This week Dylan Bishop, attorney and lobbyist with Eckert Seamans, joins Thomas and Michael to discuss the status of marijuana legalization in Virginia, the mix of cannabis-related bills in the General Assembly this year, and the "mess" that currently exists around retail marijuana and hemp regulation.

Episode Transcript

Michael Pope

You are listening to Pod Virginia; stick around.

Michael Pope

I'm Michael Pope.

Thomas Bowman

I'm Tom Bowman.

Michael Pope

And this is Pod Virginia, a podcast that's getting into the weeds of marijuana policy. We're joined by an attorney and lobbyist, Eckerd Siemens. H's returning to the podcast to help us understand this complicated topic. Dylan Bishop, thanks for joining us.

Dylan Bishop

Gentlemen. It's a pleasure to be with you this afternoon.

Thomas Bowman

Nice to see you in the flesh. It's rare we get to record in person these days.

Dylan Bishop

It's great to see you in person, Thomas. Nice. See you too. Michael.

Michael Pope

I forgot what you looked like. Alright, Dylan, what's the big picture for the status of marijuana legalization in the General Assembly in 2023?

Dylan Bishop

Well, first and foremost, I need to pay ties to my corporate overlords. And just let everybody know that I'm not speaking on behalf of Eckert Siemens or even on behalf of my clients. I am just speaking as Dylan Bishop, somebody who's mildly familiar with subject matter expertise. So Michael, what I would say big picture, our hopes of having a regulated adult-use market this year have gone up in smoke.

Michael Pope

Ohh.

Thomas Bowman

Nice.

Dylan Bishop

And we've got one hell of a mess on our hands with regulated hemp products. It's turned into more of an issue than anybody had ever anticipated. And I think that the bills that we're considering this year are solutions in search of a problem. And that, unfortunately, could be a death knell to our regulated hemp industry here in the Commonwealth.

Michael Pope

We are going to get into those bills before we do, though, on more of a global scale; where's Governor Youngkin on this stuff?

Dylan Bishop

Great question. And one that I believe the Speaker also has. I think he's gone on the record multiple times saying that he and the House Republican caucus are reticent to act on adult use until they get some additional guidance from the Governor. Whether he would sign a bill or not. Or, if he's remotely interested in the topic, what sort of parameters he would like to see in a regulated adult-use market. And as far as I know, I think those questions have been left wholly unanswered.

Thomas Bowman

I am equally unsatisfied, Dylan. Alright, so you mentioned the difference between retail marijuana and industrial hemp products and that industrial hemp, of course, blew up very quickly. Explain to us what the difference is between the retail market and the industrial market. Let's go and talk about that retail market.

Dylan Bishop

Sure. So the industrial hemp plant and what we commonly refer to as pot or marijuana it's actually genetically the exact same plant, the cannabis sativa L. The line of demarcation between the two, according to state law. Currently stands and federal law, 0.3% Delta 9 tetrahydrocannabinol on a dry weight basis. So any Cannabis sativa plant or the product that comes from that plant that has a 0.3% Delta 9 THC concentration or less is a federally sanctioned agricultural commodity. Industrial hemp and the products that come there from our industrial hemp products. Any component part of cannabis sativa L with a Delta 9 THC concentration exceeding 0.3% is considered marijuana so it's sliding. It's the same plant. If the THC concentrations are above the line, it's marijuana. Schedule One federally illicit substance if it's at or below 0.3% Delta nine THC It's a federally sanctioned agricultural commodity, and you're all good.

Michael Pope

So it's a spectrum.

Dylan Bishop

Yes, sir.

Michael Pope

Okay, so Virginia is in this place that's really kind of a gray area. A very bizarre situation we've got going on here. This substance that's now legal in small amounts, but there's nowhere that you can buy it because there is no retail market. This is a very strange position. Virginia has found itself, and last year; there was an effort to create a retail market that fell through; this year, there were several efforts; Adam Eben had to bill to create a retail market, Keith Hodges had a bill to create a retail market, Michael Weber had a bill to create a retail market. They all went in your language, up in smoke. So we're not really having that discussion anymore. Why is creating retail markets such a problem?

Dylan Bishop

Well, you said we find ourselves in a strange position, I would go one step further to say we're in an untenable position. We've legalized marijuana for adult use; this happened two years ago, and it's already on the books. So we're not asking our General Assembly or even the Governor to pass judgment on whether marijuana for adult use is a good idea, policy-wise or not. That's already a fait accompli; it's in the books. So now it's incumbent on our policymakers to do something about it. And the way I see it, there's really a fork in the road; we can either re-criminalize marijuana, which I think the political headwinds would wholly prohibit.

Michael Pope

I think a lot of people would say yes to that, though, right? I hear what you're saying; a lot of our listeners wouldn't like that. And there would be headwinds, but there would also be a lot of support for re-criminalizing, don't you think?

Dylan Bishop

In fact, I don't think you would have a majority of the House Republicans that would go along with that. And I'm not going to name names or count noses. But there's a pretty sizable contingency of the House Republican caucus that has come to terms with adult use, taking the more libertarian limited government side of the Republican Party and holding that close to the vest. And back to what I was saying, we have this untenable situation where we've legalized adult-use marijuana; we're not going to re-criminalize it. It's now incumbent on our policymakers to provide a lawful and safe means for Virginia to procure the substances. So without that, what we have is, endangering Virginia Citizens. And, if they want to get their hands on this substance that's legal for them to possess and consume, we have an ability in our code for home cultivation. But I think we all know that our consumption rates are significantly higher than the number of folks that we have growing at home. And so they've got to get their marijuana product somewhere; they're inherently forced into going through an illicit source to get their marijuana now. And what that does is it introduces a criminal element. We've got Virginians that have to go to, let's just say, a drug dealer and expose them not only to this criminal element but possibly more nefarious drugs. And I think, most importantly, the marijuana that they're getting is untested. It's not accurately dosed or labeled. It could be tainted with some other nefarious substance. And it's a shame because the Commonwealth has already said that marijuana is legal for adult use. So what gives? So I think it's almost a dereliction of duty to do nothing, you know, I would understand if they're, you know, bills and initiative coming from the administration to re-criminalize, because at least then we're doing something, but I think the failure track. It is doing nothing but endangering Virginia Citizens; it's bolstering the illicit market. And all the while, it's doing so at the expense of legitimate Virginia farmers and Virginia businesses.

Thomas Bowman

So the present status is that while it's legal to have marijuana in your possession, all of the things that you might have to do to procure it, somewhere along the line, somebody had to break the law.

Dylan Bishop

That's correct. And even if you want to go the route of home cultivation, it's not legal to buy your seeds anywhere. So we've got an immaculate conception problem.

Thomas Bowman

I was thinking about that. Importing a plant. Of course, seeds are illegal, you can't import a plant. So you need somebody to give you a clone. And again, somewhere along the line, somebody had to commit a crime, bringing it into the state.

Dylan Bishop

That's correct. And to bring things full circle. We hear these cries about issues with regulated hemp products, you know, edible hand. Products are smokable hemp products. But the only reason that consumers are flocking to these intoxicating hemp products is that they can't get the marijuana products that they actually want. That, by all accounts, would be preferable to these hemp products that are legal under current Virginia law and federal law but have a mild psychoactive effect. So they are mildly intoxicating if you consume them in certain quantities or concentrations.

Michael Pope

Alright, before we get into our discussion of cracking down on Delta 8 and Delta 9, I want to ask another question about the creation of the retail market, which might be an academic question because none of these bills are alive, but humerus for a little bit here. What would this retail market look like? There we've there's three different approaches here, Eben Hodges and Weber. And so there's probably a variety of different approaches, but just generally speaking, what would a retail market look like? And then what was the pushback to it?

Dylan Bishop

I'll start with the simplest bills to explain and then move into the more complex legislation. The simplest bill to explain is the Delegate Hodges bill. This essentially said we would have a legal, commercial marijuana market by this date, cannabis control authority, figure it out; you're the experts have at it. What was your take on that approach? I thought that was the quickest way to get from point A to point B without having to have legislators pass judgment on the particulars and the nuance of a regulated cannabis market. Because, let's face it, most legislators are not experts in the field of cannabis or cannabis regulation. And we do have an agency that's specifically tasked with regulating cannabis.

Michael Pope

What was the reaction to that?

Dylan Bishop

I don't think there were many reactions at all other than voting the bill down on party lines and committees. I think it was a larger issue of foot here that the House Republican caucus simply didn't have an appetite to talk about adult use of marijuana whatsoever, regardless of whether the bill just punted the entire framework to the cannabis control authority or, like the Weber bill, where it specifically mapped out certain parameters and structures of this regulated market and presented a framework. But it still left room for the experts at the Cannabis Control authority to fill in some of the, you know, the nuance and the gaps that would be left there.

Michael Pope

So there was no enunciated pushback? And we don't know the logic of why people voted against this.

Dylan Bishop

I certainly can't think of any, and I don't want to be in the position of putting words in legislator's mouths that may have been a no-vote on that bill. But none that I can think of. None of that makes sense to me.

Thomas Bowman

How would you characterize that debate? So where's the hang-up in creating a retail market? Is it political headwinds? Is it politically inconvenient? Or is it the devil being in the details or all of the above?

Dylan Bishop

Well, I think in years past, when we had Democrat, big, deep Democrat control of both chambers, the issue was we couldn't get the details. Now, we're in a totally different dynamic. And I think it's purely political in nature. It's no surprise that legislators are a little bit more hesitant to step outside the bounds of their traditional party platforms and a year where all 140 members of the General Assembly are up for election this coming year. We also have a Governor that allegedly is at least considering a national run for a presidential Republican primary. So not only do we have, you know, campaign concerns afoot here on the state level in the General Assembly, but there very well may be political headwinds, working against adult use of marijuana all the way up in the Patrick Henry building and the Governor's administration.

Michael Pope

All right, let's move on to these bills to crack down on the Delta 8 and Delta 9 products that are available all over Virginia. If you go into a smoke shop or convenience store, or gas station, you will see these products, and there are lots of people clutching their pearls about how it's awful these kids are getting high on stuff that you can buy in your local smoke shop. So there's been a number of bills here Emmett Hanger, McGuire had a bill. Kilgore had a bill. Hanger's bill was actually a governor's bill. The Governor has an interest in cracking down on Delta 8; what are these bills do, and how do they crack down on these products that are widely available already in Virginia?

Dylan Bishop

So what do these bills do? I'll start with broad strokes here. It's essentially an effort to regulate a federally sanctioned agricultural commodity, industrial hemp, and seeking to regulate it significantly more restrictively than the federal government under the Biden regime. So under both the Hanger bill and the Kilgore bill, if they were to pass and become enacted law, there's behavior that would be totally acceptable and legal under federal code but could result in up to $10,000 a day in civil penalties here in the Commonwealth of Virginia.

Michael Pope

Now, Virginia has the ability and the right to do that, right? I mean, if lawmakers in Virginia feel like this is a problem that they want to crack down on. They have the ability to do that, right?

Dylan Bishop

Well, certainly, there's precedent for sidestepping federal law. In fact, we did so with our medical cannabis program here in the Commonwealth. But typically, in the Commonwealth, at least in the ten years that I've been playing in the sandbox that we call the legislature, the tendency is to take Virginia law and make it more permissive than federal law. What we're trying to do here, and I use we, not in the sense that I'm in favor of working towards these bills, but the Commonwealth as a whole because these bills have passed both chambers, what we're trying to do here becomes significantly more restrictive than what's permitted under federal law. So right now, like we discussed earlier, the line of demarcation between cannabis that's considered industrial hemp. And marijuana, which is an illicit substance, is this 0.3% Delta 9 THC on a dry weight basis; what these bills are attempting to do and are likely to do before July 1st is to change to move the goalposts we are changing our standards of how we define hemp and marijuana, and all the criminal penalties that come as a result of that from a Delta 9 THC standard to a total THC standard. And what that does is it essentially eliminates or criminally prescribes about two-thirds to three-quarters of the existing hemp products market. And these bills go so far as to require the addition of bittering agents for topical products that you would typically see in lotions or hand towels. And so I think that's going to have a huge effect not just on Virginia farmers, processors, and retailers, but also with products, you know, national brands that are, you know, shipping products to your local Whole Foods are your outward Thompson's.

Michael Pope

Can we just pause on that? So the legislation would require a bittering agent, for example, a hand lotion. And the idea is you don't want people chugging the hand lotion to get high. So the requirement here is that Virginia products would have to have a bittering agent. So like, you know, from the perspective of the business that's marketing this product, they would have to do something totally different just for Virginia to meet these bittering agent requirements. Is that accurate?

Dylan Bishop

That's exactly right. And I'll read verbatim just one line from the Kilgore bill, "all topical hemp products offered for sale or sold shall contain a bittering agent so as to render the product unpalatable." Now, this is a product that's not intended for human consumption; there's no indication that it possesses any intoxicating level of whatever Delta THC you're talking about. So yes, even your hand lotions that you can find at Walmart or Target. Virginia may very well find itself, you know, out of those distribution chains because those products wouldn't meet these standards.

Thomas Bowman

That's a really funny, unintended consequence, actually. And Michael, when you said, hold on a second, let's drill down into that. My immediate thought was, you know, what a much better policy is than requiring an ingredient change just for the Virginia market is universal design. Why don't you make it edible? Right, if you're worried about kids eating lotion, I mean, you're talking about like 14-year-old kids without access to better things, consuming hand lotion that's got CBD in it, basically, because they're bored and don't have access to real pot, which is an argument for the retail market, going retail will solve that problem. But also, like, my wife's big on special ed, and special ed is about universal design and all things like, let's just let them make it edible. Like that would be a much better amendment to the bill.

Michael Pope

I was actually thinking that there's an interesting parallel here between bittering agents to prevent kids from chugging hand lotion and poison pills that you would add to legislation to prevent it from passing, like the bittering agent and the poison pills sort of share of kind of common ancestry there. So you had mentioned when we spoke earlier about changing the definition of industrial hemp, and this is to crack down on these products that are available in the smoke shops and the convenience stores; explain how that works.

Dylan Bishop

Well, there is delta eight trace amounts of Delta 8 that are naturally occurring in the hemp plant; some products extract and distill that Delta 8 and put it into a gummy. And you know, that product may have a very, very low Delta 9 THC concentration but a pretty high Delta 8THC concentration. So under our Delta 9 standard, that product would pass muster and would be totally compliant. But if we convert from a Delta 9 litmus to a total THC litmus, that's a much harder standard to reach. And so, those products under a total THC standard would become noncompliant if and when these bills are enacted.

Thomas Bowman

And that's stricter than the federal government.

Dylan Bishop

Significantly more so. Significantly more so.

Michael Pope

So we talked about the posture of the retail market bills being dead. There is no posture because it's not moving forward. But these bills to crack down on Delta 8 and Delta 9, the Hanger bill and the Kilgore bill, are both still alive and probably headed to the conference and ultimately to the Governor's desk, right?

Dylan Bishop

Yes. So the Kilgore bill has already been placed in a committee of conference, I believe the Hanger bill if it hasn't been yet today, certainly will be by the time this episode airs. But I want to address something. And that's the motivation or the narrative that the proponents of these bills espoused during the legislative process. And they kept saying; We've got to get these products out of the hands of our kids. These are unregulated products; these are hurting our kids. Well, that couldn't be more patently false. Because by way of last year's budget, we enacted legislation that required all edible hemp products to be age-restricted; you had to be 21. And over to purchase the product, it's illegal for anybody to sell these products to anyone under the age of 21. There are also testing requirements that are tantamount to the medical cannabis testing requirements. There are labeling requirements requiring every single ingredient used in these edible products to be listed on the label, as well as the THC concentration. So, it's already illegal for these products to be in the hands of kids. So our issue is not with the laws that are written on the books but with negligent parenting. And I think my friends on the right side of the aisle would agree that we can't legislate good parenting; that's a slippery slope.

Thomas Bowman

And I think a lot of people on the left side of the aisle would agree to, like, I personally agree, you can't legislate parenting. And it's just like when kids get a hold of Alcohol, Tobacco, or, God forbid, guns, like, sometimes it's going to happen. And so you want internal processes as a family to be able to prevent that from happening.

Dylan Bishop

I think the industry is wholly behind that sentiment. These products should not be in the hands of kids, and they should never have been, regardless of where the law was. But the proponents of these bills are espousing a problem that's already been addressed by the code. And, I'd go so far as to say, you know, the Governor himself may be, identifying a problem that was already addressed by legislation in last year's budget. So if the problem has already been fixed by way of legislation enacted in the budget, what's the real benefit of these bills? The only practical effect these bills will have is to kill two-thirds of the remaining existing hemp and hemp products you market. So that's Virginia farmers. That's Virginia retailers; that's processors. I mean, these are small-town, rural Virginia economic drivers.

Thomas Bowman

So am I gathering that you are a hard no? Opposed to this? I guess it is the Kilgore Hanger bill?

Dylan Bishop

Well, so I've got two answers that, pursuant to my disclaimer early on, are right. Dylan Bishop is opposed to these two bills. Well, my client, the Cannabis Business Association of Virginia, they were and remain opposed to these two pieces of legislation.

Thomas Bowman

So we want to kill the bill. I guess. as they would say in the House?

Dylan Bishop

We tried to, and we thought we had a legitimate strategy and an argument that we had discussed with our colleagues and friends in the Senate Democratic Caucus. We haven't talked about the Ebben bill yet. So what the Ebben bill sought to do was to take a big picture, look at this.

Michael Pope

And just to be clear, the Ebben bill would have created a retail market?

Dylan Bishop

The Ebben bill would have created a retail market for adult use of marijuana, but it also would have regulated hemp products that are intended to be eaten or smoked.

Michael Pope

Oh, I see. So I've separated them out into different categories, retail market versus hemp bills, but the Ebben bill actually touches on both of those areas.

Dylan Bishop

Correct/ The Ebben bill would have done both. And what we were posturing to do and asking the Senate Democrats to do is to kill Senator Hanger's bill and kill the Kilgore bill. If the administration was so determined to have this conversation about these edible hemp products, they would be forced to do so in the context of a larger conversation of regulating hemp and providing an adult-use market because no matter what we do on the hemp product side of things, until we provide an adult-use market, consumers are going to find an illicit market for marijuana. They're going to continue to find another kind of stop-gap intoxicating substances until they can get the ones that we've already legalized, so, so we're just going to keep playing whack-a-mole right now. It may be Delta 8 is a concern. Tomorrow, maybe Delta 10. And you know, I skipped chemistry class, I went to law school, it could be Delta 37. I'm not sure. But that's not addressing the issue. We're playing Whack-a-mole with that point.

Thomas Bowman

As somebody who worked for a member of House Appropriations, what I see is a bunch of unrecouped potential tax funding for any number of state needs. Right now, you're either buying off a dealer from Instagram, or you're maybe going up to DC or elsewhere where it's legal. None of that money is staying in Virginia. That's all going to help DC. Its cash is not reported to the IRS by your dealer.

Dylan Bishop

It's either benefiting the illicit market or a legitimate industry in another jurisdiction. Yeah. And so, again, you know, Virginia, and particularly Virginia in the last couple of years, when our coffers have been flushed, that's not a terribly persuasive argument, no matter what side of the issue you fall on, you know, we're, even when we were controlled by Democrats, and in both chambers in the Executive Mansion, we really weren't terribly, pressed to tax and tax and tax and tax, because we're pretty conservative fiscal stewards here in the Commonwealth. And we should be lauded for that, which means that we're not hurting for cash. So that's not an argument that I've used in my advocacy.

Thomas Bowman

No, understand; I'm just thinking about it. And like myself is like, oh, my gosh, I could fund so much. I think in Colorado, they had to give money back; it was so successful. And wouldn't that be a great position for the General Assembly to be in if, hey, we collected so much off marijuana sales and revenue, like we're giving you a bunch of your money back?

Dylan Bishop

Well, that's certainly what the Youngkin administration and the House Republicans are trying to do is to give back, I think, about $4 billion in tax revenue because I'd be inclined to agree with them. Virginia may have been overtaxed for any number of years and the recent history. So I think they may be onto something there. I just wish they would take a different approach to the adult use of marijuana and the hemp industry.

Michael Pope

I think Senate Democrats want to spend that money. So I think that's a different topic for a different podcast. One last question before we wrap up, look to the future here. Last year, we were unable to create a retail market; this year, we're unable to create a retail market, Will that ever happen? Will that happen after the election? Where's this thing headed?

Dylan Bishop

It's got to happen at some point. The two faces were already out of the tube, public sentiments behind it, particularly in Virginia and southwest Virginia specifically, you know, the public sentiments behind it. So I don't think we're ever going to read criminalize. And the position we're in now, like I said earlier, is untenable. So we have to do something. Now, the political headwinds were provided a perfect storm to totally blow this initiative up this year. As you know, this time next year, the elections for all 140 General Assembly Members will be behind us. So, the political risk, I think, will be substantially lower, particularly for folks on the Republican side of that chamber. And I think that might be an opportune time now. We'll still have the same Governor. So he still has the power of the pen and could veto any legislation. But I think even his political calculations may be significantly different than they are today at this time next year.

Michael Pope

All right, Dylan, Bishop of Eckerd Siemens, thanks for coming on your favorite podcast, Pod Virginia.

Dylan Bishop

It is; indeed, I am a regular listener and usually catch them the same day. So I'd like to quiz you on your own podcasts when I get the chance.