Bipartisan support for Medical Cannabis and Hemp legislation likely to spur growth

In Virginia’s 2019 General Assembly (GA) Session, five of six proposed cannabis-related bills passed and will soon reach the desk of the Governor, ushering in some significant changes to the Commonwealth’s medical cannabis program. Among them, allowing full therapeutic-strength medical cannabis preparations, and the addition of physician assistants and nurse practitioners to the list of providers permitted to make medical cannabis recommendations.

“We’ve made significant strides in recent years expanding Virginia’s medical cannabis program, and this year’s progress is important for both patients and licensees. With facilities set to open in the second half of the year, it was critical to make the adjustments necessary to bring full therapeutic-strength medical cannabis products to market on Day 1,”

– Jenn Michelle Pedini, Executive Director of Virginia NORML.

Notably, in addition to the five successful medical cannabis bills, the GA passed a bill that meaningfully expands the state’s industrial hemp program. Once signed into law, the bill could spur the creation of a second CBD market in the state—one for those CBD products that are derived from industrial hemp rather than marijuana. In this article, I will summarize the legislation that passed through the GA this spring, and provide insight into what that means for the future of the Virginia cannabis industry.

Permit Envy

To the chagrin of many, including the nearly 50 unsuccessful applicants for the state’s five pharmaceutical processor permits, the sole bill intended to increase the number of permittees failed early on. Delegate Glenn Davis’ HB 2245, among other things, would have doubled the number of available pharmaceutical processor permits in each health services region, and would have required the Board of Pharmacy to award the additional 5 permits to the second-highest scoring applicant in each region that was not already granted a permit. His bill would also have allowed permittees to operate up to two additional off-site dispensing locations. Alas, the bill never made it out of committee. It is a near certainty that a bill to expand the number of permits will be introduced in the next session, but for 2019, the program remains limited to the five current conditionally approved permittees. There is already a groundswell of support for expanding the number and type of permits, including efforts by the newly formed Virginia Cannabis Industry Association (VCIA).

“One of our primary goals is to make sure that this new industry is accessible and permitted to grow in a way that benefits patients and Virginia businesses. We will be pushing for an expansion in the number of permits in the next GA session,” says Steve Baril, Managing Director of KVCF Government Consulting and current spokesperson for VCIA.

Dunnavant Does It Again

The most sweeping changes to the medical cannabis program emerged in Senate Bill 1557, patroned by Sen. Siobhan Dunnavant (R-12). Followers of the maturation of Virginia’s program may recall that Sen. Dunnavant was also the chief patron for SB 726, which (along with its companion bill HB 1251) is responsible for granting to Virginia physicians the ability to recommend medical cannabis oils for any condition and significantly expanded the potential market in the Commonwealth. Her latest bill does a few important things: It clarifies the types of products pharmaceutical processors can permissibly manufacture and sell, and it expands the list of practitioners that can make recommendations for patients. These two key modifications work together to meaningfully expand patient access to a broad array of medical cannabis products.

Here’s a brief summary of SB 1557…

1. Full therapeutic-strength. The bill establishes a 10 mg THC limit in each dose of Cannabidiol (CBD) or THC-A oil (“medical cannabis products”) sold by a pharmaceutical processor. This change will permit patients to access products at full therapeutic-strength formulations. The bill retains the requirement that each dose of such products have a minimum 5 mg CBD or THC-A content.
2. An end to “oils only.” The bill clarifies that the medical cannabis products do not have to be in “oil” form, but can be in any number of preparations and formulations typically prepared by pharmacists, as long as such preparations and formulations contain the mandated cannabinoid levels.
3. Dosing Clarity. The bill includes dosage limitations for pharmaceutical processors. Each dispensed dose of CBD oil or THC-A oil (recall that this is no longer limited to “oil” but can be in any formulation) must not exceed 10 milligrams of THC. A “dispensed dose” can be in a number of forms, such as one spray, one pill, one dropper-full, or one lozenge.
4. Practitioner Pool Expansion. The bill specifies that physician assistants and nurse practitioners are permitted to issue medical cannabis recommendations. Current law only permits M.D./D.O. recommendations.
5. Kumbaya. The bill requires that the Secretary of Health and Human Resources and the Secretary of Agriculture and Forestry convene a work group to review and recommend an appropriate structure for oversight in Virginia. The work group must report its findings and recommendations to the Chairmen of the Senate Committees on Agriculture, Conservation and Natural Resources and Education and Health as well as the House Committees on Agriculture, Chesapeake and Natural Resources and Health, Welfare and Institutions by November 1, 2019. This requirement to collaborate could have significant implications for how the medical cannabis and hemp industries in Virginia converge or diverge, and what that means for both consumers and business.

A Little Something for Everyone.

Senator David Marsden (D-37) served as chief patron of Senate Bill 1719, which addresses both industry and consumer concerns regarding the existing medical cannabis program. The primary impact of this bill is its “registered agent” allowance for patients, but it also contains beneficial nuggets for cannabis industry and workforce members. The bill authorizes a patient or his or her legal guardian to designate a “registered agent”, who will also be permitted to receive and possess medical cannabis products for the patient. As written previously, the law would prevent a family member of a registered patient—even the patient’s spouse—from being able to possess medical cannabis products on that individual’s behalf.  It would also prevent caregivers at institutional healthcare providers, such as skilled nursing or assisted living facilities, from being able to possess medical cannabis products on behalf of patients and residents of such facilities. “Registered agents” must register with the Board of Pharmacy, and the Board will be setting limits on the number of individuals for whom an individual is authorized to serve as registered agent.

If signed, SB1719 will also likely positively impact the members of Virginia’s workforce who wish to join this burgeoning industry. The bill relaxes the requirement that individuals who perform cultivation-related duties and extraction-related duties for a pharmaceutical processor must have significant experience in those areas. Currently, the employment qualifications necessary for pharmaceutical processor positions severely limit the pool of applicants. SB 1719 will allow pharmaceutical processors to hire individuals without experience, as long as experienced personnel supervise such individuals, which should expand opportunities for Virginia residents to fill open positions at the pharmaceutical processors and prevent these companies from having to look outside of the Commonwealth for established talent.

In a nod to the lucky few companies that hold a current pharmaceutical processor permit, Marsden’s bill also requires the Board of Pharmacy to promulgate regulations that would permit them to do business amongst themselves. This language is meant to protect a pharmaceutical processor in the event of crop failure by allowing that pharmaceutical processor to purchase product from the other permittees to offset the loss and ensure continued access to medical cannabis products in its health service area.

Other minor aspects of the bill include (1) the addition of the ability of a PIC to authorize certain employees’ access to secured areas designated for cultivation and extraction and other areas approved by the Board; (2) establishment of a range of acceptable THC levels (within 10% of the amount identified on the product label).

Practitioner Beware

Delegate Robert D. Orrock, Sr. (R-54) was the chief patron of HB 1826, a short but impactful bill. This bill is intended to prohibit anyone considered a “practitioner of the healing arts” from referencing marijuana in any advertisement, unless the advertisement is for the treatment of addiction or substance abuse. If signed, this bill would require practitioners to be very careful in their marketing regarding Virginia’s medical cannabis program. According to the bill’s impact statement, it is permissible to note in an advertisement that the practice or practitioner is registered with the Board of Pharmacy to issue written certifications for the use of cannabidiol oil or THC-A oil. However, it is not completely clear whether simply mentioning medical cannabis in such advertising in any other way may be construed as advertising (and therefore prohibited).  The plain language of the bill makes advertising the sale or distribution of marijuana in the Commonwealth by any individual or entity that does not hold a pharmaceutical processor permit a Class 1 Misdemeanor but fails to fully define “advertising”. Regulations or guidance are needed to clarify for practitioners.

Cannabis in Schools

Delegate Chris Hurst (D-12) and Senator Glen Sturtevant (R-10) brought forth two identical bills (HB 1720 and SB 1632) to allow school healthcare providers to administer—and registered student patients to use—medical cannabis at school, on a school bus, or at a school-sponsored activity. Virginia is only the fourth state in the country to allow school nurses to administer medical cannabis.

Virginia continues to expand and improve upon its medical cannabis program, and it is likely this momentum will continue in the 2020 session. Oh, and one more thing…. Hemp is coming.

Hemp Hemp Hooray

Virginia’s hemp farmers and other hemp industry enthusiasts were pleased with the passage of Delegate Daniel W. Marshall II’s (R-14) HB 1839, which will likely spur the development of a much broader regulated industrial hemp industry in the Commonwealth.

“Industrial hemp” means any part of the plant Cannabis sativa, including seeds thereof and any derivative, extract, cannabinoid, isomer, acid, salt, or salt of an isomer, whether growing or not, with a concentration of tetrahydrocannabinol (THC) that is no greater than that allowed by federal law.

That amount is 0.3% according to the 2018 Farm Bill. So, according to the bill, if a cannabis plant contains less than 0.3% THC it is not considered marijuana, but is regulated as industrial hemp.

Currently, it is permissible to grow and process industrial hemp, but solely and exclusively as part of a higher education industrial hemp research program or the Virginia industrial hemp research program. In addition, it is not currently permissible to “deal in” industrial hemp—meaning, there is no structure to allow the purchase and sale of industrial hemp by an individual who neither grows nor processes the plant. If signed, HB1839 will permit a registered grower, processor, or “dealer” to purchase and sell industrial hemp for “any lawful purpose”—that is, without having to participate in any state research program. The “dealer” is neither grower nor processor, but serves as a kind of middle man in this new commercial industry. So, Industrial Hemp will become just another agricultural commodity in the state, regulated by the Virginia Department of Agriculture and Consumer Services (VDACS).

Under HB1839, the law will still restrict a grower, processor, or dealer from buying or selling the whole plant, or any part of the plant that isn’t the seed or mature stalk (not combined with any other part of the plant), to a non-registered grower, processor, or dealer. However, the bill would permit the sale of products derived from “industrial hemp”—including CBD oil—to the general public. This means that, if HB 1839 becomes law, Virginia will have two separate regulatory programs for cannabis products. Not surprisingly, there is some tension between stakeholders in the respective industries. Notably, the barrier to entry for the pharmaceutical processor permits is exponentially higher than for the industrial hemp program, despite the fact that it appears both sides will be permitted to sell CBD products. In addition, testing and quality standards have not yet been developed for industrial hemp, whereas standards for medical cannabis companies are likely to be quite stringent. I predict that this will be a point of great interest for both industries in the Commonwealth over the course of the next few years.

The Virginia Cannabis Industry Association and Nixon Law Group will be actively following, weighing in on, and preparing for the promulgation of forthcoming regulations and formulation of 2020 General Assembly legislation. The Virginia Board of Pharmacy will be promulgating regulations in the coming months, which should shed more light on Virginia’s program. We will cover those developments as well.

In my next article, I will take a deeper dive into the 2018 Federal Farm Bill and Virginia’s hemp laws and how they impact Virginia’s industrial hemp program. Stay Tuned!