The “Walmart of weed,” a Canadian medical marijuana dispensary called MedReleaf, is reportedly worth $2.6 billion dollars according to the company’s annual report released on August 16th. With over 450,000 active patients and an impressive revenue growth rate averaging at 30% per year;

Small cannabis entrepreneurs say they can't compete against ‘Walmart of weed'’

Small-cannabis-entrepreneurs-say-they-cant-compete-against-%E2%80%98Walmart-of

 

“The backbone of the nation is small enterprises,” said Sarah Grant, general manager of The Dispensary in Richmond.

The business began selling Delta-8-THC flower and vape cartridges last year. 

“It’s difficult to compete against the Walmart of cannabis,” Grant remarked. 

Grant claims that the recreational cannabis market’s lack of structure is difficult for small companies, and that her shop could never compete with lobbyists from larger cannabis firms. 

In the last four years, as Virginia legislators debated medicinal and recreational cannabis legislation, new lobbying clients, special interest organizations, and investors have joined the fray. Simple possession of cannabis was decriminalized in 2021, with early ambitions to legalize recreational cannabis by 2024 — however that idea fizzled in this year’s session. Parts of the legislation had to be reenacted or approved again the following year before becoming law, leaving potential sellers in uncertainty. 

The four firms authorised to service five health districts in Virginia are now favored by the market. There is presently no licensed firm in the Northwest health district. Only state-licensed businesses are permitted to establish medicinal cannabis shops in their jurisdiction. 

Some of these businesses have amalgamated in order to grow their businesses and have more money to invest in Virginia politics. 

Stephen Farnsworth is the head of the University of Mary Washington’s Center for Leadership and Media Studies and a political science professor.

“Right now, the recreational marijuana sector is like the Wild West,” Farnsworth said. 

In Richmond, Virginia, a dispensary staffer is measuring flowers. Walker, Josephine.

According to a 2020 study by the Joint Legislative Audit and Review Commission, the state’s legislative watchdog body, the state’s commercial cannabis industry may generate $30 million to $60 million in tax revenue in the first year. Commercial cannabis sales, according to JLARC, may earn between $154 million and $308 million in tax revenue by the fifth year.

According to the 2020 U.S. Cannabis Report, Virginia’s unlawful recreational cannabis industry is anticipated to be the fourth largest in the country. Virginia’s market accounted for around $1.8 billion of the predicted $60 billion in illicit cannabis sales in the United States in 2020. 

According to Farnsworth, a rising business always has multiple affluent interests contending for the greatest position in the sector. 

“From the perspective of an elected politician, that implies a lot of people are trying to influence you,” Farnsworth said.

High stakes to break into the industry

Sen. Adam Ebbin, D-Alexandria, introduced legislation to create a recreational cannabis market using a handful of existing medicinal dispensaries and large-scale industrial hemp processors. The bill attempted to replicate laws approved last year in order to hasten the establishment of a recreational cannabis industry. 

The presently approved medical cannabis shops each paid a total of $70,000 in permission fees to open their medical operations. The renewal charge is $10,000 each year. Under Ebbin’s modified plan, dispensaries would have paid $6 million for additional license to build recreational retail outlets, while hemp producers would have paid half a million dollars apiece. Lawmakers were unable to reach an agreement on numerous requirements of the law, therefore it was postponed until the 2023 parliamentary session.

Jason Amatucci is the president of the Virginia Industrial Hemp Coalition, which aims to build a strong hemp-based agricultural and industrial industry in the state. Amatucci mentioned the booming hemp business in California. According to the United States Department of Agriculture, California generated about 4 million square feet of hemp cultivated in protected areas in 2021, nearly twice the amount produced by the next biggest state, Colorado. According to Forbes business magazine, California has a $4 billion yearly industry, with medicinal and recreational cannabis sales accounting for the bulk. 

Amatucci expressed concern about pharmaceutical firms gaining a footing in the recreational sector before small entrepreneurs. 

“The government wants to safeguard Big Pharma,” Amatucci added, alluding to national medical marijuana businesses’ retail buying power and legislative contributions.

“Follow the money on this because it’s all there in front of your eyes.”

monopolies on medical cannabis

Only a practitioner certified by the Virginia Board of Pharmacy may lawfully sell cannabis that has more than.3% THC. The practitioners write a certification stating that the patient has a medical condition that might benefit from the usage of medicinal cannabis. Patients who have been approved must next apply to the board for an official card. The General Assembly recently enacted a law that would enable people to skip the Board of Pharmacy application and go straight to the dispensary beginning in July.

Medical cannabis businesses in Virginia may produce cannabis at their processing facilities and sell it via their dispensaries. According to the cannabis legalization advocacy organization Virginia NORML, there are presently 11 medicinal cannabis stores operational throughout the state. Each licensee is authorized to run one dispensary for cultivating and processing cannabis as well as up to five retail sites.

Dalitso, also known as Beyond / Hello, for the Northern health area, is one of Virginia’s four licensed operators. 

  • In the Southwest health district, Dharma Pharmaceuticals, better known as RISE, is located.
  • Green Leaf Medical is a medical practice in the Central Health District.
  • In the Eastern health district, Columbia Care is located.

Columbia Care bought Green Leaf Medical, a Richmond-based company, in 2021. 

Cresco Labs, a Chicago-based medical cannabis conglomerate, revealed intentions to buy Columbia Care for $2 billion in late March, but the transaction has yet to finalize. 

Jushi Holdings, located in Florida and with operations in five other states, paid $22 million for Dalitso in Virginia in 2021. 

According to the Bristol Herald Courier, Dharma Pharmaceuticals was purchased in 2021 by Chicago-based Green Thumb Industries, which operates in 13 additional markets.

The state’s four licensed pharmaceutical processing enterprises are currently owned by three out-of-state corporations with stock market worth in the hundreds of millions of dollars.

In Richmond, Virginia, the Dispensary Manager Sarah Grant and an employee are measuring flowers. Walker, Josephine.

Lobbyists for cannabis

According to a joint press release, the combination of Cresco Labs and Columbia Care may make them the country’s second-biggest retailer and the largest retailer outside of Florida if sales targets are met. The firm announced that they will have 130 retail locations in eight states. The business predicted that it might earn more than $100 million each year.

Money from the cannabis industry has found its way into political contributions. According to the Virginia Public Access Project, a group that collects campaign finance filings, the licensed operators contributed about $160,000 to Democrats and slightly over $100,000 to Republicans between 2021 and 2022.

Jushi was the most generous, donating $117,000 in total. Jushi’s company, Dalitso, gave $30,000. The remaining operators contributed between $21,000 to $50,000 in total. There are also contributions from testing laboratories and industry professionals. 

Other political special interest organizations have spent hundreds of thousands of dollars, if not millions, on similar campaigns. However, since the cannabis sector is young, small company owners who assumed they would have a simpler route to market last year are concerned.

“At the very least, a campaign gift will give you a chance to be heard,” Farnsworth added. 

Although donations do not ensure that a politician would back legislation beneficial to a lobbying business, Farnsworth believes that money may buy access.

According to VPAP, Del. Dawn Adams, D-Richmond, is the sole nurse practitioner in the House of Delegates. Adams has a state license to recommend patients for medicinal marijuana. Adams runs RVA Telecare, where a medicinal cannabis card consultation costs $155.

Adams has sponsored many pieces of cannabis reform legislation. She spoke in support of Sen. Emmett Hanger’s (R-Augusta) now-dead measure, which many hemp proponents said would restrict their goods and encourage the medical cannabis business instead. The law also attempted to make synthetic Delta-8 items unavailable.

Adams denied demands for an interview to explain the money she earns from medicinal cannabis recommendations. Adams did not return a call or email seeking comment on whether she believes there is a conflict of interest between her two responsibilities as a legislator and her medical cannabis referral business. 

A legislator’s conflict of interest is defined by state law. According to state law, a politician having a personal interest should abstain from voting on legislation. If any possible conflict of interest is acknowledged, they may participate in discussions. According to state statute, personal interest exists when a legislator has a personal investment in a company or performs a service relevant to the proposed proposal. 

Adams’ Integrated Health Consulting firm was disclosed as an economic interest with the state’s Ethics Advisory Council earlier this year. The State Corporation Commission has RVA Telecare classified twice, once under Integrated Health and once as a separate organization. The firm isn’t on the council’s list of possible conflicts of interest.

After receiving a reference from a medical physician, which her office may give, the member voted for a measure that permits patients to circumvent the Board of Pharmacy in order to receive a medical cannabis card. On a subsequent Senate measure, she was listed as “present but not voting.” The legislator did not abstain from voting in favor of Hanger’s measure. 

Before the final House vote on Hanger’s measure, the delegate said that she had no financial interest in supporting the bill. 

Adams stated, “All I can tell you is that I spend a lot of time reading and researching.” “I have no vested financial interest in anything… This is a matter of public safety.”

Adams said that she wanted the market to be safer and more controlled. 

Hanger’s plan, according to cannabis activists, would encourage people into the medical cannabis business, which Adams is a part of, while restricting access to low-THC CBD products made from hemp. 

“They may position themselves such that only the medical monopoly can offer these products,” Amatucci said.

“With this medical monopoly system, we now get the poorest goods and the worst cost.”

Licenses for social equality

Luke Greer, the proprietor of the Northern Virginia Hemp Co., has been operating in Virginia since the legalization of industrial hemp production.

“I’m not trying to make major money interests out to be villains,” Greer remarked.

“However, I do not believe they should prioritize it above the small companies that have previously occupied the location.”

The Colorado Department of Revenue distributes recreational cannabis store licenses for around $7,500 plus application costs. The Department of Cannabis Control in California grants licenses based on a tiered revenue system, with a ceiling of $96,000 for a merchant generating more over $7.5 million. In California, applicants who have been harmed by the illegality of cannabis may request to have the cost waived.

Virginia legislators have also debated on how and whether to make the recreational market more accessible to persons who have been operating in it prior to legalization, dubbed the “legacy market” by cannabis reform proponents.

The 2021 House measure, presented by Del. Charniele Herring, D-Alexandria, legalized simple possession of cannabis and laid the groundwork for a recreational market. Social justice measures were inserted in the law to prevent existing processors from forcing out smaller businesses. It also had to deal with decades of excessive enforcement of cannabis-related offenses. 

Lawmakers couldn’t agree on how many licenses should be given to social equity applicants or how much these vendors should pay in licensing fees. 

Del. Danny Marshall, R-Danville, proposed a bill that would have required licensed industrial hemp sellers who wanted an additional license, such as to sell recreational cannabis, to pay a $1 million fee to the Board of Pharmacy and be a long-time resident or business owner in an economically disadvantaged area to pay a $1 million fee to the Board of Pharmacy. 

Small company owners, according to Grant, are unable to pay these costs because they have already been harmed financially by the court system. 

“People have been in this profession their entire lives,” Grant said.

“Those people should absolutely be able to enter into this lawfully.”

Amber Littlejohn is the executive director of the Minority Cannabis Business Association, an organization that wants Virginia to create a legal cannabis market that benefits minorities who have been targeted by the drug war. 

“We’re going to get our money back when we invest in social equality initiatives,” Littlejohn added.

Supernova Women is a non-profit organization founded by women of color who wish to break down barriers to entrance and ensure the industry’s long-term viability. This year, a Supernova Women research indicated that for every dollar spent in a social cannabis equality initiative, $1.20 is returned. 

“Even if individuals aren’t motivated by moral imperatives, there are economic and larger societal motivations to do it,” Littlejohn said. 

She expressed optimism that her organizations’ requests for inclusion in the business would be granted, but acknowledged that it would be a difficult struggle.

Carter Farms in Orange County is owned by Michael Carter Jr., an 11th-generation farmer. Carter believes that although social justice initiatives would not undo the harm done to communities of color, acknowledging the history by allowing more access to licensure might be a start. 

“When it comes to moments like these, we had the potential to make up the gap,” Carter remarked.

“However, many farmers and African Americans recognize that we will not have that possibility.”

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