Virginia’s HSA 1 Pharmaceutical Processor Permit
Effective January 1, 2024, the Virginia Cannabis Control Authority (CCA) assumed regulatory oversight of Virginia’s medical cannabis program. The CCA was established in 2021 and has been recognized as Virginia’s “principal source of government expertise on cannabis,” but until this year, Virginia’s medical cannabis program has been overseen by the Board of Pharmacy. The CCA announced that one of its top priorities for 2024 will be the issuance of a request for applications (RFA) for a medical cannabis license (known in Virginia as a Pharmaceutical Processor Permit) providing medical cannabis in the Commonwealth’s only unlicensed health service area (HSA).

There are currently five HSAs in Viriginia and four of them have operating medical cannabis licensees, but HSA 1, which covers the northwestern portion of the state, including the Shenandoah Valley, has a vacancy. PharmaCann (since acquired by MedMen) was initially awarded a conditional permit for HSA 1, but failed to complete construction of its facility in time and the Board of Pharmacy revoked the conditional permit. The Board of Pharmacy issued a new RFA for HSA 1 in September 2020, but PhamaCann immediately sued the Board of Pharmacy in an effort to reclaim the permit. The Board of Pharmacy defeated PharmaCann’s lawsuit last year, but determined that since it could not complete the RFA process to issue a new permit for HSA 1 prior to January 1, 2024, when the CCA assumed oversight of the medical cannabis program, the RFA for HSA 1 should instead be conducted by the CCA.

Application Process
According to the regulations, to start the application process for the issuance of a new Pharmaceutical Processor Permit, the CCA is required to first publish a public notice of open applications for a pharmaceutical processor permit (this could happen as soon as this month) which must include: 

• information on how to obtain and complete an application;
• the required fees; 
• the criteria for issuance of a permit; and
• the deadline for receipt of applications. 

The CCA has the right to amend the notice prior to the deadline for submitting an application and to cancel the notice prior to the award of a conditional permit.

A. The initial application must include the application fee and the following information and documentation:

• The name and address of the applicant and the applicant’s owners, including any other information that is necessary for the CCA to conduct a criminal background check on the applicant;
• Detailed information regarding the applicant’s financial position indicating all assets, liabilities, income, and net worth, to demonstrate the financial capacity of the applicant to build and operate a facility, to cultivate cannabis plants intended only for the production and dispensing of cannabis products, which may include evidence of an escrow account, letter of credit, or performance surety bond;
• Documents sufficient to establish that the applicant is authorized to conduct business in Virginia and that all applicable state and local building, fire, and zoning requirements and local ordinances are met, or will be met, prior to issuance of a permit;
• Detailed information regarding the applicant’s security plans, business and marketing plans, and the interior and exterior layout of the facilities that the applicant plans to operate;
• Information about any previous or current involvement in the medical cannabis industry, including expertise in agriculture and other production techniques required to produce cannabis products and to safely dispense such products and whether the applicant has ever applied for a permit or registration related to medical cannabis in any state;
• Documents related to any compassionate need program the applicant intends to offer; and
• Such other documents and information required by the CCA to determine the applicant’s suitability.

B. Following the deadline for receipt of applications (applications could be due as soon as next month), the CCA will evaluate each complete and timely submitted application and will grant conditional approval on a competitive basis, based on compliance with requirements, unless the CCA determines that there are no qualified applicants to award conditional approval in which the CCA will republish the notice of open applications.

C. The applicant that is granted conditional approval (this could happen as soon as June), then has one year from date of notification to complete all requirements for issuance of a permit, to include employment of a PIC, responsible party, and other personnel necessary for operation of a pharmaceutical processor, construction or remodeling of a facility, installation of equipment, and securing local zoning approval. PLEASE NOTE: this step is incredibly important and, as discussed above, was the step that PharmaCann failed to comply with resulting in the revocation of their permit award.

D. The CCA will only issue a pharmaceutical processor permit when all requirements have been met, including:

• Designation of a PIC and responsible party;
• The applicant has provided evidence of criminal background checks for all employees and delivery agents of the pharmaceutical processor to ensure compliance with § 4.1-1602 of the Code of Virginia;
• The applicant has provided evidence of utilization of an electronic tracking system; and
• The CCA has conducted a satisfactory inspection of the facility.

E. Once an applicant has completed all of the requirements, and the pharmaceutical processor permit is awarded, cultivation of cannabis plants must commence within 180 days, otherwise the CCA will rescind the permit.

Pharmaceutical Processor Permits
Each medical cannabis licensee in Virginia is permitted to operate a single location that cultivates, manufactures, and dispenses medical cannabis to qualified patients, a second cultivation facility, and five additional dispensaries at separate locations, however, all of the facilities must be located within the same HSA. See Va. Code Ann. § 4.1-1602(J). Licensees are permitted to wholesale cannabis and cannabis products among themselves but are not permitted outside of their designated HSA. In addition, all dispensing areas or dispensing facilities must be under the personal supervision of a on-premises licensed pharmacist when open to patients.

While the possession of cannabis by adults over the age of 21 is legal in Virginia, the current permits are for medical-cannabis operation only, as Virginia has yet to establish the regulatory framework for the issuance of permits for adult-use sales.