West Virginia Medical Marijuana Revenue Is Supposed To Support Drug Treatment Programs, But Sits Unspent As Officials Worry About Federal Prohibition

*“The money in the fund will remain unallocated until federal law changes.”*

*By Nicole Blevins, Mountain State Spotlight*

*This story was originally published by Mountain State Spotlight. Get
stories like this delivered to your email inbox once a week; sign up for
the free newsletter at https://mountainstatespotlight.org/newsletter.*

Since the state’s first dispensary opened in 2021, West Virginia’s medical
cannabis program has collected roughly $34 million in taxes, licensing fees
and interest.

State law requires the money be used to create a medical cannabis research
program, provide resources to residents with substance use disorder and
fund law enforcement training.

But almost four years later, the money sits unspent.

Cannabis is still an illegal drug at the federal level. Traditional banks
were unwilling to hold the state’s cannabis dollars, so they’re held at a
credit union under control of the state treasurer’s office.

“The money in the fund will remain unallocated until federal law changes,”
said treasurer’s office spokesperson Carrie Hodousek.

But other states with legal cannabis markets, including Maryland,
Pennsylvania and Ohio, are spending their tax revenue.

*A medical cannabis rollout made rocky by federal law and fearful banks*

In 1970, the federal government classified marijuana as a Schedule I drug,
a designation that finds it has no medical use and a high potential for
misuse. Today, 40 states have legalized recreational or medical cannabis
use despite the federal classification.

West Virginia’s 2017 Medical Cannabis Act allowed licensed physicians to
issue medical cannabis cards to patients seeking alternative treatment for
serious health conditions.

But it took over four years from the time the bill was passed for patients
to get medical cannabis from a dispensary in West Virginia.

In 2018, then-Treasurer John Perdue said banks refused to hold funds from
the program because they did not want to be held liable for interacting
with money from an illegal substance.

Perdue sought an advisory opinion from then-Attorney General Patrick
Morrisey to determine the best way to legally handle the program’s
finances. Morrisey found the federal government had not gone after other
states with medical cannabis markets, but there was no guarantee it would
continue to refrain from doing so.

Licenses for growers, processors or dispensaries had not been dispersed by
the state because there was nowhere to collect the permit fees. It wasn’t
until March 2019 that lawmakers changed the state law to allow a credit
union to hold the money.

Element Federal Credit Union—which was already planning to provide banking
services to the state’s cannabis industry—won the bid to hold the tax
dollars.

“It’s up to the individual bank if they want to take that risk. It’s a big
risk because it’s federally illegal,” said CEO Linda Bodie. “We obviously
took the risk.”

Former delegate and then-Republican candidate for state treasurer Riley
Moore criticized Perdue for the continued delay in the program in a 2019
opinion published in the Charleston Gazette-Mail.

“Clearly, West Virginia needs a modernized, transparent and proactive state
treasurer’s office,” he wrote. Moore defeated Perdue in the 2020 election.

After planting, harvesting and processing cannabis into consumable
products, the first dispensary opened in November 2021 and began generating
tax revenue.

During Moore’s four-year term as state treasurer, the medical cannabis
program generated millions of dollars that went into the fund but were not
spent. Moore, now a U.S. representative, did not respond to questions about
the fund.

Lawmakers who helped write the state’s medical cannabis laws were surprised
that the money is sitting at a credit union.

“I was not aware of that,” said Del. Mike Pushkin, D-Kanawha, “That’s the
first I’ve heard of it, that it wasn’t being spent.”

Pushkin helped craft the 2019 cannabis banking legislation. He said there
were no discussions he was involved in during that legislative session, or
after, that suggested the fund would stall.

Sen. Mike Woelfel, D-Cabell, who wrote the original version of the Medical
Cannabis Act, also said he wasn’t aware the money was stockpiling. After
learning the status of the fund, he spoke with the current treasurer.

“I think this has come to the attention of Treasurer Larry Pack, and I
think he’s summoned the experts to find a way to meet the expectations of
the bill and to make this work,” Woelfel said.

*As West Virginia sits on its funds, other states put cannabis taxes to use*

Meanwhile, Maryland, Ohio and Pennsylvania all have legal cannabis markets
and are distributing the tax revenue as it’s designated in state laws.

Ohio has distributed over $35 million to its general fund, and nearly
two-thirds of the cannabis tax revenue will be allocated to its general
fund beginning this fiscal year. But the rest, which goes to Ohio’s Host
Community Cannabis Fund, has not been disbursed to individual
municipalities due to a lack of appropriation by the state legislature,
said Ohio Office of Budget and Management spokesperson Pete LuPiba.

In Pennsylvania, medical marijuana revenue has supported drug and alcohol
programs and its Commission on Crime and Delinquency, said Pennsylvania
Department of Revenue spokesperson Jeffrey Johnson. The state has not been
able to establish a medical marijuana research program because of
complications with federal law.

A third of Maryland’s cannabis tax revenue goes to a fund aimed to help
communities disproportionately affected by drug use. The rest goes to the
state’s general budget, counties and public health efforts.

Andrew Livingston, Director of Economics and Market Analysis at Vicente
LLP, a national cannabis law firm, said he is not aware of a systemic issue
where cannabis tax revenue cannot be spent in states with legal markets.

*How could allocations from the fund help West Virginians now?*

Woelfel introduced the Medical Cannabis Act with a key requirement to
establish a medical cannabis research program. It would determine whether
the medical cannabis program was helping and where it could be improved.

“To me, that was a very important part of the bill,” he said.

State Department of Health spokesperson Gailyn Markham said it has not been
created due to the inability to access funds.

If West Virginia distributed the entire fund today, roughly $19 million
would go back to the Bureau for Public Health within the Department of
Health, nearly $8 million to the Fight Substance Abuse Fund overseen by the
Department of Health, $6 million to the Division of Justice and Community
Services and $1.5 million to a special revenue account for law enforcement
professional training and professional development programs.

Dr. Matthew Christiansen, former state health officer from 2023-2024, said
he asked but couldn’t get a clear answer of how much money was in the fund.

He said West Virginia has struggled more than any other state in the nation
with addiction, and there is a lack of sustainable funding for treatment
and recovery programs. Federal funding has declined, but he said the tax
revenue could ease the gap.

Federal cuts include money to the Department of Justice’s Office of Justice
Programs, which helped divert people with an intoxication or a possession
charge into treatment instead of prison.

Christiansen said the state’s revenue from medical cannabis could be used
in other ways as well.

“It’s a significant amount of money. It could be used to help quite a few
people, or stand up specific programs for a period of years that would make
a positive impact for people with addiction,” he said. “It’s nothing to
sneeze at.”

He said this fund could also provide access to resources for the small
percentage of medical cannabis patients who develop a cannabis use disorder.

Elizabeth Shahan, executive director of West Virginia Prevention Solutions,
a nonprofit focused on substance use prevention, said the organization has
struggled with the loss of federal funding to address the needs of West
Virginians.

The West Virginia Division of Tobacco Prevention RAZE program closed this
summer. It was a program aimed to educate youth about the dangers of
smoking, vaping and tobacco use. West Virginia is currently leading the
nation in teen vaping, according to a study conducted by Drugwatch.

“That fund alone could secure that evidence-based prevention education in
school systems,” Shahan said.

Medical cannabis was brought to the state as an economic driver, she said,
and businesses, prevention programs and medical cannabis patients all have
a shared value to prevent harm in young populations.

“Every dollar that’s available for prevention really needs to be invested
in prevention,” Shahan said. “If it sits, it doesn’t do anyone any good.”

*This article first appeared on Mountain State Spotlight and is republished
here under a Creative Commons Attribution-NoDerivatives 4.0 International
License. *

The post West Virginia Medical Marijuana Revenue Is Supposed To Support
Drug Treatment Programs, But Sits Unspent As Officials Worry About Federal
Prohibition appeared first on Marijuana Moment.