Virginia medical marijuana market consolidates

As Virginia lawmakers tried to create a framework for a retail marijuana market, only to receive a surprise veto from Gov. Abigail Spanberger, the state’s medical marijuana landscape underwent consolidation.

A single entity is now assigned to two of Virginia’s five geographically based medical marijuana markets. Arboretum Virginia — a wholly owned subsidiary of Arboretum Bidco, which shares an address with Boston-based investment adviser Millstreet Capital Management and Millstreet affiliates —is now listed as the medical marijuana pharmaceutical processor for Virginia’s Health Service Area I, or HSA 1, which is made up of 32 counties and cities located around the Shenandoah region, and HSA IV, which includes Richmond and other Central Virginia localities, as well as a few counties in Southern Virginia.

In both HSA regions, the change is due to multistate marijuana operators liquidating assets due to financial distress.

First, some background: The Virginia General Assembly authorized medical marijuana in 2018. In most parts of the state, medicinal cannabis is thriving. Virginia has seen about $59.4 million in medical marijuana sales this year, according to the Virginia Cannabis Control Authority‘s dashboard.

However, in HSA I, medical marijuana was delayed due to a lawsuit over a rescinded conditional approval to serve the region. With the legal fight wrapped up, the CCA in 2024 awarded a subsidiary of AYR Wellness a conditional approval to serve as the pharmaceutical processor of medical marijuana for the Shenandoah region.

In 2025, AYR Wellness, which is headquartered in Miami and registered in Canada, began restructuring proceedings in Canada due to overwhelming debt.

On April 10, AYR Wellness announced the initial closing of the transfer of its Virginia operations, part of an agreement made with its senior noteholders led by Millstreet Capital Management, into Arboretum Virginia.

After taking over the conditional approval to serve HSA I, Arboretum Virginia now has a deadline of July 27, according to the CCA, to meet Virginia’s requirements to become a pharmaceutical permit holder. Those requirements include things like showing evidence of an electronic tracking system and allowing an inspection of the company’s facility.

“We are excited to serve the patients of HSA I, who have historically lacked access to medical cannabis,” Arboretum Virginia said in a statement to Virginia Business Monday. “We anticipate Arboretum will receive the pharmaceutical processor permit and begin dispensing to patients in HSA I this summer.”

Arboretum Virginia’s cultivation facility will be in Winchester, according to Robert Vanisko, a spokesperson for the entity. He declined to give an address.

Licensees must notify the Virginia Cannabis Control Authority when ownership of a pharmaceutical processor permit changes. However, the CCA does not have “the authority to review or approve ownership changes to pharmaceutical processor licenses before those changes take effect,” a spokesperson for the CCA explained in a December 2025 email.  

The CCA staff does complete background checks on the new licensees afterward, according to the CCA.

After Arboretum Virginia receives a pharmaceutical processor permit, the CCA can rescind the permit if it is not operational within 180 days, a spokesperson for the CCA noted in a Tuesday email to Virginia Business.

Taking over in HSA IV

Previously, The Cannabist Co. held the medical marijuana pharmaceutical processor permit for HSA IV. Arboretum Virginia became the permit holder in HSA IV on Feb. 5. On that day, Parma Holdco, an entity affiliated with Millstreet, completed the $130 million purchase of The Cannabist Co.’s Green Leaf Medical of Virginia, its Central Virginia medical marijuana business.

The Virginia assets consisted primarily of five active retail locations, one additional retail location in development, and approximately 82,000 square feet of cultivation and production capacity in the Richmond region, according to a February news release.

“We’re working to improve the cultivation and dispensary experience,” Vanisko said of HSA IV. “We’re thrilled to be there.”

Florida-based Jushi Holdings is the medical marijuana pharmaceutical processor for HSA II, which includes Northern Virginia. Verano Holdings, a Chicago-based multistate cannabis company, is the pharmaceutical provider for HSA V, which encompasses the Hampton Roads region, while GTI Core, an indirect wholly owned subsidiary of Chicago-based Green Thumb Industries, is the pharmaceutical provider of HSA III, which encompasses Southwest Virginia.

Chelsea Higgs Wise, the Richmond-based executive director of nonprofit Marijuana Justice, said Thursday that her organization has long warned about the dangers of allowing large, out-of-state marijuana companies to take over Virginia’s medical and retail marijuana markets.

Wise noted that Ohio Attorney General Dave Yost’s recently filed an antitrust lawsuit accusing nine multistate cannabis operators of engaging in anti-competitive conduct to reduce product choice and keep prices artificially high in that state.

Thinking about that happening in Virginia, Wise said, “really hurts my heart.”

JM Pedini, executive director of  Virginia NORML, the state affiliate of the National Organization for the Reform of Marijuana Laws, was less concerned about consolidation.

“Virginia patients, especially those in the northern part of the state, have been waiting for years for local access,” they wrote in an email.

Since the pharmaceutical processor permits are spread out geographically, Virginia medical marijuana patients must buy from the operators selected for their regions.

“Most patients don’t have the luxury of being concerned about who’s operating the dispensaries closest to them,” Pedini wrote. “They’re just happy to have access.”