As a child my father often said to me “When the opportunity train passes by, be ready to get on board. Don’t say to the conductor: Can you wait until I pack my bags?” With the recent passage of the legislation that legalizes possession of, and ultimately the sale of, recreational/adult use marijuana in Virginia¹, the cannabis opportunity train is coming your way in Virginia. Virginia is the first state in the traditional South to legalize recreational/adult use marijuana.²

As more states have legalized the use of medical and recreational marijuana, legal marijuana sales have become very big business. Nationwide, legal marijuana sales grew from $10.7 billion in 2019 to $15 billion in 2020. That is a 40% growth rate! It is projected that from 2021 through 2024 legal marijuana sales nationwide will expand from $15 billion to $51 billion. In Virginia, it is projected that legal recreational marijuana sales will be between $400 and $500 million in 2024, the first year of legalization. Those sales will likely grow to $1.5 billion within five years following legalization. Clearly, there is an exceptional opportunity to make money in many different ways once recreational marijuana sales kick in in January, 2024. While 2024 may seem to be in the distant future, the key to success here is anticipation, proper preparation and smart action.

Like so many regulated industries, the number of permitted recreational marijuana license holders will be limited. Only 935 licenses³ will be issued across all classes of licenses. On July 1, 2021, the Virginia Cannabis Control Authority (“CCA”) became operational. The CCA will determine which applicants receive the 935 recreational marijuana licenses that have been authorized by the legislation. Although the legislation calls for acceptance of license applications to begin on July 1, 2023, the Joint Legislative Audit & Review Commission has recommended that the application acceptance date be moved to January 1, 2023 to provide adequate time to process and award applications so that the licensees can get the product produced and into the marketplace by January 1, 2024.

Prior to the filing of the license application, a great deal of preliminary work must be done. Therefore, the January 1, 2023, date does not provide a lot of time to prepare. Among the work that must be done is the following:

• Establish an operating team with the requisite expertise to meet CCA requirements
• Raise sufficient capital for the application fee, the permit fee and operating capital
• Obtain proper authorization to conduct business
• Identify and contract for an operational facility that meets the requirements of the CCA and the county or municipality that the facility is located in
• Develop a facility security plan
• Develop a business marketing plan
• Establish product and site safety parameters

As can be seen from this partial list, the preparatory work that must be done is significant.

Like marijuana legislation in some other jurisdictions, the Virginia legislation provides for a social equity component to serve as recompense for the harm and suffering that minority communities have incurred due to the disparate enforcement of marijuana laws in prior years. One component of this legislation makes it a priority to give preference to minority businesses run by individuals who have been disproportionately impacted by prior enforcement of marijuana laws. What form this minority preference will take remains to be seen, but it is likely to involve preference in license issuance and financial assistance to establish and operate the business.

If the experience of recreational marijuana licensees in states like Colorado and California is any guide, then those who are granted these licenses in Virginia will very likely be on the path to make a lot of money.

The opportunity train is on its way. Will you be ready to get on board when it passes by?

Byron Smith, Sr., Esq., CCIM, CRB
Your cannabis real estate advisor
Intelligent and profitable real estate solutions in the age of legalized cannabis

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¹ Technically, the state legislature must pass additional legislation in the 2022 legislative session for recreational cannabis to be fully legalized, but it is anticipated that this will occur.

² The production and use of medical marijuana in Virginia was approved in 2015. The first medical dispensary in the Commonwealth was opened in 2020.

³ The legislation imposes a ceiling on licenses across the different sectors of the industry:

• Retail stores: 400.
• Wholesalers: 25.
• Manufacturing facilities: 60.
• Cultivation facilities: 450.