The Virginia Cannabis Control Authority (CCA), which assumed oversight of Virginia’s medical cannabis program from the Board of Pharmacy as of January 1, has promulgated regulations to govern medical cannabis operations in the Commonwealth. The regulations are largely similar to those that existed under the Board of Pharmacy, but they bring the Commonwealth one step closer to opening applications for the state’s single unlicensed health service area (HSA).

We previously wrote about Virginia’s remaining open pharmaceutical processor license here. In short, the state currently has four medical marijuana licensees, also known as pharmaceutical processors. The original program called for up to five licensees divided among five HSAs in the state. The original HSA I license was rescinded by the Board of Pharmacy due to the licensee’s failure to complete construction on its facility within the allotted amount of time. Last year, the Board of Pharmacy signaled that it would allow the CCA to operate the licensing process for HSA I.

With the promulgation of regulations, it is possible that the CCA will announce an application round this year. Importantly, the available license is for medical-cannabis operation only, as Virginia has yet to legalize adult-use. Each holder of a pharmaceutical processor license, including the future licensee in HSA I, is permitted to open one vertically integrated location with cultivation, manufacturing, and dispensing; up to five additional dispensary locations in the HSA; and up to one additional cultivation facility in the HSA. Va. Code Ann. § 4.1-1602(J). The additional dispensary locations must be owned at least in part by the pharmaceutical processor. 3 V.A.C. § 10-30-140(A). The Commonwealth requires that dispensaries be under the personal supervision of a licensed pharmacist at all times while open to qualified patients. 3 V.A.C. § 10-40-30(D).

According to the regulations, the application process will proceed as follows:

• The board of directors of the CCA will publish a notice of open applications for pharmaceutical processor permits. Such notice will include information on how to obtain and complete an application, the required fees, the criteria for issuance of a permit, and the deadline for receipt of applications. 3 V.A.C. § 10-30-100(A).
• The application process for permits will occur in the following three stages: submission of initial application, award of conditional approval, and grant of a pharmaceutical processor permit. 3 V.A.C. § 10-30-110(A).
• Applications must include, among other things:
  • Detailed information regarding the applicant’s financial position indicating all assets, liabilities, income, and net worth to demonstrate the financial capacity of the applicant to build and operate a facility.
  • A blueprint of the proposed pharmaceutical processor to show and identify (i) the square footage of each area of the facility; (ii) the location of all safes or vaults used to store the cannabis plants and products; (iii) the location of all areas that may contain cannabis plants or cannabis products; (iv) the placement of walls, partitions, and counters; and (v) all areas of ingress and egress;
  • Information about the applicant’s expertise in agriculture and other production techniques required to produce cannabis products and to safely dispense such products.

3 V.A.C. § 10-30-110(B).

• Following the deadline for receipt of applications, the board of directors will evaluate each complete and timely submitted application and may grant conditional approval on a competitive basis. 3 V.A.C. § 10-30-120(A).
• If granted conditional approval, an applicant will have one year from date of notification to complete all requirements for issuance of a permit, including employment of a pharmacist-in-charge (PIC), a party responsible for cultivation and production, and other personnel necessary for operation of a pharmaceutical processor, construction or remodeling of a facility, installation of equipment, and securing local zoning approval. 3 V.A.C. § 10-30-120(E).
• The final approval will be issued when all board of director requirements are met, including:
  1. Designation of a PIC and a party responsible for cultivation and production;
  2. Evidence of criminal background checks for all employees of the pharmaceutical processor;
  3. Evidence of utilization of an electronic tracking system; and
  4. A satisfactory inspection of the facility conducted by agents of the CCA.

3 V.A.C. § 10-30-130(A).

• Once an applicant has been awarded a pharmaceutical processor permit, the cultivation of cannabis plants must commence within 180 days, otherwise the CCA may rescind the permit. 3 V.A.C. 10-30-130(D).

Any parties interested in applying for the open license are advised to begin making preparations well in advance of the release of applications. Troutman Pepper’s Cannabis team is available to assist.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.