By Thomas Howard. He has over 10 years of experience in corporate and cannabis laws nationwide.
In this expert guide, we will tackle the step by step process on how to open a dispensary in Virginia, social equity considerations, and strategies for ensuring compliance and success in this rapidly evolving industry.
Cannabis in Virginia: Overview of Its Past and Present
Recreational cannabis was legalized in Virginia in July 1, 2021 and The Virginia Cannabis Control Authority (CCA) was established to manage the state’s burgeoning recreational cannabis industry.
Virginia’s cannabis landscape has transformed dramatically in recent years, with the expansion of its medical marijuana program and the legalization of recreational cannabis. That’s why, learning How to build a Dispensary in Virginia before the application opens up will put you in a great position. Sales are projected to begin in 2024, providing ample opportunities for aspiring entrepreneurs to enter the growing legal cannabis market, as well as for existing medical cannabis businesses to expand their operations.
Understanding the Current Status of Cannabis in Virginia
Currently, there are five Cannabis Pharmaceutical Processor Permits in Virginia, making it a very lucrative state to operate a cannabis business. Permit holders can operate up to 5 facilities per HSA (Health Service Area).
With more than 8.5 Million Population. Virginia is set to become a major player in the cannabis industry.
It’s crucial to stay updated with the ever-evolving regulations by regularly checking the official Virginia Government pages. As the cannabis industry in Virginia continues to flourish, ensuring compliance and understanding the process of obtaining a Pharmaceutical Processor Permit will pave the way for a successful venture.
How to Open a Dispensary in Virginia?
To build a Dispensary in Virginia. Aspiring Owners need to apply for a “Pharmaceutical Processor Permit.” According to (VBP) Virginia Board of Pharmacy’s Website, they will use a point system for the Applications of the Pharmaceutical Processor Permit.
Pharmaceutical Processor Permit:
Pharmaceutical processors play an important role in providing patients with access to safe and effective medical cannabis products. By cultivating and producing high-quality cannabis products, and by dispensing them in a safe and responsible manner, pharmaceutical processors help to improve the lives of patients with intractable epilepsy.
Steps to Obtain Pharmaceutical Processor Permit:
Opening a marijuana dispensary can be intricate and difficult. It’s vital to comprehend the application process, and local laws and restrictions that might affect the creation and operation of a cannabis business. By carefully navigating these factors, entrepreneurs can position themselves for success in Virginia’s growing cannabis market.
Application Process and Requirements
The Request for Applications for Pharmaceutical Processors – Health Service Area I will be conducted by the Virginia Cannabis Control Authority, which assumes control of the Medical Cannabis Program on January 1, 2024.
Overview of the three-stage pharmaceutical processor permit application process in HSA I in Virginia:
Stage 1: Submission of Initial application
- Applicants must submit an initial application and a non-refundable application fee of $10,000.
- The application will be reviewed and scored by an ad hoc committee appointed by the Board.
- The committee will recommend to the Board the awarding of conditional approval or the need to re-issue the RFA if there are not enough qualified applications.
Stage 2: Awarding of conditional approval
- If granted conditional approval, an applicant will to complete all requirements for issuance of a permit, including:
- Constructing or remodeling a facility
- Criminal Background Check
- Installing equipment and security
- Obtaining local zoning approval
- Electronic Tracking System
- Attestation – Indicating full compliance with all state and local laws and ordinances
Stage 3: Granting of a pharmaceutical processor permit
- Once all requirements have been met, an agent of the Board will inspect the facility to assess compliance with the conditional approval and relevant laws and regulations.
- If any deficiencies are identified, a written corrective action plan must be submitted to the Board and a reinspection may be performed.
- Once the facility is in compliance, an application for an initial permit, the initial permit fee of $60,000, and any reinspection fees (if applicable) must be submitted to the Board.
- Once the pharmaceutical processor permit is issued, the facility may obtain Cannabis seeds and begin operation.
The permit will be valid for one year from the date of issuance and may be renewed annually pursuant to Board regulations for continued operation. The Board may also suspend, revoke, or refuse to grant or renew a permit for certain reasons, as outlined in 18VAC110-60-160.
Evaluation Criteria for Pharmaceutical Processor Permit Applications in Health Service Area (HSA) I, Virginia. (Point System Application)
Scoring System & Component Descriptions:
Financial Position: (25 Points)
The Board will evaluate the applicant’s financial position to ensure that they have the resources to build and operate a pharmaceutical processing facility. This will include an assessment of the applicant’s assets, liabilities, income, and net worth.
- Location within the Health Service Area: (25 Points)
The Board will evaluate the proposed location of the pharmaceutical processing facility to ensure that it is accessible to patients, compatible with the surrounding neighborhood, and complies with all applicable zoning and building regulations.
- Security Plans: (25 Points)
The Board will evaluate the applicant’s security plans to ensure that they have adequate measures in place to prevent the diversion, theft, or loss of cannabis plants and cannabis oil.
- Authorization to Conduct Business: (20 Points)
The Board will evaluate the applicant’s authorization to do business in Virginia and ensure that they have met all applicable state and local requirements.
- Industry Involvement & Disciplinary Action: (25 Points)
The Board will review the applicant’s history of involvement in the cannabis industry and any disciplinary actions that have been taken against them.
- Agriculture, Production, & Dispensing Expertise: (50 Points)
The Board will evaluate the applicant’s experience and expertise in cultivating cannabis, producing cannabis oil, and dispensing cannabis oil to patients.
- Marketing Plans: (20 Points)
The Board will evaluate the applicant’s marketing plans to ensure that they are educational and responsible, and that they do not promote the use of marijuana or cannabis oil for recreational purposes.
- Facility Exterior & Blueprint: (25 Points)
The Board will review the applicant’s submitted materials to ensure that the proposed pharmaceutical processing facility complies with all applicable regulations. Facility Exterior and Blueprint
- Product & Site Safety: (20 Points)
The Board will evaluate the applicant’s plans to produce safe and unadulterated cannabis oil products, and to provide a safe work environment for employees.
- Expected Hours of Operation: (15 Points)
The Board will evaluate the applicant’s proposed hours of operation to ensure that they are sufficient to meet the needs of patients.
- Additional Points: (25 Points)
The Board will award additional points for plans that meet the objectives of the following categories:
- Compassionate need plan
- Delivery service plan
- Research plan
The Board of Pharmacy will evaluate pharmaceutical processor permit applications based on the criteria outlined above. Applicants who achieve a score of at least 160 points will be granted conditional approval. Maximum Score: 275 Points.
Fees Associated with Licensing and Operating a Cannabis Dispensary in Virginia
Application fee: $10,000 Non-refundable Application Fee
Permit fees: $60,000 Permit Fee
Startup and Operating Costs: $1 million – $2 million
- Retail cannabis sales will be taxed at a rate of 21% across the state.
- On top of pre-existing state sales tax rates, municipalities can add sales tax of up to 3%
By consulting with Experienced Cannabis Consultants specializing in cannabis business law, entrepreneurs can gain a deeper understanding of the ever-evolving regulations and industry trends. This knowledge can prove invaluable in ensuring compliance, minimizing risks, and staying ahead of the competition in Virginia’s dynamic cannabis market.
Securing compliance and success in the cannabis industry entails maneuvering through advertising and marketing regulations, insurance and risk management, and keeping abreast of industry developments. By addressing these key aspects, cannabis businesses in Virginia can mitigate potential risks, maintain compliance, and achieve long-term success in the growing market.
How many Cannabis Facilities can a Pharmaceutical Processor Permit holder own? A Permit Holder can operate up to 5 facilities under 1 license.
If the patient is a minor or a vulnerable adult as defined in 18.2-369, what must a parent/legal guardian do to obtain medical cannabis products for the patient? The parent or legal guardian must be listed on the written certification provided for the patient from the practitioner.
Effective July 1, 2022, HB933 removes the requirement for patients, parents, and legal guardians to register with the Board of Pharmacy. A Written Certification for the Use of Medical Cannabis from a Registered Practitioner for Medical Cannabis is still required and must be presented at the dispensary, along with a government-issued ID, to obtain medical cannabis products. Showing proof of registration with the Board of Pharmacy will no longer be required.
As the cannabis market in Virginia continues to grow and expand, opportunities for entrepreneurs will only increase. By taking the necessary steps to establish a compliant and successful cannabis business, entrepreneurs can position themselves for success and contribute to the growth and development of this flourishing industry in the state.
About the Author
Tom Howard, Cannabis Industry Lawyer and Consultant has practiced commercial law since 2008 when he graduated law school and got his Series 7 & 66 Securities licenses. He pivoted to practicing litigation for financial institutions before helping cannabis teams form, capitalized and get licensed. He has concentrated in cannabis business since Illinois legalized in 2019. He won licenses for clients in Illinois, Connecticut, New Jersey, New Mexico, Massachusetts, Missouri and has gotten into lotteries in Ohio, Maryland and Maine. He became a Certified Ganjier in 2021. He chairs the ISBA’s section council for Cannabis Law in 2023.