Virginia Marijuana Establishment Licenses

Virginia Marijuana Establishment Licenses

Recently -on April 7- HB 2312 and SB 1406 were voted to be approved after Gov. Ralph Northam requested amendments from the legislature. 

This bill will replace cannabis prohibition with a system to legalize, tax, and regulate cannabis for adults 21 and older. 

The legislation also includes automatic sealing of low-level past cannabis sentences, establishes a social equity program to promote participation in the legal cannabis industry from those hardest hit by the war on cannabis, and dedicates 30% of tax revenue to a Cannabis Equity Reinvestment Fund. 

Many — but not all — of the law’s provisions require a second legislative vote in 2022, or “re-enactment.” The provisions to legalize cannabis possession and cultivation on July 1, 2021 do not require re-enactment, nor do penalties for minors possessing cannabis and provisions to allow the regulatory work to start. The provisions to begin the regulatory structure and to legalize sales on January 1, 2024 also do not require re-enactment. Most new penalties — such as for bringing any cannabis into Virginia — do require re-enactment.

But what does the new legislation establish regarding the Virginia marijuana establishment licenses?

Types of Virginia marijuana establishment licenses

The new bills establishes four types of Virginia marijuana establishment licenses:

1. Marijuana cultivation facility license: Authorizes the licensee to cultivate, label, and package retail marijuana; to purchase or take possession of marijuana plants and seeds from other marijuana cultivation facilities; to transfer possession of and sell retail marijuana, immature marijuana plants, and marijuana seeds to marijuana wholesalers; to transfer possession of and sell retail marijuana, marijuana plants, and marijuana seeds to other marijuana cultivation facilities; and to sell immature marijuana plants and seeds to consumers for the purpose of cultivating marijuana at home for personal use:
   1. Class A cultivation facility: Authorizes the licensee to cultivate not more than a certain number of marijuana plants or marijuana plants in an area not larger than a certain number of square feet, as determined by the Board;
   2. Class B cultivation facility: Authorizes the licensee to cultivate marijuana plants with a tetrahydrocannabinol concentration of no more than one percent, as determined post-decarboxylation.
2. Marijuana testing facility license. Authorizes the licensee to purchase or take possession of retail marijuana from a marijuana cultivation facility or another marijuana manufacturing facility; to manufacture, label, and package retail marijuana and retail marijuana products; and to transfer possession of and sell retail marijuana and retail marijuana products to marijuana wholesalers or other marijuana manufacturing facilities.
3. Marijuana wholesaler license. Authorizes the licensee to purchase or take possession of retail marijuana, retail marijuana products, immature marijuana plants, and marijuana seeds from a marijuana cultivation facility, a marijuana manufacturing facility, or another marijuana wholesaler and to transfer possession and sell or resell retail marijuana, retail marijuana products, immature marijuana plants, and marijuana seeds to a marijuana manufacturing facility, retail marijuana store, or another marijuana wholesaler.
4. Retail marijuana store license. authorize the licensee to purchase or take possession of retail marijuana, retail marijuana products, immature marijuana plants, or marijuana seeds from a marijuana wholesaler and to sell retail marijuana, retail marijuana products, immature marijuana plants, or marijuana seeds to consumers on premises approved by the Board.

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How to apply for Virginia marijuana establishment licenses

According to the newest legislation on the matter, here is the information regarding the application for Virginia marijuana establishment licenses:

• Every person intending to apply for any license authorized by the newest legislation has to file with the Board an application on forms provided by the Board and a statement in writing by the applicant swearing and affirming that all of the information contained therein is true.
• Applicants for licenses for establishments that are otherwise required to obtain an inspection by the Department of Agriculture and Consumer Services shall provide proof of inspection or proof of a pending request for such inspection.
  • If the applicant provides proof of inspection or proof of a pending request for an inspection, a license may be issued to the applicant. If a license is issued on the basis of a pending application or inspection, such license shall authorize the licensee to purchase retail marijuana, retail marijuana products, immature marijuana plants, or marijuana seeds; however, the licensee shall not sell retail marijuana, retail marijuana products, immature marijuana plants, or marijuana seeds until an inspection is completed.
• Each applicant for a license has to post a notice of his application with the Board on the front door of the building, place, or room where he proposes to engage in such business for no more than 30 days and not less than 10 days. 
  • Such notice shall be of a size and contain such information as required by the Board, including a statement that any objections shall be submitted to the Board not more than 30 days following initial posting of the notice required pursuant to this subsection.
  • The applicant shall also cause notice to be published at least once a week for two consecutive weeks in a newspaper published in or having a general circulation in the county, city, or town wherein such applicant proposes to engage in such business. 
  • Such notice shall contain such information as required by the Board, including a statement that any objections to the issuance of the license be submitted to the Board not later than 30 days from the date of the initial newspaper publication.
• The Board shall conduct a background investigation, to include a criminal history records search, which may include a fingerprint-based national criminal history records search, on each applicant for a license. 
  • The Board may waive, for good cause shown, the requirement for a criminal history records search and completed personal data form for officers, directors, nonmanaging members, or limited partners of any applicant corporation, limited liability company, or limited partnership. 
  • In considering criminal history record information, the Board shall not disqualify an applicant because of a past conviction for a marijuana-related offense.
  • The Board shall notify the local governing body of each license application through the town manager, city manager, county administrator, or other designee of the locality. 
  • Local governing bodies shall submit objections to the granting of a license within 30 days of the filing of the application.
• Each applicant shall pay the required application fee at the time the application is filed, except that such fee shall be waived or discounted for qualified social equity applicants pursuant to regulations promulgated by the Board. 
  • The license application fee shall be determined by the Board and shall be in addition to the actual cost charged to the Department of State Police by the Federal Bureau of Investigation or the Central Criminal Records Exchange for processing any fingerprints through the Federal Bureau of Investigation or the Central Criminal Records Exchange for each criminal history records search required by the Board. Application fees shall be in addition to the state license fee and will not be refunded.
• All licensees shall file and maintain with the Board a current, accurate record of the information required by the Board and notify the Board of any changes to such information in accordance with Board regulations.
• Every application for a permit granted shall be on a form provided by the Board. Such permits shall confer upon their holders no authority to make solicitations in the Commonwealth.
• The fee for a temporary permit shall be one-twelfth of the combined fees required by this section for applicable licenses to sell retail marijuana or retail marijuana products computed to the nearest cent and multiplied by the number of months for which the permit is granted.

The Board has the authority to increase state license fees. The Board shall set the amount of such increases on the basis of the consumer price index and shall not increase fees more than once every three years. Prior to implementing any state license fee increase, the Board shall provide notice to all licensees and the general public of (i) the Board’s intent to impose a fee increase and (ii) the new fee that would be required for any license affected by the Board’s proposed fee increases. Such notice shall be provided on or before November 1 in any year in which the Board has decided to increase state license fees, and such increases shall become effective July 1 of the following year.

Adult use possession and home-cultivation

Beginning July 1, 2021: 

Adults who are 21 or older could possess up to one ounce of cannabis, or the equivalent amount of cannabis products, and could gift the same amount to other adults. 

• Adults could securely and discreetly cultivate up to four cannabis plants at their primary residence. (The four-plant cap also applies to households.) Each plant must have a tag with identifying information on the grower. 
• Possessing more than an ounce, but no more than one pound, would be punishable by a civil fine of up to $25. 
• Possessing more than one pound could result in up to 1-10 years in prison. 

State regulation 

A new Cannabis Control Authority would be created in July 2021 to regulate the adult-use cannabis market. A Board of Directors would issue regulations; grant, suspend, or revoke licenses. 

The Board would establish the number of licensees, which could not exceed 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers. This would be without counting existing medical cannabis businesses and hemp processors. It would also approve labs. 

It creates two types of cultivation licenses: Class A licenses, which are capped at a certain number of square feet or plants. Class B would be limited to 1% THC. 

It will also establish criteria to evaluate new licensees based on the density of retail stores in the community and to consider any negative public health outcomes in the community. 

• Vertical integration (owning multiple types of cannabis businesses) would not be allowed except in the case of: 
  • Microbusinesses 
  • Existing medical cannabis businesses, all of which are vertically integrated, and hemp processors may be vertically integrated if they: 1) pay a $1 million fee to the Virginia Cannabis Equity Loan Fund and the Virginia Cannabis Equity Reinvestment Fund; and 2) the business submits a diversity, equity, and inclusion plan to the Cannabis Business Equity and Diversity Support Team and implements it or provides job training services to persons recently incarcerated. 

• Stores must be geographically dispersed. Their dispersion must be reassessed after every 100 licenses are issued. 
• Promotes inclusion in licensing by prioritizing social equity applicants. 
  • The bill denes “social equity applicants” as having 66% or more owners who: have a prior cannabis conviction, have a close relative with a cannabis conviction, live either in an area with disproportionate cannabis arrests or that is economically distressed, or graduated from a Virginia HBCU. 
  • Social equity applicants will be given preference from July 1, 2023 until January 1, 2024. Regulators will waive a percent of fees. 
• Creates a Cannabis Business Equity and Diversity Support Team to identify barriers to inclusion, oer technical assistance, conduct outreach, and develop requirements for diversity, equity, and inclusion plans. 
• A new 21-member Cannabis Public Health Advisory Council would assess and monitor public health impacts and make recommendations, including about warnings cannabis products’ safety and product composition and public health awareness. 
• The bill includes requirements for seed-to-sale tracking, packaging, and labeling —including for potency and mandating warning labels — and requires state-created information on risks to be available at the point-of-sale. Delivery, internet-based sales, 
• Rules would govern outdoor cultivation, sanitation, testing, and advertising. 
• Regulators would also establish public health and safety guidelines for personal home cultivation, including to protect children and prevent  nuisances, including odor. 

Timeframe of the bill

• Most of the bill — including legal possession — will take effect on July 1, 2021. (The current penalty for possession of up to an ounce is a civil fine of up to $25.) 
• Sales would begin no earlier than January 1, 2024. 

Taxes established on the bill

• A state tax of 21% at the point of retail sale would be levied, in addition to standard 6% sales taxes. The tax does not apply to medical cannabis sales from medical dispensaries. 
• Localities could impose a tax of up to 3% on sales to consumers in the municipality. 
• Fees would be determined by the Board and can be increased based on ination. 
• After covering regulatory costs, the revenue would be allocated to: pre-K education for at-risk children (40%); a Cannabis Equity Reinvestment Fund (30%); substance abuse treatment and prevention (25%); and public health programs (5%). 
• The Cannabis Equity Reinvestment Fund, administered by a 20-member Cannabis Equity Reinvestment Board, would direct funds to: 

Scholarship programs for historically marginalized populations, including those who were in foster care and who have been impacted by substance use; 

• Grants to support jobs training and placement, workplace development, youth mentoring, and reentry services; 
• Contributing to the state’s Indigent Defense Fund; and 
• No- and low-interest loans for social equity applicants.

If you want more information regarding what could you do in order to enter the cannabis industry in Connecticut, don’t hesitate to contact us.

If you want to be updated on the current state of Cannabis legalization, you should check out our map of marijuana legality by state.

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