Shenandoah medical marijuana applications due April 30

While working as an occupational therapist, Stewart Bossman injured his back attempting to help a falling patient.

That happened almost 25 years ago, but Bossman continues to deal with back pain. “I’ve had four back surgeries and one neck surgery,” he said, “so sometimes it’s just hard to take.”

Bossman, 69, buys CBD drops, which are made from the active ingredient in cannabis that is derived from the hemp plant. He described the drops as being “better than nothing” as far as helping his pain. He has a prescription for Hydrocodone, but he holds off taking that medication unless he’s really suffering. “I like something more natural than a prescription,” he said.

A licensed practitioner provided a written certification for Bossman to buy medical cannabis. The only problem: The Shenandoah Valley doesn’t have a state-licensed medical marijuana provider.

In September 2018, months after then-Gov. Ralph Northam signed legislation allowing doctors to prescribe cannabis oil to patients, the Virginia Board of Pharmacy issued five regional pharmaceutical processor licenses for medical cannabis dispensaries.

Virginia is divided into five health service areas, or HSAs, for regulating medical marijuana. The state currently has four licensed pharmaceutical processing firms.

The processor initially given a conditional permit for HSA 1, which includes the Shenandoah Valley, as well as the cities of Charlottesville and Fredericksburg and the counties of Spotsylvania and Stafford, 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 However, that permit was revoked in 2020 after the company failed to build a facility by the December 2019 deadline.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. The Board of Pharmacy’s second requests for applications for conditional permits for pharmaceutical processors in HSA 1 was put on hold during the litigation. 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 late February 2024, Virginia’s Cannabis Control Authority, which began overseeing the state’s medical marijuana program at the beginning of the year, announced it was accepting applications for pharmaceutical providers for HSA 1. They’re due 5 p.m. Tuesday, April 30, with an application fee of $18,000.

Jeremy Preiss, the state Cannabis Control Authority’s acting head and chief officer, said that opening applications for HSA 1 was one of his top priorities when he joined the authority as its second employee in January 2022.

Not having a provider to dispense medical marijuana in the Shenandoah Valley, he said, is a disservice to the people who live there. For instance, people who have cancer or chronic illnesses may have a hard time driving from the Shenandoah Valley to Richmond or Northern Virginia to obtain medical marijuana.

“I do think some people discount the inconvenience, and it is a hardship,” he said. “People should have easy access to a product that a medical professional has deemed worthy of receiving, that they would get benefits from having access to it, and they shouldn’t have to travel great distances just to access it.”

Preiss said he did not know how many applications had been turned in as of Monday. “We’re not reviewing them as we receive them,” he said. “We will review them all at once.”

Jean E. Gonnell, a partner at Troutman Pepper who works with clients in the cannabis industry, said she expects there could be more than 10 applicants for the conditional permit to be the state-licensed pharmaceutical provider for HSA 1. There were nine applicants for that area in 2018.

A review committee will score the applications and present the results to CCA board members on June 26.

Tanner Johnson, CEO of Elkton-based Pure Shenandoah, a CBD and hemp products business he runs with his three brothers, will be among those submitting licenses. The seed-to-sale company has invested more than $500,000 preparing applications to be the pharmaceutical provider for HSA 1 in 2020 and for this round in 2024, according to Johnson.

The state’s four licensed medical marijuana dispensers fall under the ownership of three out-of-state companies. Johnson would like to see a Virginia company win this conditional permit.

For his family-owned company, the idea of growing medical marijuana products to help patients is “very near and dear,” he said. Johnson thinks they’ll provide better service to medical marijuana patients than companies that dispense across multiple states.

Johnson estimates it will cost Pure Shenandoah about $50 million to build a vertically integrated facility that cultivates cannabis plants, produces cannabis products and dispenses cannabis to qualified patients, as well as to establish five satellite dispensaries.

Johnson is concerned that under the CCA’s rules, the review committee can use a lottery to pick which company earns the conditional permit if more than one applicant has a highest ranked score. “It’s not who’s the best company; it’s who’s the best company that’s lucky,” he said.

Preiss questioned how likely it will be that multiple applicants will tie, however.

And even if one applicant faces off against another in a lottery, that still offers a 50/50 chance of winning, Gonnell pointed out.

“It’s a lot of money to put these applications together,” she said. “It’s not cheap obviously. That makes people always worry.”

MedMen Enterprises, a multistate cannabis operator based in California, acquired PharmaCann Virginia in 2019, according to the U.S. Securities and Exchange Commission.

A request for comment to MedMen was not immediately returned on Monday. The company filed for bankruptcy under Canada’s Bankruptcy and Insolvency Act on April 24.