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Medical marijuana provider to also serve Charlottesville, Fredericksburg
Beth JoJack //September 5, 2024//
Medical marijuana provider to also serve Charlottesville, Fredericksburg
Beth JoJack// September 5, 2024//
On Thursday morning, the Virginia Cannabis Control Authority selected AYR Virginia, a wholly owned subsidiary of AYR Wellness, a cannabis operator in eight states, as the winner of a conditional approval that puts it on the path to become the sole licensed pharmaceutical processor of medical cannabis for a region of Virginia that includes the entire Shenandoah Valley, as well as the cities of Charlottesville and Fredericksburg and the counties of Spotsylvania and Stafford.
If AYR Virginia goes on to successfully meet requirements necessary to obtain a pharmaceutical processor permit, the company will be free to engage in “vertically integrated operations,” which includes cultivating cannabis plants, producing marijuana products and selling to qualified medical marijuana patients.
Virginia has issued four pharmaceutical processor permits to serve other areas of the state. Ownership of the companies holding those permits are tied to three out-of-state companies.
A request asking AYR Wellness for comment was not immediately returned Thursday. According to a CCA news release, AYR Virginia plans to open a medical cannabis facility in Clear Brook, north of Winchester.
Thirty-three applicants tied in scoring determined by a CCA committee. The CCA then conducted a lottery with a random-number generating website to select the winner, which was AYR Virginia. The lottery is posted on YouTube.
Tanner Johnson, CEO of Pure Virginia, which applied for the conditional approval, issued this statement Thursday: “It has been clear for some time that there were problems with the CCA process and evaluation and we are even more concerned by what we heard today.”
Pure Virginia, which is connected to Pure Shenandoah, an Elkton-based, family-run CBD and hemp products business, invested more than $500,000 in preparations to win the conditional permit, according to Johnson.
The CCA received 41 complete applications from companies eager to be granted the sole permit to serve medical marijuana customers in the state’s health service area 1 (HSA 1). Each company paid an $18,000 fee to be considered.
The HSA 1 region has not had a licensed medical marijuana dispensary available since the state began issuing pharmaceutical processor licenses in 2018.
In response to a Freedom of Information Act request made by Virginia Business, the CCA named Brianna Bonat, Bette Brand, Wendy Hupp, Jeremy Preiss and Anthony D. Williams as members of the committee that scored the applications. Brand and Williams sit on the CCA board and Preiss is the authority’s acting head and chief officer, while Bonat is its health policy and data manager and Hupp is its finance director.
In April, Preiss said the state authority planned to announce which company had been selected by the end of June. However, at a June CCA board meeting, Shawn Casey, deputy chief of CCA’s regulatory, policy and external affairs office, said CCA staff and legal counsel needed more time to study the scoring of the applications and to ensure the authority’s choice complies with all regulatory requirements.
At a virtual meeting of the CCA board held Thursday, Preiss recommended that the winner of the lottery, AYR Virginia, receive the conditional approval. The board members approved this recommendation.
Eric Postow, a Fairfax County-based managing partner for Holon Law Partners, said he wasn’t surprised that several applications received high rankings, noting that Virginia has a number of professionals able to put together quality applications for companies who want to operate as a pharmaceutical processor of medical marijuana.
“Like five years ago, there was only a handful of folks that could do sophisticated application work and really think through all those issues,” he says. “Now [there are] just dozens of folks that can.”
AYR Virginia will have a year to meet all requirements necessary to obtain the permit, including completing required background checks.
The competition for the conditional permit reflects the lucrative nature of the license. Virginia patients paid an average $14 per gram for medical cannabis flower at dispensaries, compared with $10 in Florida and Pennsylvania, according to a November 2023 market study conducted for the CCA. While the authority doesn’t currently track sales revenues, the state’s dispensaries made 3.4 million medical cannabis dispensations in 2023, according to a spokesperson for the Virginia Department of Health Professions. The Virginia Board of Pharmacy oversaw the state’s medical marijuana program until January of this year, when the CCA took over that responsibility.
Medical marijuana patients in HSA 1 have had to travel to access the product since Virginia granted five regional permits to produce medical marijuana in 2018. Preiss has been vocal about wanting to fill that gap.
The processor initially given a conditional permit for HSA 1 in 2018 was PharmaCann Virginia, originally a subsidiary of Illinois-based PharmaCann. However, that permit was revoked in 2020 after the company failed to build a facility by the December 2019 deadline.
PharmaCann Virginia filed suit against the Virginia Board of Pharmacy in Henrico County Circuit Court in September 2020. In April 2023, Virginia’s Court of Appeals agreed with the circuit court, which rejected PharmaCann Virginia’s argument that the Board of Pharmacy treated it differently than the four other pharmaceutical processors in the state. In February, the CCA issued a notice of applications to solicit applications for a permit to operate a pharmaceutical processor.
“Establishing a medical cannabis operator in HSA 1 is overdue,” John Keohane, chairman of the CCA Board, said in a statement. “Patients in this area have waited far too long to have access to the medical cannabis products they need. AYR Virginia’s entry into the market will make a significant difference in their lives.”
AYR Wellness reported revenue of $463.6 million for fiscal 2023.
Mike Tabor, CEO of Integra Vertical, an Albemarle County company that applied to be considered as the HSA 1 provider, said he was disappointed his company wasn’t selected but added, “We are happy to see the process finally moving forward for the benefit of the patients.”
The 33 applicants that tied with the highest scores were:
