A growing field

California became the first state to legalize medical marijuana in 1996. Though laws vary across state lines, today 33 states and Washington, D.C. have legalized marijuana for medicinal use, including Virginia.

Well, to an extent.

“The [cannabis] laws in Virginia are constantly changing,” said Norfolk attorney Anne Bibeau. “This is a booming industry and there are a lot of businesses in it that need counsel.”

That’s why, on June 4, the Norfolk-based law firm announced it had formed a new hemp and medical marijuana law practice to help clients navigate the “complex and ever-changing” marijuana business in Virginia.

“Hemp and cannabis businesses, like any other, need to be well-informed and prepared for all types of issues, including banking and financing processes, licensure and certifications, cybersecurity threats, environmental regulations, construction, land use, real estate, tax, commercial transactions and others,” according to the press release.

Marijuana remains illegal under federal law. But in 2015, Gov. Ralph Northam signed legislation creating an “affirmative defense” for the possession of the marijuana compound cannabidiol, or CBD, and THC-A oils for medicinal use for patients suffering from epilepsy. In 2018, lawmakers expanded that protection to patients with cancer, Crohn’s disease and other medical conditions.

In its 2017 session, the General Assembly authorized one medical marijuana processor to be located in each of the state’s five health regions, including facilities near Staunton and Roanoke. When medical marijuana operations in Virginia begin, Bibeau said they will likely face “basic business issues” similar to what states already producing medical marijuana are dealing with.

“For example, business and individuals with income derived from the marijuana industry cannot use banks and they are ineligible for bankruptcy protection,” Bibeau said.

According to Dylan Bishop, a lawyer with Kaplan, Voekler, Cunningham & Frank in Richmond, many banks will completely refuse to service anyone in the industrial hemp or medical marijuana industries.

“Where are they going to bank? Where is is legal for them to bank? Those are questions people in the medical marijuana industry have to ask,” Bishop said.

The industrial hemp business raises even more questions. In 2014, the federal farm bill allowed industrial hemp to be grown by farmers employed by universities for research purposes only.

Then the law changed. In 2018, the farm bill signed by President Donald Trump and emergency Virginia legislation in March redefined hemp as a “variety of cannabis that contains less than 0.3% THC,” the psychoactive component of cannabis plants, and eliminated the research requirement of hemp production.

However, there were no regulations put in place by the U.S. Food and Drug Administration around the production of industrial hemp when the farm bill was passed, which raises even more questions for consumers.

“Some of the uncertainties that clients are grappling with right now are what you can say about your products, because there’s a lot of uncertainty with what the FDA regulations are,” Bibeau said.

Because the FDA doesn’t require testing before putting hemp products on the shelf, there is no way to confirm whether hemp products being purchased contain less than 0.3% – or any – THC.

“The problem is that a product may say it does not contain THC, but there’s no certification for that… People are just going on what the label says,” said Vandeventer attorney Jonathan Gallo. “Businesses and consumers need to be careful.”

People interested in simply selling hemp products also face confusion. Since the 2018 farm bill passed, the “two main areas of legal uncertainty” that Bishop’s clients face are which hemp products are legal to sell and to whom they can sell these products.

“The fundamental issue that’s coming in now is that folks see the industrial hemp bill is alive and well in Virginia and they assume it’s open season, when in fact it is not,” Bishop said.

To legally possess hemp plants, seeds, micro-greens, leaves or flowers in Virginia, individuals must be a “registered Industrial Hemp Grower, Dealer, or Processor or an agent of one of these registrants for the purpose of growing, dealing or processing,” according to the Virginia Department of Agriculture and Consumer Services, or VDACS.

But just because individuals need a license to grow industrial hemp, a license isn’t necessarily required to sell hemp products. However, Bishop’s clients are often uncertain whether or not the products they’re selling are legal, and if they should apply to be an Industrial Hemp Processor to avoid criminal liability.

“Under Virginia law, you have to have a grower, dealer or processor registration to possess industrial hemp… But, there’s a separate definition for hemp products, and those products you do not have to have a grower, dealer or processor registration to possess,” Bishop said.

Differentiating between industrial hemp and hemp products has become a major area of confusion for Bishop’s clients. According to VDACS, a hemp product is defined as “any finished product that is otherwise lawful and that contains industrial hemp.” This can include building materials, cosmetics, food additives and more.

In a letter to VDACS, Bishop wrote that the definition of a hemp product is “too narrow” and that packaged hemp flowers, buds and micro-greens that are labelled as hemp products for retail should be excluded from the definition of “marijuana” in Virginia’s Criminal Code and Drug Control Act.

According to Bishop, this would clear up much of the uncertainty clients have surrounding cannabis laws.

“Right now you can categorize the sale of industrial hemp and CBD products as the Wild West,” said KVCF partner Stephen Baril. “There’s a lot of confusion for our clients about what is and isn’t permitted… They just want to make sure what they’re doing is legal.”

According to the Virginia Department of Pharmacy, Maryland-based company Green Leaf Medical is opening a dispensary in the Manchester section of Richmond in September.

For those interested in hemp and medical marijuana industries, Bibeau recommends staying as informed on legal changes as possible.

“More information will continue to be available from government entities as the law develops,” Bibea said. “Consulting with competent counsel with knowledge in this area is always important.”