Over the past decade, recreational adult-use cannabis has turned from a whisper to a full-fledged shout across the US.
As of this writing (in the first half of 2024), recreational adult-use cannabis is legal in 24 states and in Washington, DC. On top of that, legal medical cannabis programs exist across 38 states.
That’s almost half the US in which recreational cannabis can be legally consumed by adults.
How the times have changed.
Turn back the clock, and the thought of legal cannabis anywhere other than fabled red light districts seemed a pipe dream.
Traditional American values—in particular—seemed to fly in the face of legalizing any inebriating substance beyond alcohol, especially one federally depicted as a Schedule I narcotic alongside heroin.
“Traditional values” are changing, though.
This shift is reflected in Virginia, a longstanding stronghold of those steadfast, traditional national beliefs and philosophies. Case in point—the state has legalized medical cannabis since 2020 and recreational cannabis since 2021.
In fact, Virginia was the first southern state to legalize recreational cannabis consumption, growth, and possession for adults in April 2021.
Three years is a short time relative to the rest of the US’s rich history, and the cannabis market within Virginia undoubtedly reflects its youth. The area is amid exciting times, with more expected to come, but much learning remains regarding the state’s cannabis market.
Thus, those aiming to open or invest in dispensaries must navigate murky waters.
Even more complex is that cannabis sales aren’t yet legal throughout Virginia.
All that said, the state plans for business owners to open and run legal recreational dispensaries soon. Getting in on the ground floor now could prove vital, ensuring you’re ready to hit that same ground floor running when recreational dispensaries eventually open.
Below, we’ve written a detailed guide on opening a recreational dispensary in Virginia. Read it, study it, and set yourself up for success.
What’s The Current State Of Virginia’s Cannabis Market?
Investors and entrepreneurs in the cannabis space should be intrigued by Virginia’s legalization.
There’s a need to temper this enthusiasm, though.
After all, cannabis growth, possession, and consumption are only legal for personal purposes in Virginia—recreational cannabis can’t yet be sold.
An official legal framework for commercial cannabis sales doesn’t exist in the state.
However, Virginia isn’t without progress on the matter. Much remains vague on the topic, but a present sense of momentum gives many cannabis entrepreneurs and investors hope for an imminently bright future.
On February 28, 2024, House and Senate lawmakers passed legislation to catalyze the Virginia Cannabis Control Authority (VCCA) to begin a commercial adult-use application process by September.
That application would theoretically enable 21-plus consumers to buy commercial cannabis by 2025.
It’s also essential to examine the state of medicinal cannabis throughout the state, as it informs us of where recreational dispensaries could end up.
Virginia’s medical cannabis market has experienced a transition, with the program now falling under the VCAA’s umbrella. This massive managerial shift has been enacted to improve patient accessibility and overall efficiency. Heightened safety and quality standards drove this substantial change.
Currently, 21 medical dispensaries operate across four Virginia-based Health Service Areas.
It’s worth noting that many believe cannabis prices in medicinal dispensaries across Virginia are too high. Thus, patients are taking their business to other states.
However, the most recent numbers show that the state’s medicinal market produces reasonably tantalizing revenues. In 2022 alone, Virginia’s medicinal cannabis market raked in up to a projected $11 million.
Bringing down prices could drive those respectful revenues far higher, which is something that those potentially entering the recreational space should note.
What’s The Future Outlook For Virginia’s Cannabis Market?
Legal commercial sales continue to hang in the balance for Virginia, resting mainly in the hands and decision-making prowess of Republican Governor Glenn Youngkin.
The recent legislation passed means the state sits on the cusp of a thriving retail cannabis market.
Provided Governor Youngkin overcomes his hesitancy towards legalized cannabis sales, the state’s economy could leverage the $3 billion illicit cannabis market with tested, safe, and taxed products.
Governor Youngkin’s hemming and hawing prevents real insights from being provided on the market. We can only tell you there’s much potential and a robust framework for success.
The medicinal market has yet to hit its stride despite the steady proliferation of dispensaries. Much of these limitations have to do with poor pricing. Medicinal cannabis is costlier in Virginia—averaging $14 per gram—than in neighboring states.
Until the above issue is amended, the market’s future outlook will remain somewhat positive. But the outlook won’t be as sunny as it could be.
How to Apply for a Virginia Dispensary License
MOST Consulting Group has experience developing applications and winning licenses for dispensaries and cultivators in a number of medical and adult-use states. We can help guide you through the entire process, write the application, and maximize your chances of success. If you'd like more information on our application writing and consulting services, you can read our service page about cannabis licensing or contact us today — we'll explain how MOST can help.
Applying For A Cannabis Dispensary License In Virginia
We’ll first tell you to keep your ears to the ground as any well-practiced investor or entrepreneur would. We can also inform you that while Governor Youngkin isn’t prioritizing legalized recreational cannabis sales, that doesn’t mean he’ll veto it.
As long as Governor Youngkin doesn’t outright reject the bill, it can be passed without his signing, and a recreational adult-use cannabis transaction can be made by May 1, 2025.
The following four licensed operator classes will be available per the legislation: 1. Wholesaler. 2. Retailer. 3. Product manufacturer. 4. Cultivator.
Expect transporter and tester classifications to be added to the list.
Read below for a further breakdown of the prospective recreational adult-use dispensary license application process.
Licensing Limitations
Licensees will be subject to caps and limitations.
There will be room for 25 wholesalers, 400 retailers, 60 product manufacturers, and 450 cultivators. Note, however, that medical cannabis businesses and hemp processors are exempt from these caps.
Theoretically, a license allows licensees to sell and transfer retail cannabis to related businesses and wholesalers. It also enables them to label, package, and cultivate retail cannabis.
Currently, growers/cultivators are subject to the following two license classes:
- Class A license: Restricted by plant numbers or the size of plants.
- Class B license: You can only cultivate plants with 1% THC and under.
The Impact Of Social Equity, Diversity, And Inclusion
Social equity applicants should pay the most attention to the developments of recreational adult cannabis sales legislation in Virginia. They will be prioritized and can leverage such opportunities to thrive for generations to come.
A “social equity applicant” entails an application with at least 2/3rds of the owners who fall under the following categories:
- They’ve been previously convicted due to cannabis.
- A close relative has been convicted of cannabis.
- They live in an economically distressed area disproportionately impacted by cannabis laws.
- They’ve graduated from a historically black college or university (HBCU) in Virginia.
Applicants who tick these boxes will receive lower application fees and front-of-line treatment.
Necessary Preparations
Like any enterprise-based endeavor or investment, you must adequately prepare for and research when applying for a cannabis business license.
First and foremost, you must understand what license type best suits your needs. Here’s a breakdown of what each of the four licenses entails:
- A wholesaler license will enable you to sell immature hemp plants, retail cannabis, hemp seeds, and retail items containing cannabis.
- A retail license means your business establishment can sell retail cannabis and similar products directly to customers.
- A cultivation license allows you to sell and grow cannabis, but not products made from cannabis.
- A product manufacturing license best suits companies that manufacture and process cannabis items.
Learning compliance rules, such as local restrictions (e.g., laws pertaining to advertising, packaging, and zoning), is also crucial in your research.
Business Planning
Approval for a recreational adult-use commercial sales license will significantly depend on your ability to produce a viable business plan, which should include the following:
- Company Description: Where will your business unit be built? How you’ll manage your teams? What will the company’s legal structure be?
- Executive Summary: An overview of your cannabis business, including its vision, goals, and mission, should be written down and kept in mind.
- Market Analysis: Perform market research to determine factors like your target market, industry trends, and direct competition.
- Products and Services: What retail cannabis products do you want to sell? What makes them attractive to customers, and what’s your competitive advantage?
- Establishing Target Customers: Who do you want to sell your cannabis products to? Determine how to earn these target consumers’ trust and discover what they want from your dispensary.
- Analyze Risk: What hurdles and risks might your dispensary encounter? Suss these challenges out and build tailored strategies to help you topple them.
- Sales and Marketing: Advertising, promotions, and customer retention strategies and philosophies will be crucial in developing a successful marketing plan.
Provide The Necessary Documentation
We’ll remind you that our suggestions are primarily theoretical at this point. There is no concrete application process yet for legal recreational cannabis dispensaries in Virginia.
Still, there’s a substantial likelihood of applications being accepted come 2025, and you’ll want your i’s dotted and t’s crossed when that time comes. Don’t let the tiny details (such as not meeting documentation requirements) impede your progress.
Below are the general documentation requirements most cannabis board authorities require. Have these on hand so that when the time comes, the VCCA won’t reject your application due to easily avoided documentation issues:
- Your business’s financial resources.
- Proof of Virginia residency.
- Government-issued ID.
- Theft/loss insurance and other security plans.
- Property lease agreements.
- A list of owners and shareholders.
- Information about your cannabis and retail experience.
- Labor peace agreement.
- Your municipality’s city planning department’s approval.
- A 100% completed application.
Associated Fees And Application Submission
The only licensing fees we have to work from in Virginia are for cultivation licenses.
On the above note, the VCCA charges an initial $10,000 application fee for cannabis cultivation. Then, cultivators are charged an additional $60,000 after approval to make the licensing permanent.
A once-annual $10,000 renewal fee is also required for cultivators.
These prices might differ for dispensaries, but we’d expect something similar or in the ballpark.
What About Medicinal Cannabis Licenses In Virginia?
Can you open a medical cannabis dispensary in Virginia? As of this writing, the chances are slim.
You can only legally sell medicinal cannabis in Virginia if you possess a Pharmaceutical Processor Permit, of which Virginia only permits five.
These five permits align with the five designated health service areas outlined by the state’s Department of Health. Currently, no other applications are being accepted.
We wouldn’t blame you for exploring medicinal dispensaries as a way around Virginia’s lack of legalized recreational cannabis sales. Your best bet, though, is to play the waiting and preparation game until 2025, when the legalization of recreational sales will likely come into play.
A Matter Of Location
Recreational dispensaries won’t have designated health service areas as a guiding post like medicinal cannabis businesses do.
Nevertheless, geography will play a role in license dispersal. Specifically, the VCCA will re-evaluate the geographic distribution of stores for every 100 licenses granted.
Also worth considering is the right of refusal offered to local municipalities. Some places (averse to progress) plainly won’t want cannabis businesses.
Relatively recent studies show that only 35% of Colorado—one of the most cannabis-friendly states–allows dispensaries (medicinal or recreational).
Sure, Virginia has legalized recreational cannabis use and growth. Regardless, it’s far less cannabis-friendly than Colorado, so you can imagine some of the location hurdles faced as an aspiring dispensary owner.
Your wisest course of action is to research the most pot-friendly portions of the state.
Examine the following specifics throughout your preferred regions:
- Rental rates.
- Property costs.
- Consumer demographics.
Once you’ve discovered your preferred location, it’s time to bolster your preparations even further as 2025 looms.
Need Support For Your Virginia Dispensary Application?
Adult-use cannabis sales are on Virginia’s front doorstep, and the application process isn’t far behind.
As the market hits its stride, the dispensary landscape will face hurdles and confusion. It takes time for brand-new sectors to develop steady footing, and recreational adult-use cannabis sales will be no different.
Do you need help navigating the challenges sure to arise as Virginia (theoretically) enters this new frontier?
If so, streamline your application process by discussing your plans with MOST, a professional consulting firm specializing in cannabis dispensaries. We’re on top of all industry trends and regulatory shifts across all 50 states, giving you a leg up in preparation and navigation.
Contact us today with your questions about opening a cannabis dispensary in Virginia.
