal contractors should not consider it a blanket exception.
CoVa BIZ: And CBD?
Toscano and Collins: CBD is primarily marketed as a supplement, and so it’s not regulated by the Food and Drug Administration. So, an employee using CBD can never be exactly sure of what’s in it. An employee who takes unregulated CBD with higher THC levels may trigger a positive in a drug screen. From an employer’s perspective, employees are only protected from “lawful use” of cannabis oil.
Employers can test and employees can be disciplined for unlawful use and for being impaired at work. Virginia remains an at-will employment state. Policies should clarify that legal protections for medical marijuana use only extend so far, and that employees can still be disciplined, up to and including termination, for being impaired at work or other violations of the employer’s policy.
In order to attract more employees, and for non-safety sensitive positions, some employers are excluding THC out of testing panels for routine drug testing, for example, pre-employment screening. Those employers still retain the ability to screen for THC if an accident occurs.
CoVa BIZ: What are some of the issues facing cannabis-related ancillary businesses and services? What would they need to know to avoid running afoul of federal law? Theoretically, banking, accounting, legal, marketing, advertising and packaging businesses could be impacted.
Toscano and Collins: It is a gray area because the regulatory environment concerning marijuana is complex and fluid, and federal law is currently in conflict with the law of Virginia and other states. Everyone recognizes that such disparities between federal and state law create problems and complicates compliance. Proposed bills in Congress could offer more certainty to cannabis-related ancillary business.
But whatever momentum advocates achieved in the 117th United States Congress will certainly bump up against a new Republican-controlled House of Representatives with different priorities. One such bill, the Secure and Fair Enforcement (SAFE) Banking Act prohibits federal banking regulators from penalizing banks for servicing lawful cannabis-related industries. Another, the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act would allow U.S.-based, plant-touching cannabis businesses to list on U.S. stock exchanges, something they are currently prohibited from doing.
CoVa BIZ: What are some of the pressing issues yet to be decided, and when could employers in Virginia and around our region begin to get a bit more clarity, and what resources would you recommend to help them stay current?
Morring: One important issue is the role that cannabis-related social equity initiatives would play in the licensing and application process. Many states have social equity provisions to offer opportunities to minority entrepreneurs who’ve been marginalized or affected by the racial disparities and the impact that the war on drugs has had on black and brown communities. Most states have mandated that social equity is the responsibility of cannabis policymakers, but we’re still waiting to see what efforts will be made to ensure the fair and equitable treatment of applicants who want to participate in Virginia’s cannabis market.
Another pressing issue is whether legislators will ensure that other licenses are added to the legislation to safeguard seed-to-sale tracking. For instance, transportation licenses are key. Some states have even created consumption licenses for those businesses that seek solely to allow cannabis consumption on their property. I believe more effort needs to be focused on these areas.
Toscano and Collins: There is much legislative and regulatory work to be done in Virginia before a commercial marijuana market is legal and fully functioning. There is also much work to be done on the federal level. These things take time, and we’re only seeing the front end of reforms. In the meantime, businesses would do well to rely on legal counsel to navigate the murky waters of current cannabis law. Employers can also visit the Virginia Cannabis Control Authority’s* website (Cannabis.Virginia.gov) for important updates.
*The 2021 Virginia General Assembly established the Virginia Cannabis Control Authority (CCA), recognizing it as the principal source of government expertise on cannabis and vesting it with broad authority to develop, issue, and enforce rules related to cannabis in Virginia. The 2021 legislation also empowered the CCA to undertake initiatives and promulgate regulations on various public safety and public health aspects of cannabis.