The number of Americans free to enjoy recreational cannabis is growing. In April, Virginia became the sixteenth state to legalize non-medical marijuana use for adults. At Dunlap Law, our phones have been buzzing with inquiries from business owners about what this change means for them. Here are the answers to some of your burning questions so far.
How can I get involved in the commercial marijuana industry?
You’re not the only entrepreneur wondering about Virginia’s budding marijuana economy. A report by the Joint Legislative Audit & Review Commission projects there may be more than $211 million in commercial sales the first year of legal retail alone – and the market is expected to bloom from there. Naturally, many micro entrepreneurs have high hopes about blazing their own trail and capturing a piece of the pot.
We hate to be a buzzkill, but retail sales of marijuana won’t be legal until January 1, 2024. The newly-created Virginia Cannabis Control Authority (CCA) will consist of five directors with the power to license up to 400 retailers, 25 wholesalers, 450 cultivators, and 60 product manufacturers. While we know that the CCA will be in charge of governing the marijuana stores in the Commonwealth, many of the regulatory details are hazy and still need to be worked out in next year’s general session of Virginia lawmakers.
In the meantime, canna-biz entrepreneurs should start considering how they plan to fit into the industry. Borrowing from the experience of the those states that have already instituted legal retail, Virginians can expect the commercial marijuana market to be made up of five key operations: cultivation, processing, distribution, retail, and testing. Each of these will likely face different licensing challenges.
For example, growers wanting to get a head start on production are stuck in limbo because there’s currently no legal way to obtain seeds or clippings under the law. Individual households may grow up to four plants total starting this July, but the law specifies that those plants must be for personal use only.
Additionally, plants must not be visible from any public street and there’s some confusion around how the four plant allowance will interact with the one ounce per adult possession rule since a single plant can produce 17.5 ounces or more. Virginians caught growing more than four plants face penalties ranging from a $250 fine for four to ten plants all the way up to felony charges for those growing more than fifty plants.
For those still on the fence about starting a commercial grow early anyway, NORML has put together an excellent overview of the penalties that will be imposed for breaking Virginia’s new marijuana laws.
In addition to the state penalties, business owners should also beware of the uncertainty around federal interference. The feds generally stay out of individual state commercial markets, but that’s only a handshake agreement – there’s nothing preventing the federal government from prosecuting state actors for marijuana-related federal crimes, especially when it comes to transporting marijuana across state lines.
I’m a commercial landlord; what if my tenant wants to operate a marijuana store?
This one seems trickier than it is. If your tenant is involved in the sectors of the marijuana industry that do not involve dealing with the marijuana itself (think: retailing generalized grow lights – not bongs and other paraphernalia, which is still illegal), then there’s no real issue.
If, however, your tenant is trying to open a grow house or a similar without a license before commercial sales become legal on January 1, 2024, you could face liability for knowingly allowing those illegal operations. Like most other unlawful activity, landlords are well within their rights to evict commercial tenants who engage rather than risk taking a hit themselves.
I’m an employer; should I change my employee drug testing policy now that personal recreational use will be legal on July 1, 2021?
Probably not yet. For one thing, if your business deals with federal contracts then you are likely subject to heightened requirements. Relaxing your policies now could jeopardize those lucrative agreements. Marijuana is still illegal under federal law, after all.
Even under the new Virginia laws, the “right to partake” is not absolute. You can think of the legal boundaries similarly to those placed on alcohol, although the marijuana limitations are objectively more restrictive.
Adults age 21 and older may possess up to an ounce of marijuana, but it’s still illegal to smoke and drive or to have an “open container” (though it’s still unclear what will constitute an open container of marijuana) in your vehicle – just like the potential for a DUI/DWI with alcohol. It’s also against the law to smoke in public and while it’s not necessarily illegal to drink in public, you can liken this prohibition to an even stricter ban on public intoxication.
Just as is the case with alcohol, private employers can impose additional restrictions on their employees’ cannabis use during work hours. As always, business owners should be mindful not to contravene on the religious or medical reasons an employee may have for his or her usage.
So what can I do now?
Well, to be blunt… not a whole lot. Add to all the issues we’ve already discussed the ambiguity around how licenses will ultimately be awarded and whether local governments will be able to dictate where canna-businesses can be located and your best bet is likely to hold off on getting started for now unless you’ve got unlimited money to burn.
A seed of good news for entrepreneurs who are ready to roll is that Virginia declined to allow its existing medical marijuana producers to immediately begin retail sales, as some other states have done. This means that medical producers won’t have too much of an advantage when the marketplace finally opens up.
Keep your eyes on our blog for updates. We’ll delve into the weeds as Virginia’s half-baked new laws around commercial marijuana mellow.