Business
Virginia cannabis firms expand medical facilities amid uncertainty over adult-use sales
Cannabis multistate operators in Virginia are focused on building out their medical marijuana facilities while they wait to see whether the commonwealth’s adult-use program actually launches in 2024 as planned, now that Republicans control much of the state government.
Virginia lawmakers last year approved legislation legalizing what would be the first commercial recreational marijuana market in the South. Democrats were then in control of state government.
But a 2024 launch is far from certain, sources told MJBizDaily, after Republicans retook the state House of Delegates and the governor’s mansion last November, throwing the upcoming recreational market – and its structure – into doubt.
In the meantime, representatives from Florida-based Jushi Holdings and New York-headquartered Columbia Care – which have MMJ licenses in Virginia – say they’re focused on opening their six total dispensaries allowed under state law.
They also are building out related infrastructure such as grow rooms and manufacturing facilities.
“We are feverishly working on building out our full complements of grow rooms,” said Trent Woloveck, chief commercial director at Jushi, who added that the company recently opened its third store in July, in Alexandria.
Jushi also has dispensaries operating in Manassas and Sterling, and all three are in the Washington DC metro area.
“We’ll have our Fairfax store open before the end of the month,” Woloveck added. “We just started construction of our fifth store in Arlington, and we’re finalizing our sixth site in Woodbridge and building out that facility there.”
The reason for that focus is threefold:
- The Virginia Legislature made major changes to the state medical marijuana program this year, including streamlining patient applications so consumers can buy products the same day they receive a doctor’s recommendation. That is expected to increase demand.
- The medical program continues to ramp up, and there’s plenty of infrastructure to build before a recreational cannabis market begins.
- The Legislature failed this year to reenact two bills needed to launch the adult-use marijuana market in January 2024. That means companies such as Jushi can count only on MMJ sales for the foreseeable future.
The changes for patient access are particularly notable.
Previously, patients had to wait up to six months to receive the necessary paperwork from the state Board of Pharmacy after obtaining a physician’s medical cannabis recommendation.
That requirement has been eliminated, which puts medical marijuana more on par with traditional prescriptions.
“With the expanded access for patients … we’re really focused on getting all of our satellite locations up and running so we can service as many as possible,” said Ngiste Abebe, vice president of public policy at Columbia Care.
Columbia Care is set to be acquired by Illinois-based Cresco Labs, but that deal hasn’t closed yet, and Cresco Labs directed questions about Virginia to Columbia Care.
So far, Columbia Care has four of its maximum six dispensaries in the state, according to the company website: In Portsmouth, Virginia Beach, Richmond and Short Pump.
The Virginia medical market, which launched in 2020, is projected to reach up to $25 million in sales this year and up to $95 million by 2026, according to the 2022 MJBiz Factbook.
In addition to Columbia Care and Jushi, the other licensed medical cannabis operators in Virginia include Green Leaf Medical, a Maryland-based multistate operator, and a Virginia company called Dharma Pharmaceuticals.
Recreational market launch questionable
Perhaps the biggest development in Virginia so far this year, however, is what didn’t happen – the requisite approval of two bills that would have cleared the way for the state’s recreational marijuana market.
The recreational market is projected to hit upward of $500 million in sales in 2024 if it launches as planned, according to the MJBiz Factbook, and could surpass $1 billion in sales in 2026.
The two bills – House Bill 430 and Senate Bill 391 – were shelved by Republican leaders in the House of Delegates, said JM Pedini, the executive director of Virginia NORML.
Pedini noted the Senate measure sailed through the Democrat-controlled upper chamber but didn’t move out of committee in the GOP-led House.
“There is not one single committee in the House of Delegates in which the chair of said committee would allow an adult-use retail bill to advance to the floor,” Pedini said.
As a result, Pedini doesn’t believe the recreational market will launch as planned in January 2024.
“With an originally projected date of Jan. 1, 2024, for adult-use retail sales, is that even possible given the Virginia Republican-controlled House of Delegates’ complete unwillingness to move forward with any adult-use legislation?” Pedini asked rhetorically.
“The answer to that is ‘No.’ … Unless or until House leadership decides to prioritize retail sales … there will be no path forward for adult-use retail.”
But Woloveck is more optimistic that economic and public-health issues will force the Virginia GOP and Gov. Glenn Youngkin to honor the original plan for a regulated adult-use market in 2024.
Youngkin’s office did not respond to a request for comment.
Woloveck believes the governor and the House Republicans want to take their time to ensure there aren’t any negative ramifications for public health from launching a recreational market.
He pointed to the ban on hemp-based delta-8 goods approved this past legislative session – alongside the MMJ program expansions – as part of that agenda.
Woloveck also said the Republicans are still deciding on a policy route for adult-use marijuana.
“The governor has continued to show good faith in wanting to learn … and get an adult-use program teed up and ready to go,” Woloveck said.
And, Woloveck implied, they might not have a choice.
“It makes sense that the Republicans are going to get something that would kick into effect 1/1/24, because come (that date), adult-use sales are allowed,” Woloveck said.
He added that his understanding of the legislation approved in 2021 that legalized adult-use marijuana and set the Jan. 1, 2024, start date for sales is that the launch isn’t flexible; it’s set in law.
The only question is whether Republican legislators and Youngkin will agree on a regulatory scheme to govern those sales.
“I think the Legislature and the governor are going to continue to push to make that happen, because they understand the need from a public safety perspective and a law and order perspective,” Woloveck said.
“So I feel very confident that there will be a commercial program in place on 1/1/24.”
He also noted that Youngkin made his first appointment to the state Cannabis Control Authority just this month: retired police chief John Keohane.
Columbia Care’s Abebe was more circumspect.
“I think it’s entirely possible that we see a bipartisan compromise. I also don’t think it’s necessarily a fait accompli” that recreational sales will begin on time in 2024, Abebe said.
“I would be really impressed if we’re able to get everything done in this next year and have adult-use sales start on Jan. 1, 2024, but I also think there’s a lot of work to get done to accomplish something like that.”
Either way, Abebe said, it appears that there won’t be any solid answers on the rec market question for a while yet.
“I think we’ll see more movement building through September. That said, it’s difficult no matter who’s in charge to make cannabis the No. 1 issue for everyone,” she said.
In the meantime
In the absence of a state-regulated market to serve consumer demand, Pedini said, the illicit market has begun to flourish, since adult-use possession and consumption – but not sales – were legalized last year.
Pedini added it throws a wrench into the works because many of those illegal businesses are selling cannabis goods of questionable quality, which could lead to a public health issue.
“Pop-ups are definitely a thing. They weren’t before, and they are now,” Pedini said.
“People see these things – these stores that call themselves dispensaries – and they go in and buy these completely unregulated products, and everyone knows unregulated products are a threat to consumer health.”