VIRGINIA CANNABIS REGULATION LAW
Virginia's HB 2312, which proposed a system to legalize, tax, and regulate cannabis for adults 21 and older, was approved on April 7, 2021 and the provisions legalizing simple cannabis possession and cultivation came into effect July 1, 2021. However, under the legislation, retail cannabis sales are not anticipated to begin until at least January 1, 2024.
The Virginia Cannabis Control Authority, consisting of a five-member Board of Directors, would be responsible for implementing regulations, issuing cannabis licenses, and overseeing the cultivation, manufacture, and sale of retail cannabis and related cannabis products.
The legislation creates four classes of licensed operators:
(4) Product Manufacturer
Additional licenses will likely be created for testers and transporters.
The number of licensees will be capped at 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers, though these limitations do not include existing medical cannabis businesses and hemp processors.
A cultivation license would allow the licensee to cultivate, label, and package retail cannabis, as well as transfer and sell retail cannabis to wholesalers and retail cannabis businesses. Two categories of cultivation licenses are available. Class A licenses are restricted by the size of or the number of plants, while Class B licenses would be limited to the cultivation of plants with no more than 1% THC.
Vertical integration is generally prohibited, with exceptions made for (1) microbusinesses, (2) existing medical cannabis businesses, and (3) hemp processors upon payment of a $1 million fee to the Virginia Cannabis Equity Loan Fund and the Virginia Cannabis Equity Reinvestment Fund and submission and implementation of a diversity, equity, and inclusion plan to the Cannabis Business Equity and Diversity Support Team.
PROMOTION OF SOCIAL EQUITY, DIVERSITY, AND INCLUSION
Licensing will prioritize social equity applicants, those who are defined as having 66% or more of its owners who: (1) have had a prior cannabis conviction, (2) have a close relative with a cannabis conviction, (3) live in an area that has been disproportionately impacted by cannabis enforcement or that is economically distressed, or (4) graduated from a Virginia HBCU (historically black college and university). Social equity applicants will be subject to lowered application fees and will be prioritized from July 1, 2023 through January 1, 2024.
The Virginia Cannabis Control Authority will create a Cannabis Business Equity and Diversity Support Team to identify barriers and remedies to inclusion, provide technical assistance, and formulate requirements to bolster diversity, equity and inclusion.
30% of the revenue raised from licensing fees and taxation will go to the Cannabis Equity Reinvestment Fund which directs financial support to scholarship programs for historically marginalized populations, job training and placement as well as youth mentoring and reentry services, the state's Indigent Defense Fund, and zero to low-interest loans for social equity applicants.
The licensing application period is anticipated to open July 1, 2023, prior to the start of retail cannabis sales, which is scheduled to begin no earlier than January 1, 2024.
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PREPARE NOW FOR YOUR UPCOMING APPLICATION
The legal cannabis industry is growing, evolving, and highly-regulated. To succeed, it is a must for businesses to obtain licenses and insurance necessary to operate legally and position themselves to expand if desired. Leaf Legal, P.C. is fully equipped to guide your company as it obtains licenses, identifies and recruits our industry's top talent, executes its business plan, and navigates Virginia's ever-evolving regulatory scheme. Contact the attorneys at Leaf Legal, P.C. to schedule a consultation.