State delays choosing Shenandoah medical marijuana provider

At its June 26 meeting, the Virginia Cannabis Control Authority was expected to announce which company, among 40 applicants, had been selected from a highly competitive process to become the sole licensed pharmaceutical processor of medical cannabis for a region including the entire Shenandoah Valley, as well as the cities of Charlottesville and Fredericksburg and the counties of Spotsylvania and Stafford. 

However, during Wednesday’s meeting of the board of directors for the CCA, which began overseeing the state’s medical marijuana program in January, Shawn Casey, deputy chief of CCA’s regulatory, policy and external affairs office, said CCA staff and legal counsel need more time to study the scoring of the applications and to ensure the authority’s choice complies with all regulatory requirements. Casey noted the application materials totaled 16,000 pages. 

“Given the great interest in the application process, as shown by the number of applications, … we know the result will be highly scrutinized,” Casey said. “We wanted to make sure that we’re taking the time necessary to ensure the integrity and comprehensiveness of the recommendation that gets to the board and we’ll have an updated timeline whenever we can.”

Scoring of the applications was tabulated by five members of a review committee. Jeremy Preiss, the CCA’s acting head and chief officer, declined to name the committee members. However, one speaker at the meeting noted that board members Bette Brand and Anthony D. Williams sat on the committee. 

Virginia is divided into five health service areas, or HSAs, for regulating medical marijuana. The state currently has four approved pharmaceutical processors. The region currently being considered, HSA 1, has not had a licensed medical marijuana dispensary since the state began issuing pharmaceutical processor licenses in 2018.

The processor initially granted a conditional permit for HSA 1 was PharmaCann Virginia, originally a subsidiary of Illinois-based PharmaCann. That permit was revoked in 2020, however, after the company failed to build a facility by a December 2019 deadline. The permit was then tied up in legislation for years.

In February, the CCA announced it was ready to begin accepting applications for a pharmaceutical provider for HSA 1. Each of the 40 companies that applied paid an $18,000 fee to be considered. 

Tanner Johnson CEO of Pure Virginia, a company connected to Pure Shenandoah, an Elkton-based, family-run CBD and hemp products business, and one of the 40 companies who submitted an application spoke during the public comment portion of the meeting. 

“We are all too aware of extra-extraordinary efforts required to submit a truly competitive application, between the enormous upfront capital cost, the need to secure highly qualified cannabis industry experts, site control of the processor and dispensary locations in compliance with all the zoning and setback requirements, as well as demonstrating strong support from the local community,” he said.

In a statement to Virginia Business, Johnson said, “Delays are common, but you still hate to see it.”  Later, he added, “We hate to see it because every delay impacts the patients of HSA 1.” 

Greg Habeeb, chair of Gentry Locke’s Government and Regulatory Affairs Practice Group and also the president of Gentry Locke Consulting, a lobbying group representing the Virginia Cannabis Association, heard on Monday that the CCA would not be naming the permit recipient for HSA 1.

“Obviously, there’s a lot of applications, and I think there might have been a lot of applications that were missing information, and so, I’m not sure if that was it, or if it was just more work than they expected, or what’s going on,” he said.

Virginia’s four pharmaceutical processors of medical marijuana are owned by three out-of-state companies. 

Several of the applicants to serve HSA 1 were tied to multistate marijuana businesses with headquarters in other states. In his public statement, Johnson noted that a total of 21 companies are behind the 40 applications submitted for the HSA 1 license. Preiss confirmed that information Wednesday afternoon.

Habeeb doesn’t expect a lot of time to pass before the CCA makes an announcement about HSA 1. “I’m not sure why it would take a long time from here, unless, again … if they have concerns about some of the information and want to check behind it,” he said.

At Wednesday’s meeting, Johnson thanked the CCA staff and board members for their efforts.

“For too long, our medical patients of HSA 1 have been denied proper access to medical cannabis,” he said, “and we believe that through your efforts, that wait is almost over.”