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Virginia Cannabis Industry Faces Uncertainty Amid New Regulations and Budget Delays

Jul 13, 2023


Richmond, VA--Virginia's cannabis industry is undergoing a major transformation as new regulations and budget negotiations impact the state's hemp and marijuana markets. Local businesses are struggling to adapt to the changing rules, while consumers are concerned about the availability and quality of cannabis products.

New Laws for Hemp Products

Richmond, VA--In 2023, Virginia enacted stricter standards for hemp-derived products, such as CBD oils, edibles, and topicals. The new law requires that these products have a 25-to-1 ratio of CBD to THC, the psychoactive compound in cannabis, and comply with specific labeling and packaging requirements. According to a news report, the law also imposes civil penalties of up to $10,000 per day for each violation.

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The purpose of the new law was to bring some order and clarity to the state's hemp industry, which was previously considered the "wild west" of cannabis. However, the law has also created confusion and frustration for many industry stakeholders, including consumers, manufacturers, and retailers.

## Budget Stalemate Affects Enforcement and Compliance

The Virginia Department of Agriculture and Consumer Services (VDACS) is responsible for enforcing the new hemp regulations and assisting businesses in the transition. However, the department's resources are stretched thin due to the stalling of the state's budget negotiations.

The report added that the budget had allocated $2.2 million to support the VDACS and an extra $632,000 to create five new Office of the Attorney General positions. However, these funds have yet to be released due to disagreements between the Democratic-controlled Senate and the Republican-controlled House of Delegates.

This holdup creates obstacles for those attempting to comply with the new regulations. Several manufacturers who have followed the law and submitted all the necessary documentation for product approval to the VDACS have yet to receive confirmation. According to Jason Blanchette, president of the Virginia Cannabis Association, this is a clear sign that the department is overburdened.

Local Businesses Face Challenges and Opportunities

The new hemp regulations have forced many local businesses to remove or modify many products from their shelves. Savana Griffith, who runs The Hemp Spectrum in Virginia Beach, lamented the limited selection of teas, salves, oils, and edibles her shop now offers. Barbara Biddle, proprietor of District Hemp Botanicals in Leesburg, also needs help to adapt to the shifting rules, especially considering different states have unique labels, production, and certification laws.

VDACS spokesperson Mike Wallace stated in the report that the department had provided information about the new legislation on its website and distributed a memo to over 14,500 establishments dealing with edible hemp products. However, not all business owners find the new guidelines satisfactory or sufficient.

Despite the challenges, some business owners see the new regulations as an opportunity to innovate and expand their businesses. Rita Woods of Hemp House Wellness opened a mobile shop in North Carolina to respond directly to the changing environment. She also plans to launch her hemp product line that meets the new standards.

Consumers' Concerns

The sudden changes in the industry have affected not only business owners but consumers as well. Many consumers rely on hemp products for various health and wellness purposes, such as pain relief, anxiety reduction, and sleep improvement.

Allyson MacLeod, a 25-year-old Virginia Beach resident with complex regional pain syndrome, shared in the report her fear that these stricter rules might lead to a resurgence of the stigma around cannabis. She also worries that these changes might affect her ability to access quality products that suit her needs.

Marijuana Market Still on Hold

While hemp products face new regulations, marijuana products remain illegal for recreational sale in Virginia. The state legalized simple possession and limited adult home cultivation in 2020 but delayed retail sales until 2024. The delay was intended to allow lawmakers to establish a regulatory framework and a Cannabis Control Authority (CCA) to oversee the market.

However, some lawmakers have proposed to speed up the timeline for retail sales to 2023. The General Assembly's Cannabis Oversight Commission has agreed to recommend that Virginia move up retail sales of recreational marijuana to Jan. 1, 2023. The proposal would require a second vote by the new General Assembly in 2022.

The fate of this proposal is uncertain, as Republicans have gained control of all three statewide offices and split control of the General Assembly in 2021. While Gov.-elect Glenn Youngkin said he would not look to repeal legalization, he also expressed concerns about public safety and youth access. House Speaker-designee Todd Gilbert (R-Shenandoah) said Democrats left many unresolved issues with the legislation and claimed that legalization would only enhance the black market for marijuana.

Meanwhile, Virginia's medical cannabis program continues to operate under its own rules and regulations. The program allows registered patients to purchase up to four ounces of marijuana products monthly from licensed dispensaries. The CCA is seeking an entity to conduct a data-driven study of the program, which should include recommendations for action that would address any gaps in supply, product types, and patient accessibility.

According to market data from Headset, a cannabis analytics firm, Virginia's medical cannabis sales reached $18.7 million in 2022, a 157% increase from 2021. The average basket size was $105.67, and the most popular product categories were flowers, concentrates, and edibles.