Virginia’s first look at a cannabis retail market

Virginia took a step toward launching its recreational marijuana market this month after years of legislative limbo.

The Virginia Cannabis Control Authority released its first draft of regulations for prospective businesses, including registration fees, limits on customer purchases, and even how delivery operators would be permitted.

Virginia approved legislation legalizing retail marijuana sales this year. The law allows up to 350 recreational marijuana stores, 100 microbusinesses and five tier V cultivation facilities to open across the state.

Under the draft regulations, retail marijuana stores will pay a $4,000 application fee, with initial authorization costing $20,000. Annual renewal and reinspection fees would cost $17,500. Medical dispensaries pay the same application fee, but an initial permit costs $40,000, with annual renewal and inspection fees totaling $35,000. A retail license only allows the sale of marijuana products, not the ability to grow or process.

One issue the authority hopes to stave off is oversaturation in certain geographic markets as there are no explicit restrictions on the maximum number of retail stores in an individual locality.

“We’re still working to build out what the process will look like and whether you apply for a specific area or not,” said Jamie Patten, the CCA’s acting head and chief administrative officer. “Some of that will come out of the recommendation on how to geographically locate the licenses to ensure a proper distribution.”

Patten said although the timeline is still in development, she believes retail licenses will be open for applications in a phased approach, and not all at once. If more than one qualifying applicant applies, the CCA plans to award permits through a lottery.

The draft proposal caps each customer transaction at 2 ounces of botanical marijuana, in accordance with Virginia law, which equates to 8 grams of concentrate or 800 mg of THC in edibles.

Delivery of marijuana products is permitted, but purchasing products through automated dispensing, vending machines, drive-thru or curbside pickup is prohibited. Drive-thrus are currently offered by some medical dispensaries, but only for pre-orders.

The CCA is tasked with setting regulatory framework for the retail market, which will begin July 1. The draft regulations will go through multiple reviews, including by the Cannabis Public Health Advisory Council, before final regulations are presented to the board in December. Regulations will be published and effective by February.

Unlike retail licensees, microbusiness can grow, process and sell retail marijuana products, Patten said, but on a limited scale. Those licenses offer the opportunity for small-business owners to get started in Virginia’s cannabis industry.

“Think about almost like a craft brewery where they can make their own beer and then sell it on site,” Patten said.

Microbusinesses will pay $1,000 to apply, and $2,500 for initial authorization. The draft requires $25 registration of each marijuana product, and $7,000 in annual renewals and reinspection fees.

Marijuana cultivation facilities will also face application and initial authorization fees up to $57,500, $50 registration of each product, and annual renewal and inspection fees up to $50,000.