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Cannabis authority chooses Shenandoah Valley provider

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:

  • AYR Virginia
  • Bear River Cannabis
  • Blue Ridge Cannabis
  • Blue Ridge Medical
  • CLVA
  • Curaleaf Compassionate Care VA
  • Green Circle Virginia
  • Green Plus Virginia
  • Green Power Virginia
  • Green Square Virginia
  • Greenridge Medicinal
  • Growth Circle Virginia
  • Growth Plus Virginia
  • Growth Power Virginia
  • Growth Square Virginia
  • H.I. Virginia
  • Health Circle Virginia
  • Health Plus Virginia
  • Health Power Virginia
  • Health Square Virginia
  • Medical Circle Virginia
  • Medical Plus Virginia
  • Medical Power Virginia
  • Medical Square Virginia
  • Pure Virginia
  • TheraTrue Virginia
  • True Circle Virginia
  • True Plus Virginia
  • True Power Virginia
  • True Square Virginia
  • Trulieve VA
  • Verano Virginia
  • VMCC Wellness

Competition’s fierce for Shenandoah medical marijuana permit

UPDATE: State delays choosing Shenandoah medical marijuana provider

The Virginia Cannabis Control Authority (CCA) received 40 complete applications for conditional permits to operate as the state’s sole licensed pharmaceutical processor of medical cannabis for a region including the Shenandoah Valley, as well as Charlottesville, Fredericksburg and the counties of Spotsylvania and Stafford.

Applications were due April 30, and the state authority planned to announce the selected company at the end of June, according to CCA Chief Officer Jeremy Preiss.

Each company paid an $18,000 fee for the opportunity to be granted the sole medical marijuana license to serve the CCA’s health service area 1 (HSA 1), which has been tied up in litigation for years. HSA 1 has not had a licensed medical marijuana dispensary available since the state began issuing pharmaceutical processor licenses for its five HSAs in September 2018.

“This is a pay to try-to-play,” says Eric Postow, Fairfax County-based managing partner for Holon Law Partners. “That really just kind of demonstrates the interest in the business community wanting to service the cannabis sector.” Postow led a team that helped put together an application for Albemarle County-based Integra Vertical.

The competition also reflects the lucrative nature of the license, which allows licensees to open and operate dispensaries within their designated HSA. While the CCA doesn’t track sales revenues, the state’s dispensaries made 3.4 million medical cannabis dispensations in 2023. 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 authority.

Along with multiple out-of-state businesses, Pure Virginia, a company connected to Elkton-based CBD and hemp products business Pure Shenandoah, applied for the conditional permit. Pure Virginia CEO Tanner Johnson says 40 applicants was on the higher end of what he’d expected, but he’s optimistic about his family business’s chances.

“To us, it didn’t really come down to the competition we were against but how good of an application we could put in, and I think that we put in a really, really good one,” he says.

Greenwood-based Jackpot 777 Farms, the company behind applicant Integra Vertical, currently produces hemp flower and CBD-infused products. “When the opportunity came up and Virginia decided to put HSA 1 up for application,” says Integra Vertical CEO Mike Tabor, “it seemed like an opportune time to make the shift into cannabis.”   

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 JanuaryShawn 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.” 

Forty applicants vying for Shenandoah medical marijuana license

Forty complete applications were received for conditional permits to operate as the state’s sole licensed pharmaceutical processor of medical cannabis for a region including the Shenandoah Valley, as well as the cities of Charlottesville and Fredericksburg and the counties of Spotsylvania and Stafford, according to the Virginia Cannabis Control Authority.

Each company paid an $18,000 fee for the opportunity to be granted the sole medical marijuana license to serve the CCA’s health service area 1 (HSA 1), which has been tied up in litigation for years. The HSA 1 region has not had a licensed medical marijuana dispensary available since the state began issuing pharmaceutical processor licenses in 2018.

“This is a pay to try-to-play,” said Eric Postow, Fairfax County-based managing partner for Holon Law Partners. “That really just kind of demonstrates the interest in the business community wanting to service the cannabis sector.” Postow led a team that helped put together an application for Albemarle County-based Integra Vertical to be considered for the HSA 1 license.

The competition also reflects the lucrative nature of the license, which allows licensees to open and operate dispensaries within their designated HSA region. While the CCA doesn’t track sales revenues, the state’s dispensaries made 3.4 million medical cannabis dispensations in 2023. 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 authority.

Virginia Cannabis Control Authority Chief Officer Jeremy Preiss, the agency’s acting head, provided Virginia Business a chart listing the names of applicants on Tuesday. It began with AYR Virginia, which lists a principal address that is shared by AYR Wellness, a Miami-based multistate cannabis business.

Another applicant for the HSA 1 license, Curaleaf Compassionate Care VA, lists a principal address that is also used by Massachusetts-based Curaleaf Holdings, the largest U.S. cannabis company, according to Stash, a New York-based financial services firm. 

CLVA, another HSA 1 applicant, lists a Chicago principal address that is also used by Cresco Labs, which Stash ranks as the sixth largest U.S. cannabis company. Another application, Trulieve Virginia, shares an address with Tallahassee, Florida-based Trulieve Cannabis, which Stash lists as the fourth largest U.S. cannabis company

Pure Virginia, a company connected to Pure Shenandoah, an Elkton-based, family-run CBD and hemp products business is also included on the list. Pure Virginia CEO Tanner Johnson said 40 applicants was on the higher end of what he’d expected, but he’s still optimistic about the chance of his family’s business being selected. 

“To us, it didn’t really come down to the competition we were against but how good of an application we could put in, and I think that we put in a really, really good one,” he said. “So, if they want a company from Virginia for Virginians, then it’s going to be hard to pick anyone besides us.”

Mike Tabor, CEO of Integra Vertical in Albemarle County, got his start in medical cannabis two decades ago when a friend was diagnosed with cancer. “I started growing medicine for him, and it all just kind of ballooned from there,” he said. Greenwood-based Jackpot 777 Farms, the company behind Integra Vertical, currently produces hemp flower and CBD-infused products.

“When the opportunity came up and Virginia decided to put HSA 1 up for application, it seemed like an opportune time to make the shift into cannabis,” Tabor said. “I think [that is] a lot of people’s long-term goal in the hemp business anyway.”

The state Cannabis Control Authority plans to name the selected applicant at the end of June, according to Preiss.

Virginia is divided into five health service areas, or HSAs, for regulating medical marijuana.

In September 2018, the Virginia Board of Pharmacy issued five regional pharmaceutical processor licenses for medical cannabis dispensaries.

Dharma Pharmaceuticals opened Virginia’s first dispensary in Bristol in 2020, with three other Virginia HSAs following. 

The processor initially given a conditional permit for HSA 1 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. New applications for conditional permits for pharmaceutical processors in HSA 1 were put on hold during 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.

The current landscape

Virginia currently has four pharmaceutical processors of medical marijuana owned by three out-of-state companies. 

Maryland-based Green Leaf Medical was selected to serve patients in HSA IV, which includes Richmond, while New York-based Columbia Care was tapped to serve HSA V, which includes the Hampton Roads area. 

In 2021, Columbia Care bought Green Leaf Medical for $240 million. Columbia Care, which rebranded as the Cannabist Co. in September 2023, has operations in 15 states. It had more than $511 million in revenue in 2023 and reported that Virginia operations made up $16.5% of that number. 

Abingdon-based Dharma Pharmaceuticals received the processing license for HSA III, which encompasses Southwest Virginia. Chicago-based Green Thumb Industries purchased Dharma Pharmaceuticals in 2021, reportedly paying about $80 million in cash and stocks. With operations in 14 states, Green Thumb Industries reported a revenue of $1.05 billion in 2023.

Alexandria-based Dalitso received the permit to operate in Health Service Area II, which includes Northern Virginia. In December 2020, Florida-based Jushi Holdings announced it had acquired the 100% of the issued and outstanding equity of Dalitso. In 2019, it reported having paid about $16 million for 62% of the company. 

Jushi had a total revenue of $269.4 million in 2023. A spokesperson for Jushi declined to disclose state-by-state revenues. 

Messages to Green Thumb Industries asking what percentage of their total revenue came from Virginia operations were not immediately returned. 

The Cannabist Co. operates 10 dispensaries in Virginia, while Jushi and Green Thumb Industries both operate six each.

Tabor said he’d like to see the last service area go to a Virginia-owned company and “have some of the revenue directly contribute back into our local economy.”

The CCA contracted with Massachusetts-based Cannabis Public Policy Consulting to complete a report on Virginia’s medical marijuana program, which was released in November 2023. A key finding of the report was that Virginia does not have a track-and-trace system, which allows states to track cannabis from the moment a seed is planted to when a retail sale is made. 

In 2022, there were 1,846,313 medical cannabis “dispensations” reported to the Prescription Monitoring Program, according to a spokesperson for the Virginia Department of Health Professions. In 2023, there were 3,356,376 medical cannabis dispensations in the commonwealth.

The CCA has issued a request for proposals for a seed-to-sale tracking system that’s due May 12, with an expedited six-month implementation timeline.

“Once we have seed-to-sale tracking software in place, we will track medical marijuana sales,” Preiss wrote in an email Tuesday. 

 

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.

Virginia currently has four pharmaceutical processors of medical marijuana owned by three out-of-state companies:
Maryland-based Green Leaf Medical was selected to serve patients in HSA IV, which includes Richmond, while New York-based Columbia Care was tapped to serve HSA V, which includes the Hampton Roads area. In 2021, Columbia Care bought Green Leaf Medical for $240 million. Columbia Care, which rebranded as the Cannabist Company in September 2023, has operations in 15 states. It had more than $511 million in revenue in 2023 and reported that Virginia operations made up $16.5% of that number.
Abingdon-based Dharma Pharmaceuticals received the processing license for HSA III, which encompasses  Southwest Virginia. Chicago-based Green Thumb Industries purchased Dharma Pharmaceuticals in 2021, reportedly paying about $80 million in cash and stocks. With operations in 14 states, Green Thumb Industries reported a revenue of $1.05 billion in 2023.
Alexandria-based Dalitso received the permit to operate in Health Service Area II, which includes Northern Virginia. In December 2020, Florida-based Jushi Holdings announced it had acquired the 100% of the issued and outstanding equity of Dalitso. In 2019, it reported having paid about $16 million for 62% of the company. Jushi reported total revenue of $269.4 million in 2023.
Messages to Green Thumb Industries and Jushi were not immediately returned.