In the historic US South, Virginia was the first state to legalize recreational marijuana. On the 1st of July 2021, the Virginia Cannabis Control Authority was created to oversee the state’s emerging recreational cannabis program.
Implementing the cannabis legislation in Virginia will take longer than in other states as the current dispensaries won’t be able to start selling to adults immediately.
Learning how to set up a dispensary in Virginia is the best way to be prepared. Let’s go through the history of the marijuana industry in Virginia, its development, advancement, license requirements, and legalization conditions.
Overview and History of Cannabis in Virginia
Virginia is the first South state and the 17th state overall to legalize adult use of cannabis. Cannabis laws in Virginia define marijuana possession up to an ounce, the launch of cannabis sales, and the implementation of laws to manage Virginia’s marijuana industry.
As for Virginia’s dispensaries:
- Stores will be spread out regionally, and for every 100 licenses given, the distribution of those stores will be reviewed.
- Social equity candidates will be preferred from 1st July 2023 through 1st January 2024, and authorities will spare some of the application expenses.
- The authority to make rules, award, suspend, or revoke licenses, and impose penalties will rest with a five-member Board of Directors.
The Virginia Senate approved a measure enabling the sale of marijuana for adult use on 7th February 2023.
Beginning 1st January 2024, marijuana will be sold for recreational use. It would be offered through recognized medical marijuana stores and fresh companies run by locals from financially poor communities.
Current State of the Cannabis Market in Virginia
There are five active medicinal dispensaries in Virginia. These license holders can operate five more dispensaries under the existing system.
Virginia is the 12th most populated state, forming a bigger marketplace to establish a cannabis business, stated by a reputable online journal, Marijuana Business Daily. Virginia’s recreational sector will generate revenues of $1.2- $1.4 billion by 2025.
Additionally, according to the Joint Legislative Audit and Review Commission, if Virginia’s marijuana sector operated with a 25% sales tax, it could support more than 18,000 employment and bring a total of $177 and $300 million in net income from taxes.
The Virginia Board of Pharmacy regulates the Virginia medicinal cannabis market. Everyone interested in working in the Virginia cannabis market must carefully follow the Virginia Board of Pharmacy guidelines for applications, licensing, and operations.
Social Equity Programs for Cannabis in Virginia
A social equity license applicant in Virginia’s adult-use industry should reside in the state for at least a year.
The Board has not yet created Social Equity clauses. However, the legislation mandates establishing a program to offer loans to social equity cannabis license holders who qualify to encourage company ownership and economic development in neighborhoods that the cannabis industry has negatively impacted.
In its initial phases, the social equality program should:
- Find cannabis license holders who meet the criteria for social equity and who want funding to launch legally permitted cannabis businesses;
- Offer loans to social equity operators;
- Offer technical help; and
- Assemble community allies to support the program.
Types of Dispensary Licenses in Virginia
The following cannabis licenses are issued in Virginia:
Medical Marijuana Licenses
Vertical integration is permitted in this license, allowing license holders to grow medicinal cannabis, extract, process, manufacture, and distribute CBD for certified patients. The license is also referred to as the Virginia Medical Cannabis Processor.
Only five company licenses are available to Virginia Medical Cannabis Processors in Virginia.
Retail Marijuana Store License
Retail outlets are subject to the following general restrictions:
1. Only execute business with clients face-to-face and directly.
2. Refusing to sell through
- an automatic vending or dispensing device
- an automated sales window
- a platform for online commerce
- a delivery company
3. A person can only purchase one ounce of marijuana in each transaction or its product value.
Marijuana Cultivation Facility
Two categories for cultivation licenses exist:
1. Class A
With a Class A cultivation facility license, the licensee may grow up to a predetermined number of cannabis plants or a predetermined amount of cannabis plants per square foot, as determined by the Board.
2. Class B
The holder of a Class B cultivation facility license may cultivate cannabis plants with a maximum THC content of 1%, as determined following a process known as decarboxylation.
Marijuana Manufacturing Facility
The cannabis manufacturer with the license can:
- Create retail cannabis and its items, as well as their labels and packaging.
- Acquire or own retail cannabis obtained from a cannabis production facility or another manufacturing business.
- Supply retail cannabis and products while in possession to wholesalers, retail cannabis shops, or other cannabis production facilities.
Note: “Manufacturing” excludes any kind of testing or cultivation. The distinction between manufacturing and cultivation under the legislation forbids cultivators from converting it into a finished good.
Marijuana Wholesaler License
The holder of a cannabis wholesaler license is permitted to:
- Purchase seeds and young cannabis plants from a cultivator, manufacturer, or another cannabis wholesaler for personal use and retail sale.
- Transfer ownership of any retail cannabis plants, cannabis products, young plants, and seeds to a retail cannabis shop, a production facility, or another distributor.
- The licensee can also sell or resale seeds, juvenile plants, commercial cannabis, and cannabis goods.
- The wholesaler develops into the group’s middleman by purchasing from and selling to each of the many groups.
Understanding the Cannabis Market in Virginia
Some points you need to consider when applying for a dispensary license in Virginia:
- Each time 100 licenses are granted, the geographic distribution of the stores will be re-evaluated.
- Social equity registrations will be prioritized from 1st July 2023 until 1st January 2024, and authorities will discount some of the expenses.
- A legal organization called the Cannabis Control Authority will be created to oversee Virginia’s adult-use cannabis market. The five-member Board will make rules, grant licenses, cancel or suspend them, and levy fines.
Application Process for a Dispensary License
Those interested in opening a dispensary in Virginia must apply for a Pharmaceutical Processor Permit.
The following standards are utilized in a scoring system to award medical licenses in the state of Virginia, as per the website of the Virginia Board of Pharmacy:
- Financial standing
- Ideally situated in a Health Service Area
- Safety Plan
- Authentication for business operations
- Industry participation and disciplinary procedure
- Knowledge of agriculture, manufacturing, and medication
- Marketing Strategy
- Building’s exterior and layout
- Safety of the Product and the Site
- Expected operating hours
Note: Although these standards have been applied to the Virginia medical dispensary registration process, many more will likely be applied to adult-use applications. Again, we strongly advise you to keep up with the new Virginia Cannabis Control Authority for details.
Steps Involved in Obtaining a License
This is what the general license process in Virginia looks like:
- You must submit an application for a Pharmaceutical Processor license to the Board of Pharmacy in Virginia to get a license for cannabis trading, manufacturing, or growing.
- You will pay a $10,000 initial application fee when submitting your application. You must pay a $60,000 license fee upon receiving your license.
- In Virginia, licenses for growers, processors, and dealers are given yearly and require renewal. Your yearly permit renewal would cost you $10,000.
Required Documentation for a License
In addition to the $10,000 application processing fee, candidates must also provide the supporting information and paperwork listed below:
- The applicant’s and the applicant’s parents’ names and addresses.
- The territory specified by the State Board of Health as the designated health service area.
- A thorough description of the applicant’s financial situation and any supporting documentation, such as a letter of credit, escrow account, or Performance Surety Bond.
- Information on how the applicant intends to maintain appropriate security to prevent theft, loss, or misdirection.
- A permit will not be issued until the requirements for the application are completed or will be fulfilled in order to prove the applicant’s right to operate a business in Virginia.
- The Board requires information to examine the applicant’s criminal history.
- All the business and marketing strategies pertaining to the pharmaceutical processor, the distribution of cannabidiol oil, or the sale of THC-A oils.
- Written and pictorial resources displaying the planned pharmaceutical processor’s design.
- The planned pharmaceutical processor’s outline will specify the area of square footage, placements of the storage facilities, and positions of the cannabis plants.
- Records pertaining to any program for the most impoverished.
- Details on the applicant’s knowledge of farming and other methods of producing.
Timelines for Obtaining a License
It generally takes a few months to process applications and grant licenses to applicants, given that you provide all the necessary documents.
Before launching recreational cannabis retail sales in January 2024, authorities will begin accepting license applications on 1st July 2023.
Financing and Business Plan for a Dispensary
The success of your dispensary will depend on the financing and business strategy you have in place. So, it’s crucial to give careful consideration to planning.
Types of Financing Available
Whether your proposed business concept succeeds or fails will depend on your financial approach. Your financial strategy determines the probability of you receiving funding from banks, angel fund investors, or venture capital firms in the form of equity or debt financing.
Importance of a Solid Business Plan
Your road to success is paved with a strong business strategy. The following elements must be included in your business plan to help you launch your own business and beat out any rivals in the cannabis industry:
- Market research
- Competitive research
- Management strategy
- Operating strategy
- Financial plan
These particular metrics will make it easier to monitor the company’s progress.
Risk Management Plan
The specific dangers that cannabis businesses have to handle include theft, regulatory compliance, and negative media coverage. The following elements must be included in any risk management plan;
- Identifying potential threats
- Detailed examination
- Evaluation based on the severity of the risks
- Keeping an eye on how much danger your company’s activities are exposed to
- Elimination utilizing an effective risk management technique
Market Research and Location for a Dispensary
You can select the ideal location for your business by conducting in-depth market research before opening a dispensary.
Overview of the Virginia Market for a Dispensary
Virginia offers a huge market potential for individuals wishing to launch a cannabis business due to its ranking as the 12th most populated state in the US, with roughly 9 million citizens.
Virginia’s medicinal and adult-use or recreational cannabis license applications have been open since 1st July 2023. The state’s recreational cannabis market is set to launch in 2024.
However, the five permitted medicinal dispensaries under the Code of Virginia have been licensed; hence the Department of Health is not accepting any further applications for medicinal cannabis pharmaceutical processor licenses.
Trends and Competition in the Virginia Cannabis Industry
Virginia has always supported traditional American principles. It is a very important state since it is one of the oldest in the country. The successful cannabis operations in Virginia have led to adult-use legalization, which brings new business potential.
Although the news of Virginia’s plans to legalize cannabis for adult use is certainly appealing, the business environment in this new upcoming industry is still unknown. As a result, prospective business owners and innovators are speculating about what the adult-use market would include.
The three businesses that now own and operate the entire medical marijuana industry in Virginia are:
Once the state allows all adults to participate in the market, sizable profits are expected. According to a Columbia Care projection, the market may reach $3 billion annually by 2026.
Location Requirements for a Dispensary
The state legislature prohibits cannabis outlets from being next to public places like play areas, educational institutions, and churches. Typically, retailers are bound to be located at a distance of 500 to 1000 feet from these facilities.
Additionally, even if some states permit stores, not all towns or municipalities will comply. Therefore, to avoid having your application denied on this ground, research the laws and regulations established by the state government and local governments before picking a location for your business.
Insurance Requirements for a Dispensary
There are no insurance requirements for dispensaries in Virginia; however, given the national laws of the country and the nature of business, comprehensive insurance will protect you from various risks.
Costs of Opening and Running a Dispensary
To set up a cannabis dispensary in Virginia, applicants must incur the following costs:
|The non-refundable application fee||$10,000|
|The initial permit fee after obtaining the license||$60,000|
|Taxes and fees||Total 25%: Retail cannabis sales tax of 21% and additional sales tax of up to 3%.|
|Ongoing and startup costs||Around $1.5 million (may vary depending on the opening of your dispensary.)|
Resources for Potential Entrepreneurs in Virginia
Additional Resources and Links for Opening a Dispensary in Virginia
- Virginia Cannabis Control Authority – Virginia.gov
- Virginia Board of Pharmacy – Pharmaceutical Processors FAQ
- Office of Medical Cannabis – WV.gov
FAQ about Opening a Dispensary
How Much Does it Cost to Open and Run a Dispensary?
There is a $10,000 non-refundable application fee that you must submit to start operating your dispensary in Virginia. The next step is a $60,000 permit fee. Moreover, startup and ongoing costs depend upon the size of your operations in the state.
What are The Location Requirements for a Dispensary?
The state legislature prohibits cannabis outlets from being located next to public places like play areas, educational institutions, and churches. Typically, retailers are bound to be located at a distance of 500 to 1000 feet from these facilities.
What Types of Insurance Policies are Required for a Dispensary?
Here are four common types of insurance policies often recommended for dispensaries:
- General Liability Insurance
- Product Liability Insurance
- Property Insurance
- Workers’ Compensation Insurance
How Long Does it Take to Obtain a Dispensary License?
It generally takes a few months to process applications and grant licenses to applicants, given that you provide all the necessary documents.
What are The Regulations for Advertising a Dispensary?
Here are the advertising regulations in Virginia:
- Advertising cannot run on TV or radio when students are in class unless it reaches at least 85% of adults aged 18 and above.
- Advertisements must be truthful and backed by clinical data, including negative effects.
- Statements that promote drunkenness, target children, encourage recreational use of cannabis, or are obscene are all prohibited.
- Cannabis and its products shouldn’t be displayed in public areas or promotional materials with no contact information.
- No outdoor advertisements within 1,000 feet of any treatment center, playground, or school.
- Signs shouldn’t advertise cannabis, attract too much attention, or be lit up after dark.
- There should not be any advertising on billboards, in transit, or at athletic events.
Can I Have More Than One Dispensary Location?
In Virginia, cannabis dispensary owners can have no more than five outlets under the same license.
In a Nutshell
If you want to operate a cannabis business in Virginia, you must be knowledgeable about many other subjects besides cannabis.
Any knowledge gaps will likely hamper your long-term success. Given the upcoming recreational market surge in the industry, start preparing for your cannabis application. We hope this guide gave you all the information to get started.