Welcome to the adult use cannabis marketplace in Virginia!… sort of. – Cannabis Business Executive

If that sounds strange because there is no “adult use” retail right now, that’s because Virginia may have just ushered in a de facto adult use market without calling it that. Allow me to explain. On July 1, 2023, the regulations and code of Virginia were updated in a few important ways that impact the Virginia industrial hemp marketplace. For starters, we have an updated definition of “hemp product” that we should take a close look at.

“Hemp product” means a product, including any raw materials from industrial hemp that are used for or added to a food or beverage product, that

• contains industrial hemp and has completed all stages of processing needed for the product and
• when offered for retail sale
  1. contains a total tetrahydrocannabinol (THC) concentration of no greater than 0.3 percent and
  2. contains either no more than two milligrams of total THC per package or an amount of cannabidiol (CBD) that is no less than 25 times greater than the amount of total THC per package.

So, the key information here is that the product cannot contain more than two milligrams of total THC per package, OR, have a CBD to THC ratio of 25-1. Thus, we have a bona fide low dose THC marketplace in Virginia. Pop the celebratory hemp beverage cork. Before you start looking at me cross-eyed, let me tell you why this is a call for celebration.

For starters, Virginia laws and regulations have clearly laid out exactly what role the industrial hemp operators can play in the intoxicating hemp marketplace. A low dose product is not a bad product or an unwanted product. It is a product that has its own marketplace and consumer base. Consumers who seek low dose products are largely not looking to the regulated cannabis markets for those products. Consumers in the medicinal space or adult use space nationwide are looking for higher THC concentrations starting at around 10mg. So, we can start to see a nice handoff of market share. This is good for political purposes between the hemp producers and regulated cannabis operators. Is a two-milligram product too low? Depends on the consumer. Would it be nice to see changes that bring the dosing up to a more national average in the 5-7 mg THC per package? Of course, and we should be looking to future legislatures to discuss updates over time.

The low dose consumer profile: someone who wants an introductory THC product but who does not want the full effect of a higher dose product. This person may want to enjoy a hemp product such as a beverage while with their family or friends, much like one would do with a glass of wine or beer. It is also someone who enjoys cannabis products broadly and would like a complimentary product at a lower dose that tastes good and again allows them to maintain a more mellow, less intoxicated feeling. I observe this consumer to be a family person, a working professional, friends at a barbeque, or any adult social function where adult libations are enjoyed responsibly.

Of course this low dose market needs to prove itself, but without more robust lawful alternatives this is the best it will look on the hemp products side for a while. The question is how do these producers and retailers reach their target consumer base.

On the other hand, I think there is good reason to be wary of the unlimited CBD-THC ratio formula that Virginia law allows. There is zero cap on this formula. One could conceivably create a product with 100 mg of THC in it with 2500 mg of CBD to offset the THC. Does anyone think this is a good idea? Are we likely to see some products that are “legitimate under law” on hemp retail store shelves? You betcha. I think we need to educate the consumer base on cannabis products and hemp products to ensure consumers are making informed choices about products that could have an impact on their wellness. Someone who is new to cannabis may think they are purchasing a “safe product” because the CBD is so high, but at a high enough ratio, this person may not enjoy the experience at all, and could in fact make themselves sick. Lower dose options with the way the Virginia program is set up seem to be the safest avenue for hemp businesses to consider.

I think as an industry we are in a prepare yourself mode. Current hemp product stores wishing to establish themselves as an accredited business with a state registration would be well advised to read the changes to the hemp product labeling and testing requirements, and understand that they have a responsibility to the consumer as the face of the industry to sell safe products and to perform the service of educating the consumer base about the basics. Get it right, now, and take advantage of this moment. Alas, we will see many retail establishments fail for lack of attention to detail. Without the registration, you will be prevented from selling hemp products. That registration is coming and “will become effective when the Commissioner of the Department of Agriculture and Consumer Services (VDACS) provides notice to the Virginia Code Commission that VDACS has established the registration process necessary to implement these requirements.” Who knows how long that will be, but perhaps within six months? Here’s to wishful thinking!

Why this matters

This past week (post July 1 updates) I gave myself a tour of a few different hemp product retailers and found consistency. Barren store shelves. These stores were clearly selling broad coverage of hemp products that are now out of compliance with the new regulations. These stores are in a transition phase as they adapt to the new rules and update their product lines to match Virginia’s unique market demands. But what are those demands? What do Virginia consumers want, and how can retailers meet those needs under the new regulations?

Understanding the consumer base is essential for any business, especially in an industry as nuanced and rapidly evolving as the hemp industry. In Virginia, with the new regulations, the market is now clearly defined, and businesses can start to strategize.

What does this mean for hemp producers, retailers, and consumers in Virginia?

1. Innovation in Products: The low THC dose regulations invite producers to get creative with their product lines. This could lead to a variety of low-dose products that appeal to consumers looking for a gentle introduction to THC or those seeking a more controlled experience.
2. Education and Transparency: Retailers will need to educate their consumers about the new regulations, the differences between products, and the effects of varying THC and CBD ratios. Clear labeling, informed staff, and educational materials will be vital in building trust with consumers.
3. Compliance and Quality Control: The new regulations require a significant shift in the types of products that can be sold, and businesses must quickly adapt to remain in compliance. Quality control measures, including testing and proper labeling, will be paramount to ensure that products meet legal requirements.
4. Market Growth and Collaboration: The clear distinction between low-dose THC products and higher-dose medical or adult-use cannabis products opens opportunities for collaboration between hemp producers and regulated cannabis operators. This might lead to shared marketing efforts, co-branded products, or other partnerships that benefit both industries.
5. Potential Risks and Regulatory Evolution: The unlimited CBD-THC ratio formula raises valid concerns, and we may see the regulations evolve over time to address potential risks. Ongoing monitoring and advocacy will be essential for industry stakeholders to shape these rules in a way that ensures both consumer safety and market viability.
6. Economic Impact: The low THC dose marketplace presents a new revenue stream for businesses and could boost the local economy. It’s an opportunity for new businesses to emerge and for existing ones to expand their offerings, leading to job creation and economic growth.

Final thought

The recent changes to Virginia’s hemp regulations signify a critical moment for the industry in the Commonwealth. While there may be challenges and uncertainties, the potential for growth, innovation, and collaboration is clear. By focusing on quality, education, and compliance, and by actively engaging with the regulatory process, businesses can seize this opportunity to shape a thriving and responsible low THC dose marketplace in Virginia. The role of both industry and government in ensuring that this market develops in a safe and sustainable way will be key to its success.