The Cannabis Control Authority’s acting head says he’s as interested as anybody in what’s next for Virginia’s pending recreational pot market.
With the General Assembly’s next session coming early next year, CCA acting chief Jeremy Preiss sat down with BizSense at his budding agency’s Richmond headquarters last week to look ahead to the legislative session that could potentially provide an answer to that question.
The agency, created in July 2021 alongside the legalization of recreational marijuana in Virginia, hasn’t yet started to work on regulations for the state’s recreational market because lawmakers failed this year to reenact elements of the 2021 legislation tied to the market’s launch.
In the meantime, the agency has been working on public outreach strategies and safety programs, assuming its role as the regulator of the state’s medical cannabis program, and filling out its ranks.
Preiss has been the acting head of the CCA since the spring. He is also the agency’s chief officer of regulatory, policy and external affairs. A lawyer by trade, he came to the authority by way of aerospace and defense company Raytheon Technologies. The governor is supposed to appoint a permanent CEO for the agency but hasn’t done so yet.
The following transcript has been edited for length and clarity:
Richmond BizSense: Where are we on regulations and figuring that out?
Jeremy Preiss: The legislature in the 2022 session did not reenact the provisions creating a retail market, so there is not a need right now for those regulations and they would be informed by adopted legislation. I think in the nearer term the legislature did direct us, in their 2021 legislation that did not need reenactment, to assume regulatory oversight of the medical cannabis program. That transition is one of the largest tasks before us.
I think there is interest among stakeholders, among elected officials, that there might be some opportunity to adopt additional regulations as part of that. We may get more concrete guidance in the 2023 session.
RBS: What sort of work is being done as part of that process?
JP: That work is going forward on multiple fronts. We are consulting with (current program regulator) the Board of Pharmacy. Another thing is we’re investing in staff and technology to ensure we have the capabilities. We have some pretty ambitious plans for hiring, not just for the medical cannabis program, but more broadly in fiscal year ’23.
This program has grown rapidly, the medical cannabis program. I think larger than anyone anticipated. Arguably that’s because it’s the only legal game in town right now to access cannabis, but I think there’s also real patient demand for it.
The last thing we want to do is to have this transition be disruptive and confusing to them. So, the third thing that we’re doing is planning a communications and outreach program to ensure people understand what this transition means for them, which at the end of the day shouldn’t be very consequential for them.
RBS: Where are we now in terms of headcount? What are those goals moving forward?
JP: We’ll be seven (employees initially). We have a chief administrative officer starting early October. The plan is to hire in fiscal year ’23 employees that will bring us to a total headcount in the neighborhood of three dozen.
RBS: What kind of roles are you looking for in that cohort?
JP: Certainly, there will be a lot of folks hired to help administer the medical cannabis program. We also need to build up significantly the administrative side of the house, which is why this CAO hire is so important. Right now, there are those of us who have our day jobs and are moonlighting as director of procurement, director of HR, director of IT. Not the most efficient way to operate, but out of necessity.
We’re going to hire additional communications staff. We identified early on we have a lot of work to do both to ensure people know we’re here and what we do. There’s just a tremendous amount of confusion and misguided notions about what’s legal and what isn’t.
RBS: Do you have any inklings about what to expect in the coming session?
JP: First and foremost, we’re a regulator. We’re an implementer of policy decisions made by elected officials. That statement is as true as anything. However, we are a resource. We were created to be where cannabis expertise in the commonwealth resides. So, we field questions from elected officials, from the administration, from other stakeholders and are asked for our reactions to ideas about future legislation.
It’s bipartisan and bicameral. We have ongoing dialogues with elected officials who have a particular interest in this issue, including officials who maybe aren’t as keen on marijuana being legalized. But as far as an inkling? There’s a lot of activity going down. There is legislation that supposedly has been drafted by industry stakeholders.
It’s going to be tough. Next year is an election year. Next year is a shorter session. (The General Assembly meets for 30 days on odd-numbered years and for 60 days on even-numbered years.)
RBS: My understanding is 2024 may be a target (for the retail market launch), but it still needs that reenactment piece to happen.
JP: There are people who believe the overriding objective should be to create a retail market that begins to undercut the illicit market and provides a well-regulated, safe product for people who want to use what is now legal. And these people believe the quickest, surest way to begin to chip away at the illicit market and the crime associated with that is to allow early entrance (of select companies that would sell recreational cannabis before a broader opening of the market).
And then you start to get into challenging waters. People say, “Well the medical cannabis providers are in a position to do that: become hybrid suppliers of medical and adult-use retail.” And then you have your hemp processors who say, “We can do that too and we shouldn’t just have one segment participate.” And you have others who say, “I am neither a (medical cannabis) processor nor a hemp processor and I am somebody equally interested in getting into the market.”
If the legislature makes progress on creating a retail market, it’ll be interesting to see what happens to the timeline.
RBS: It depends on when (reenactment) happens before we actually get into really definitive conversations about when the market opens?
JP: If you retain the timeline from the past, where we begin accepting license applications in July of next year and the market is created and we award licenses and the market gets greenlighted Jan. 1, 2024, that will be on the basis of decisions made by the legislature in late winter/early spring of ’23. That’ll be a lot of work in a compressed period of time.
I have noticed in my dialogues with members of the legislature that some are keen on getting started as quickly as possible. Proponents. Again, there are lots of people who don’t want a retail market. I want to stress, so people understand the role of the CCA: we don’t have a position on a retail market.
There is significant opposition to creating a retail market. There are people keen to retain those timelines and say, “We have to do this, it’s really important that we provide a well-regulated, safe product to begin to erode the illicit market.” There are others saying, “Yeah, we recognize that. But you’re talking about a lot of work in a compressed period of time. Isn’t it more important that we get this all right?”
It’ll be interesting if the forces in favor of creating a retail market get an upper hand and start to make progress. And if it looks like it’s going to happen, you can be sure there will be nobody more interested in the timeline than (the CCA). That could end up generating a lot of long nights.
RBS: Who are you hearing from in terms of these conversations about what legislation may or may not look like?
JP: I would be comfortable saying that certainly we’re in dialogue with the members of the (General Assembly’s) Cannabis Oversight Commission. But the interest extends well beyond. I’d rather not highlight individuals.
The (medical cannabis providers) are certainly interested in what happens. They’ll be the first to tell you they made investments that are based on a market that doesn’t just have medical cannabis. We’re certainly in regular dialogue with them. We’re also in dialogue with hemp processors and other groups that don’t fall into those two big categories.
At the end of the day, if the General Assembly chooses to create a retail market, it has to be inclusive. It has to not be dominated by just a few players, be they (medical cannabis providers) or hemp processors. It needs to be inclusive in the type of participant; I think it needs to be inclusive geographically. The opportunity needs to be shared.
RBS: Are there any states that you guys look to when you’re talking to legislators, providing advice, thinking about the things you’re doing or preparing to do? Are there any states that stick out as guides for Virginia?
JP: I don’t think so in the aggregate. It’s more a smorgasbord of a little bit of this and a little bit of that. There are some states that do interesting things. I know a lot of people have pointed to Michigan being a state that’s similar to Virginia: population-wise, rural-urban split, big cities, that kind of thing. There’s a lot there, but I was actually in Michigan in August and was blown away by the volume of advertising that would never be tolerated here.
We’re trying to build a regulatory body of work here to understand how states are dealing with some of the more contentious issues. Every program has its challenges but there are some good learnings to be had. If you consider the geography, Virginia is the first state south of the Mason-Dixon line (to legalize recreational cannabis). I can imagine sometime in the future other states south of Virginia looking to see how Virginia did it, if the legislature decides to go that way.