Cannabis Business Licensing in Virginia

Program Details

Type of Program

• Medical
• Adult-Use

Regulatory Agency

• Medical 
• Virginia Department of Health Services (DHS)
• (Source)
• Adult-Use 
• Virginia Cannabis Control Authority (CCA)
• (Source)
• The bill created the CCA (the authority), the Cannabis Oversight Commission, the Cannabis Public Health Advisory Council, the Cannabis Equity Reinvestment Board and Fund, and the Virginia Cannabis Equity Business Loan Program and Fund. 
• (Source)

Market Population

• 8,631,393 million residents as of April 1, 2020 Census data.

Annual Tourism

• Travelers spent $73 million a day in Virginia in 2019. According to the U.S. Travel Association, domestic traveler spending in Virginia reached $27 billion, up 3.4% compared to 2018. 
• The travel industry is the sixth-largest private employer in Virginia, accounting for 7% of employment.
• On average, every $112,920 spent by domestic travelers in Virginia during 2019 supported one job.
• (Source)

Existing Cannabis Market Statistics

• Tax Rate: 
• Medical Cannabis sales are not subject to a cannabis excise tax, just standard sales tax.
• Adult-Use Cannabis - A state tax of 21% at the point of retail sale would be levied, in addition to standard 6% sales taxes. 
• Localities could impose a tax of up to 3% on sales to consumers in the municipality.
• (Source)

Projected Sales

• Projected Sales for Medical and Adult-Use:
• Projected $50 Million in cannabis sales by 2024.
• A working group set up by state legislators estimates the industry could generate $698 million to $1.2 billion in economic activity overall. 
• (Source)(Additional source)
• The legalized commercial market could generate substantial revenue for state and local governments once the market matures. Depending on demand, commercial cannabis could produce $31–$62 million during the first full year of sales. By the fifth year of sales, commercial cannabis could produce $154–$308 million in tax revenue.
• (Source)

History of the Market

• 2015
• House Bill 1445 and Senate Bill 1235 passed to legalize medical cannabis for alleviating intractable epilepsy, which also provided an affirmative defense for the possession of CBD oil or THC-A oil.
• 2016 and 2017
• Authorized the establishment of five pharmaceutical processors to produce and dispense these oils.
• 2018
• Legislation passed that expanded the use of oils to any diagnosed condition or disease upon recommendation from any physician.
• The DHS Board issued conditional approval to five applicants in 2018. 
• 2019
• Legislation passed that expands authority to issue written certifications to nurse practitioners and physician assistants, created "registered agent" registration category and authorized wholesale distribution of oils between pharmaceutical processors.
• Legislation passed that allows doses to contain up to 10 mg of THC to patients.
• 2020
• On May 21, Northam signed legislation decriminalizing cannabis possession.
• (Source)
• This legislation removed the definitions of cannabidiol oil and THC-A oil and replaced them with a definition of cannabis oil.
• 2021
• In February, both houses of Virginia's General Assembly passed legislation SB 1406 and HB 2312 (identical) to legalize the use and personal cultivation of cannabis by adults ages 21 and older and establish a regulatory framework for commercial cannabis production, manufacturing, testing, and retail sales by 2024. 
• On April 7, 2021, the legislature took up the governor's recommended amendments in a one-day reconvened session. Both houses of the legislature approved the governor's entire recommendation verbatim; the bill became law on July 1, 2021, without any further action by the governor. (Source)
• On April 21, Gov. Ralph Northam (D) ceremonially signed the bill to legalize cannabis. (Source)

Licensing 

Medical Marijuana License Information

• There are no new licenses available at this time. 

Adult-Use Licensing 

• As of July 2021, the CCA Board is:
• Establishing the number of licensees, which may not exceed 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers. These figures would not count existing medical cannabis businesses and hemp processors. 
• For Adult-Use licenses, the Social Equity applicants will be given preference from July 1, 2023, until January 1, 2024.
• Stores must be geographically dispersed, and their dispersion must be reassessed after every 100 licenses are issued.
• Licensing would be entirely at the state level.
• Localities can determine hours and implement zoning and land-use rules.
• Localities can also opt out of retail stores by voter referendum.
• The legislation would also allow local governments to prohibit the sale of recreational cannabis within their jurisdictions. (Source)

Social Equity Program

• CCA promotes inclusion in licensing by prioritizing social equity applicants.
• Qualified social equity license applicants may be advantaged by a preferential process, reduced fees, and access to a low-interest business loan program.
• Regulators will waive a percentage of fees for social equity licenses.
• To qualify for a Social Equity License, an applicant must: (Source)
• Have lived or been domiciled for at least 12 months in the state.
• Have at least 66% ownership by a person or persons who:
• Have been convicted of or adjudicated delinquent for any misdemeanor violation of specific cannabis-specific laws.
• Is the parent, child, sibling, or spouse of a person who has been convicted of or adjudicated delinquent for any misdemeanor violation of those laws relating to cannabis.
• Has resided for at least three of the past five years in a jurisdiction determined to have been disproportionately policed for cannabis crimes.
• Has resided for at least three of the last five years in a jurisdiction determined to be economically distressed.
• Graduated from a historically black college or university located in the state.