West Virginia Gov. Jim Justice vetoed a bill on Wednesday meant to encourage medical marijuana businesses to come to West Virginia, arguing that it unfairly favors certain businesses.
The sponsor of the medical marijuana bill, meanwhile, says the medical marijuana business won't survive in West Virginia without it.
West Virginia's medical marijuana law passed in 2017. It was scheduled to take effect in July of this year but has been running behind schedule.
Among other changes to the law, House Bill 2079, sponsored by Del. Mike Pushkin, D-Kanawha, removes a provision from the 2017 law that states a marijuana grower or processor may not also be a marijuana dispensary.
Had the governor not vetoed the bill, it would have allowed growers and processors to also be dispensaries. This is referred to as "vertical integration."
The bill also gave vertically integrated businesses a lower tax rate. Growers, processors and dispensaries who operated independently would have been taxed 10 percent of gross receipts from sales. But when the same business was the grower, processor, and dispensary, the tax would have been 5 percent of the gross receipts from sales to patients.
In his veto message, Justice said that while he supports medical marijuana, he was vetoing the bill because it "imposes excise taxes on growers, processors and dispensaries of medical cannabis that favors wholly vertically integrated businesses."
"While the Legislature has authority to classify different businesses and tax them differently, the classifications must be 1. reasonable, 2. based on pertinent and real differences, and 3. have as their object a purpose that is germane to the enabling legislation," he said.
On Tuesday, Justice signed a bill that would let credit unions handle medical cannabis. The state's medical marijuana program had been held up, in part, because no banks would handle the revenue.
Pushkin said lawmakers had determined, through discussions with medical marijuana business operators, that stand-alone dispensaries would not be financially viable on their own.
"He signed the banking bill, but what he's going to be left with is an empty bank account for about a year," he said. "This sets back the entire program."
He noted that finding a financial institution to act as a depository would have taken several months, that DHHR would have to accept applications and select growers, processors, and dispensaries, and that potential businesses would have to repurpose buildings and set up operations.
"The fact of the matter is there's not going to be a product grown and ready to harvest in a year," he said, "so we could have addressed the tax issue next session."
"I think had the governor shown up every day during the session and played an active role during the legislative session, I would hope he would have gained a better understanding of why this bill is necessary," he added.
Lawmakers will soon reconvene for a special session focused on education.
"We've heard the special session's going to be about what he called the 'betterment' of education," Pushkin said, "so I don't think the governor's going to put this on the call for the special session."
Del. Mick Bates, D-Raleigh, added Thursday in a press release, "This will prevent West Virginians in need of accessing medication from receiving it in a timely manner. If statutory changes need to be made, I call on the governor to do the right thing and add it to the existing special session. If not, I will be petitioning two-thirds of my legislative colleagues to do it without him."
Wednesday was the last day to sign or veto bills before they would become law without the governor's signature.
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