Graham Redfern’s business will be considered all but illegal in Virginia starting July 1, and he has no idea what he’s going to do about it.
“I guess I’ll have to go to North Carolina,” says the owner of Redfern Market, a 10-employee hemp nursery and retail store in Caroline County. “We sell everything from dog treats to creams to gummies and chocolates. We have an array of products for different purposes, many for medicinal and wellness purposes, but 90% will have to be gone.”
This is no fly-by-night operator. Before he started his marijuana-focused market, Redfern was integral in setting up a state research program on growing hemp with the University of Virginia, Virginia Tech, Virginia State University and James Madison University. “You can consume cannabis in Virginia now,” he says, shaking his head, “but you can’t buy it. That’s crazy.”
Redfern joins a bevy of mostly shell-shocked business owners across the commonwealth who invested in Virginia’s burgeoning hemp industry before and after cannabis was officially legalized in 2021. Now, thanks to state laws that go into effect this month, many say they are facing a doomsday scenario.
“They are trying to scare us and shut the industry down,” says Jason Amatucci of the Virginia Hemp Coalition, a long-established marijuana advocacy organization. “A lot of businesses are telling me that they’ve had enough, why operate in a state that treats you like trash?”
Graham Redfern (center) and some of the employees of Redfern Market in Caroline County (Photo by Christopher “Puma” Smith)
New Boss, New Rules
What a difference two years can make. When Virginia became the first in the South to legalize marijuana, the future smelled sweet for a legal, regulated, taxable pot industry in Virginia. The 2021 law signed by Democratic Gov. Ralph Northam allowed Virginians to possess up to 1 ounce of cannabis and to grow up to four plants for their own use. Recreational sales of weed were supposed to start no later than Jan. 1, 2024.
Then, Amatucci says, Virginia elected Republican Glenn Youngkin as governor.
“Democrats failed to seal the deal when they were in power,” he says. “They didn’t set up an adult-use market for legal marijuana. Then we had an election, and they lost. There’s plenty of blame to go around on this.”
Amatucci helped draft that original legalization bill signed by Northam. He says there was a marked change in tone at the start of the new administration. “It was very hard to communicate with the governor’s office when Youngkin came in. I couldn’t get a meeting with the lieutenant governor to talk with her about the industry. It was very hard.” Then, he says, “they just started coming after us.”
First, the 2022 budget bill, signed by Youngkin, contained a provision designating that possession of over 4 ounces of pot, but less than 1 pound, would now be a Class 3 misdemeanor punishable by a $500 fine. Second offenses and increased volume would be a Class 2 misdemeanor punishable by up to six months in jail and/or a $1,000 fine. This measure was a shot across the bow of the recreational use market, as was the new, split General Assembly’s defunding of the Cannabis Control Authority, established to regulate a future legal, state-run system.
But, for once, this wasn’t totally an issue of partisan politics. While most agree that the policy shift was instigated by Youngkin — who has been floated as a potential 2024 presidential candidate — some Republicans wrote bills to start a legal marketplace that failed in committee, and a handful of Democrats, like Del. Dawn Adams, D-68th, were among those pushing for more regulation.
Earlier this year, with heavy lobbying from medical marijuana companies, two concurrent bills passed through the General Assembly that proposed limiting recreational, nonmedical Virginia marijuana to less than 0.3%, or 2 milligrams per package of tetrahydrocannabinol, or THC, the main psychoactive compound in cannabis that gives a buzz.
The bills were clearly designed to kill any marijuana market outside of medical marijuana — several lawmakers, like U.S. Rep. Morgan Griffith, R-9th, said so publicly. But the public safety concern driving the legislation was an effort to keep unregulated THC-derived products such as delta-8 and delta-9 out of convenience stores, vape stores and other small businesses and out of the hands of children.
“The governor has made cracking down on dangerous THC intoxicants, including those synthesized from hemp, a priority to protect public safety,” Youngkin spokeswoman Macaulay Porter said in a statement.
The governor’s office did not answer specific questions relating to the new laws. Instead, Porter issued a statement and attributed it to Secretary of Agriculture and Forestry Matt Lohr: “As it stands, retail marijuana sales in Virginia are illegal and would require legislative action for that to change. SB 903 and HB 2294 took critical steps to strengthen consumer safety and regulations around edible and inhaled hemp-derived products as well as delta-8 THC products. Specifically, the governor’s amendment continued his efforts to crack down on dangerous THC intoxicants, including synthetic THC products.
“In addition to the ban on synthetic THC, the limited percentage of total THC allowed in hemp products, the packaging and labeling restrictions, the testing requirements and the total per-package limit for THC, the substitute also requires retailers to register with the Virginia Department of Agriculture and Consumer Services to sell any edible or inhaled hemp-derived product. Additionally, the General Assembly established the registration requirement and fees as a necessary operating cost and to create a database of all regulated hemp product retail stores.”
Jason Amatucci is president of the Virginia Hemp Coalition. (Photo by Jay Paul)
‘It’s not fair’
“It makes no sense because there is already a mechanism in place to go after this public safety issue they are talking about,” Amatucci says. “The attorney general’s office is going around and moving delta-8 off the shelves, and that’s their method. And we’ve already addressed the packaging issues to help keep the products from children. So, all these new laws are doing is putting reputable people out of business.”
Assembly lawmakers were seemingly unaware that the initial version of the bills would essentially kill the CBD side of the industry — the vast array of cannabidiol products made from hemp that don’t provoke a high. To rectify that oversight, and to mollify parents of epileptic children who were worried about the law’s effects on cannabis oil used as an anti-seizure treatment, Youngkin proposed a substitute bill that required that hemp products for sale in Virginia could exceed the THC limit if they have at least 25 times the amount of CBD per package than total THC.
The change did not please Adams. “The 25-to-1 ratio is a made-up, random measure to appease a Colorado hemp company who wanted to keep selling products to Virginians,” she says in an email. “But it will not limit the unregulated intoxicating product availability specific to delta-9 THC available for sale. For example, manufacturers will still be able to sell 40 milligrams of THC by adding 1,000 milligrams [of] CBD isolate.”
The version of the bill with the governor’s amendments passed, and with it came a $1,000 “hemp selling” permit fee and $10,000 per day fine for violators caught with product that exceeds the new limits on THC and its derivatives. It also earmarked $2 million toward enforcement of these new pot laws.
“The governor’s amendments didn’t help, to say the least,” says Evan Somogyi, the owner of four Kulture stores in Richmond and two Kultivate Wellness stores. “They are just wiping everything off the market, and it’s not fair.”
Somogyi opened his first Kulture store in 1999 as “a real smoke shop.” Now he’s contemplating a move out of the commonwealth. “The 25-to-1 ratio is going to wipe out most of the full-spectrum products we carry. The problem is that Virginia hasn’t done any regulation on the bad products out there, so they are trying to shut everything down. It’s a nuclear approach.”
Somogyi says he recently bought a “million-dollar piece of property” on Hull Street with plans to turn it into a dispensary once Virginia’s commercial market was established. “I’m just sitting here paying the mortgage on it. I might have to consolidate some of my locations there,” he says.
Redfern feels blindsided. The July 1 deadline doesn’t give him much time to sell through his large inventory, he says. “All they’re doing is turning people into criminals.”
New laws have rendered edible products containing THC largely illegal. (Photo by Christopher “Puma” Smith)
A Confusing Hodgepodge
Marijuana has been fully legalized in 20 states plus Washington, D.C., with 18 of the 21 localities allowing it for medical use. Even with less than half of states participating, sales of legal recreational cannabis are expected to reach an estimated $37 billion by 2026, Statista reported in an April study. Sounds impressive, but then you factor in statistics from Whitney Economics, a hemp-focused data company, estimating that illegal marijuana still accounts for three-quarters of pot sales.
So why is Virginia putting the clamps on its burgeoning cannabis economy?
As a tax revenue generator, it is a cash cow. In Arizona, cannabis sales have topped $3 billion since its recreational dispensaries were established in 2021. For the first quarter of 2023, the state’s pot tax collections totaled about $71.8 million, a 10% increase over the $65.1 million collected during the first three months of 2022, according to the Arizona Department of Revenue. (It’s worth noting, the new laws’ critics point out, that Arizona’s recreational sales dwarf its sales for medicinal marijuana.)
“Virginia will now have a completely unregulated cannabinoid market,” says Greg Habeeb, a law partner with Gentry Locke and a former GOP Virginia delegate who lobbies for the Virginia Cannabis Association. “In the vacuum created by these laws, there will be a significant expansion of the black market, marijuana that is either homegrown or brought in from out of state.”
Greg Habeeb, a former delegate, now lobbies for the Virginia Cannabis Association. (Photo by Jay Paul)
Habeeb and the VCA, a group of hemp companies involved mostly in CBD, or non-narcotic hemp, said they were instrumental in getting the governor and lawmakers to understand the difference between non-intoxicating hemp (CBD) and psychotropic marijuana (THC) before the final veto session. The group helped to negotiate away a provision in the original bill that would have required all hemp products to have an added bittering agent. “As if people were going to drink shampoo,” he says with a laugh.
The VCA would prefer not to have any new laws, he adds. “But in the original legislation, there was no future for hemp in Virginia, none. No growers, no processors, no retailers or wholesalers. Today, some sectors of the market will exist. ... We got what we could get.”
The results seem like a confusing hodgepodge that even the House of Delegates’ chief bill patron and majority leader, Del. Terry Kilgore, R-1st, admitted to the Virginia Mercury was not “perfect.”
“The legislation will be a net loss for the state of Virginia,” Whitney Economics reported in its study. It found that Virginia’s hemp industry employs approximately 4,263 workers making $161 million in annual wages. The new laws will affect everyone from small farmers to processors to retailers, Habeeb says.
If you are serious about fixing the problem of untested and unregulated products sold to kids, sold in gas stations, you would pass a fully regulated adult-use market, strictly enforce it, limit sales, regulate and inspect it.
—Greg Habeeb, Gentry Locke
“Our position has always been that we don’t want intoxicating products sold to kids,” says Habeeb. “We want childproof packaging and we want warnings, testing, regulations. The problem for everybody is the 2 [milligram] cap. People can complain about registration fees, but the cap does real damage to a whole bunch of businesses.”
More importantly, he adds, the new laws fail to address the government’s concerns.
“If you are serious about fixing the problem of untested and unregulated products sold to kids, sold in gas stations, you would pass a fully regulated adult-use market, strictly enforce it, limit sales, regulate and inspect it,” Habeeb says.
Tanner Johnson, the president of Elkton’s Pure Shenandoah in Rockingham County, echoes that view. “The only real solution to this is getting the recreational or adult-use market up and running. Let the right businesses sell this stuff before you complain about someone who shouldn’t be selling it.”
Pure Shenandoah is primarily a processor, he adds, “so we are geared the best to weather this storm. We can continue to grow, extract and manufacture stuff. We just have to dilute it more. But our [recreational use] customers will have to buy it online and maybe not trust it as much. ... It’s embarrassing across the board. Our government dropped the ball big time.”
“The hemp business is hard no matter the circumstances, so we were excited to get into the adult-use market,” says Jason Johannessen, the operations director of NuTrac Hemp in Blacksburg. Companies have to use all parts of the plant in order to make a business of it, he says. “You have to be creative in making different types of retail products. With the governor’s amendments, we saved a sliver of the industry, but that’s all.”
Habeeb finds the situation disturbing from a legislative standpoint. “The only people really pushing this legislation were those in another industry, the medical marijuana folks. And they were trying to put another competing industry out of business. As a former legislator, it’s uncomfortable to me that someone uses the legislative process to put a competitor out of business.”
“It’s all politics, money and power,” echoes Redfern. “This is a power grab, and it isn’t hard to follow the lobby money and see where this comes from. While the new legislation tightened laws on recreational hemp, it relaxed them for medical marijuana.”
He’s referring to the fact that medical marijuana patients are no longer required to register with the Board of Pharmacy for their access to cannabis. They just have to call their new “dealer” — their doctor.
A Contentious Future
In the absence of a regulated marketplace, the only legal way to buy pot in Virginia is to join the commonwealth’s medical marijuana program and obtain written certification from a medical doctor.
“It’s set up now as a pay-to-play recreational system,” Redfern says. “Now you can have an 18-year-old high school kid call a telehealth doctor and say they have anxiety, and in an hour they can walk into a legal dispensary and buy an ounce of weed. And yet you have to be 21 to buy my hemp dog treats.”
“Essentially, they found a way to ban marijuana without calling it a ban,” says Yan Gleyzer, the owner of VGI, a distributor of CBD products and vape items, and Chesterfield Hemp Company, a manufacturing company. He also owns four Vape Guys stores in the region. “The medical monopolies are behind it. And there’s nothing better than having the government ban your competition for you.”
He and others point to Adams, the Virginia delegate who is also a nurse practitioner and the owner of RVA Telecare, as a member of the General Assembly who could be seen as benefiting from the recent legislation. Through her business, for example, a consultation for a medical marijuana card costs more than $150 per patient and is not covered by insurance. According to her biography on the RVA Telecare website, “[Adams] takes an integrative approach to health care focusing on the mind-body-spirit connection while treating medical conditions that includes the support of medical cannabis.”
“There is nothing in any of the medical cannabis laws that would directly benefit me that would not globally affect other medical providers,” Adams says. “Just because you have expertise in something doesn’t make you have a conflict.”
Adams says that she is for a regulated market for cannabis and hemp. “I support the parts of the law that close loopholes related to unregulated intoxicants; however, there are still loopholes, and it would have been safer to regulate products similarly to the medical cannabis program.”
As for the question of whether the new laws create a monopoly for the companies who are legally in that program, she says, “Not really. [They] have, like the hemp industry, leveraged people’s lack of understanding for their own gain. All of these products need regulation.”
In lieu of a recreational marketplace, most people will not utilize medical marijuana, Gleyzer argues — they will patronize the black market. “There’s no lab testing with the black market. The law will destroy jobs, and that includes farming jobs. But the black market will thrive.” (Adams admits that a rise in illegal sales is “absolutely possible.”)
But Adams challenges the view that the new laws create a monopoly for the medical marijuana firms. “They didn’t push hard around the hemp laws. There is a great deal of misunderstanding about this, and it’s unfortunate.”
According to the Virginia Public Access Project, the Florida-based Jushi Holdings sent contributions to more lawmakers than any other single donor ahead of this year’s legislative session. The house bill’s sponsor, Kilgore, has been criticized for taking $22,000 in campaign dollars from Jushi, which is one of the publicly traded out-of-state companies, along with Cresco Labs and Green Thumb, currently licensed to sell medical marijuana in Virginia in a program regulated through the Virginia Board of Pharmacy.
“We believe these measures illustrate the continued importance of the medical cannabis program in the Commonwealth,” Jushi said in a statement about Virginia’s new laws.
Derek Wall, owner of The Buffalo Hemp Company in Floyd and Roanoke and VAC secretary, thinks that Virginia’s new pot laws will see a bevy of lawsuits. “There are a lot of people who believe, because it’s inconsistent with the federal farm bill, affects interstate commerce, unwinds existing contracts people have and makes illegal industries that people have spent millions investing in, that this underlying bill will be challenged in court. That’s not our group’s position, but it’s just another thing to keep in mind. All they are trying to do is turn people into criminals.”
VGI’s Gleyzer is slated to move Chesterfield Hemp Company, his manufacturing operation, to Roanoke Rapids, North Carolina, “just across the border. My Vape Guys stores will stay here because we sell other products as well.” Angered by the new laws, he’s throwing his hat into the ring to run as a Republican challenger for Virginia’s redrawn 73rd District, which represents portions of Chesterfield.
“Virginia has become a state unfriendly to business,” he says. “There has to be a change. These lawmakers, their minds are still stuck in the 1960s.”
