The first meeting of the Cannabis Oversight Commission raised fundamental questions about the future of cannabis law in Virginia.
At the top of the Northam administration’s list of priorities for both the General Assembly and Virginia Cannabis Control Authority (VCCA) to tackle was to properly define possession equivalencies for marijuana products and to hire the Cannabis Social Equity Liaison and Cannabis Public Health Liaison before the 2022 session comes around.
Of JLARC’s twelve recommended changes to the Cannabis Control Act presented during the meeting, three quarters will require legislative action, in some cases drastically altering the prospects for some potential licensees.
- Eliminate vertical integration for registered hemp processors, or raise or eliminate the cap on marijuana manufacturing licenses.
- Restrict pharmaceutical permit processors to three adult-use locations.
- Move up the date for implementing regulations and accepting applications to January 1, 2023.
- Eliminate the social equity eligibility criterion related to convictions of family members.
- Establish a misdemeanor violation for possession between 3 and 16 ounces.
- Set separate license caps for Class A and Class B Cultivation licenses.
- Authorize the VCCA to create different classes of licenses within each license category.
- Establish additional statutory requirements to ensure social equity grant program is effectively and transparently administered.
- Enact changes that divide responsibilities for testing labs.
- Begin drafting regulations by fall 2021.
- Set possession equivalencies using an emergency regulation process.
- Develop clear definitions of business ownership for social equity applicants.
- Develop a proposal for if and how responsibility for testing could be divided between the VCCA and the Department of Consolidated Laboratory Services (DCLS).
Additional Topics to Consider
- Alcohol and tobacco sales by marijuana licensees
- Vertical integration for small businesses
- Possession and manufacturing at home
- Law enforcement training
- VCCA’s access to expunged records
- Activities allowed under different license types
- Changes to license caps
- Local zoning authority clarification
- Minimum age for industry employment
- Marijuana industry employee registration
- Encouraging diverse employment
- Clarifying individual and private business rights
- Affirming legitimacy of licensed marijuana operations
Expediting Commercial Sales & Reevaluating Market Structure
During discussion on moving up the timeline leading to commercial sales, many legislators raised questions about the role of pharmaceutical permit processors (PPPs) in the retail cannabis market.
The Commission’s Division of Legislative Services staff member mentioned that the Commission received a proposal that could alleviate potential market stress if the timeline was in fact moved up.
In this proposal, the Board would issue temporary retail sale permits to PPPs in order to use their existing footprint to allow legal sales ahead of time. This proposal would bring retail marijuana to the public faster but still gives smaller businesses adequate time to prepare within the original timeline.
Under this model, the VCCA would also create an incubator program that allows each PPP to take on up to five social equity businesses in order to give them a head start before the retail market goes live in 2024.
“Every other state that has legalized cannabis has leveraged their existing medical market to not just increase access but generate the tax revenue and funds for social equity priorities,” said Ngiste Abebe in an article from the Virginia Mercury. Abebe is the VP of Public Policy at Columbia Care and a member of the Cannabis Public Health Advisory Council.
Delegate Don Scott (D-Portsmouth) mentioned that because the Cannabis Control Act allows Virginia’s pharmaceutical permit processors to easily vertically integrate, the General Assembly must ensure that social equity provisions make it into their licensure process in order to preserve the integrity of the law.
If the Cannabis Oversight Commission were to recommend moving forward with this proposal, move up the date for retail sales, or recommend allowing vertical integration for PPPs as the law is written, small businesses should be prepared to hit the ground running as soon as their license is awarded.
All in all, the Commission agreed that licenses must be awarded in a way that ensures diversity of ownership, delivers a wide range of products, and supports a healthy and well-supplied market from seed to sale.
The next meeting of the Cannabis Oversight Commission is yet to be announced but will cover a wide range of challenging topics, including:
- Resentencing, Review, and Release
- Parental Rights
- Employment Protections
- Housing Rights
- Youth Possession
- Adding Medical Board to CCA
While the VCCA and the Commission work out regulations and proposals for the bill ahead of the 2022 session, Virginia’s statewide elections are looming. The Cannabis Control Act faces re-enactment, which means the bill that was passed on party lines last year faces an unclear fate should the makeup of the House change.
Gentry Locke Consulting is here to deliver up-to-date information to prepare your business for the cannabis licensure process. Reach out to us today to find out what you need to be doing to prepare before applications go live.