Virginia gets close to legalizing recreational weed as other states eye cannabis tax windfalls
A customer lights a joint at Lowell Farms, America's first official Cannabis Cafe offering farm-to-table dining and smoking of cannabis in West Hollywood, California, October 1, 2019.

Virginia is close to becoming the first Southern state to get a tax revenue high as it moves to legalize recreational weed.

A bill passed Sunday in both the state's House of Delegates and Senate is awaiting the signature of Gov. Ralph Northam, a Democrat.

Once signed, the Old Dominion would officially join 15 other states and the District of Columbia that have legalized marijuana for adult recreational use. Though under the Virginia bill, legal sales and possession would not take effect until 2024.

States from Wisconsin to Kansas — many cash-strapped amid the Covid pandemic — are calling for similar measures as they struggle to balance their budgets. Governors also cite racial justice as a reason to legalize marijuana, with Black and Latino men imprisoned at higher rates nationwide than their white counterparts for the same offenses.

Support for marijuana legalization has steadily increased over the years. Recent polling by Gallup found that 68% of U.S. adults think marijuana should be legalized for recreational use, up from 66% the year prior. With Democratic President Joe Biden in the White House and the party currently maintaining a majority in both the House and Senate, federal legalization of marijuana could be closer than ever.

But for now, it remains a state-by-state decision.

New Jersey is the most recent to join the party. Democratic Gov. Phil Murphy signed reform legislation in late February after voters approved the measure in November. A report from nonpartisan think tank New Jersey Policy Perspective estimates the state could see at least $300 million in tax revenue annually.

For Virginia, pot legalization could bring in $698 million to $1.2 billion annually in economic activity and up to $274 million in tax revenue per year, according to a study from the governor's office.

Northam also acknowledged racial disparities in drug convictions in his recent State of the Commonwealth address. "Reforming our marijuana laws is one way to ensure that Virginia is a more just state that works better for everyone," he said.

Not all constituents are satisfied with the pace of change. The American Civil Liberties Union of Virginia said the legislation pays "lip service," but "does nothing to help continued racial disparities that we're seeing with decriminalization until 2024," TV station WWBT, an NBC affiliate in Richmond, Virginia, reported.

A spokesperson for the governor told CNBC that "there's still a lot of work ahead, but this bill will help to reinvest in our communities and reduce inequities in our criminal justice system." The spokesperson said the governor's top priority is making sure Virginia legalizes marijuana in an equitable way.