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Virginia’s Republican Gov. Youngkin and GOP policy panel both say ‘no’ to cannabis

Virginia Republican Gov. Glenn Youngkin vetoed a measure that would have established a legal recreational-cannabis market because, as he said, ”Cannabis is bad” for the state.

While Virginia legalized possession of cannabis in 2021, it has not set up a regime for a regulated marketplace.

A measure passed both houses in the state legislature and landed on Youngkin’s desk about a month ago.

Sources told MarketWatch that Youngkin could have allowed the measure to become law simply by not signing it, in return for support from Democrats for a new arena in Alexandria for the Washington Capitols and the Washington Wizards.

With no action by the governor, the bill would have become law this month, since the state does not have a pocket veto that kills proposed laws through inaction.

But labor unions in the state and others opposed the stadium deal, which would have required Virginia’s General Assembly to establish an authority to issue public bonds to finance the new stadium.

Youngkin vetoed the cannabis measure late Thursday, just a few days after Washington, D.C. announced that the two teams would stay where they are.

In a statement on his cannabis veto, Youngkin said marijuana has not benefited states that have legalized it and that doing so would hurt Virginia’s health and safety.

“States following this path have seen adverse effects on children’s and adolescent’s health and safety, increased gang activity and violent crime, significant deterioration in mental health, decreased road safety, and significant costs associated with retail marijuana that far exceed tax revenue,” Youngkin said.

The states with regulated adult-use cannabis programs also have not eradicated illegal shops and sales, he said.

In another example of political pushback against legal cannabis, the House Republican Policy Committee has recommended against the SAFE Banking measure, which is aimed at helping legal cannabis companies conduct financial transactions. The latest version of the bill has been nicknamed the SAFER measure.

The position of the policy committee, which advises lawmakers on how to vote on various issues, may doom the SAFE Banking measure, which has been kicking around Capitol Hill for about a decade to help speed financial transactions for legal marijuana businesses.

While dispensaries have come up with various workarounds to have bank accounts and process payments electronically, these options are typically more expensive than traditional banking services.

Many dispensaries still conduct a significant number of transactions in cash, leaving them vulnerable to robberies.

Versions of the SAFE Banking measure have been approved by the House seven times, but the measure has never come to a full Senate vote, although it passed in committee for the first time last year.

The House Republican Policy Committee’s statement said cannabis is a “hazardous drug with short- and long-term impacts.”

The moves come amid gains by cannabis stocks this year around speculation of additional reforms.

The U.S. Drug Enforcement Administration is currently reviewing a recommendation made last August by the U.S. Department of Health and Human Services to lower the classification of cannabis to a Schedule III controlled substance from Schedule I under federal law.

A move by Germany to decriminalize cannabis as of Monday has also provided a lift to the sector.

Also read: Canopy Growth’s stock doubles to record weekly gain after Germany votes to legalize pot

The AdvisorShares Pure U.S. Cannabis ETF MSOS has risen by 41.7% so far in 2024, outpacing the 9.4% gain by the Nasdaq Composite COMP.

Also read: Cannabis stocks extend gains after Biden White House shows support of marijuana reforms

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