Preparing Virginia for cannabis regulation with Greg Felix
What does it take to compete in the recently legalized cannabis industry in Virginia? What are the best ways to effectively navigate policy concerns and regulations across this uncharted landscape?
Understanding the business side of marijuana is no small task. Greg Felix joined the Wilder School Lunch and Learn series to share his expertise in the processes, challenges and legal implications required to successfully launch a new industry in the commonwealth.
While adult use and possession of marijuana is now legal in Virginia, the commercial sale of cannabis is in the process of preparing for a statewide industry rollout in 2024.
“It's a very complex matter, cannabis regulation is like no other regulation. What we see very often is a major disconnect between technology and policy." - Greg Felix
The way forward for weed
Felix noted that there is no official playbook for a state to reference when establishing a retail cannabis market. In many cases, once legislation is passed for commercial legalization, the next step is for a state to coordinate the regulatory processes to monitor and control marijuana growth, distribution and sale. This may include state departments for taxation, agriculture, health and more. A commission is established to plan and review procedures, including public safety guidelines and building a framework to license and sustain operations on a statewide scale. The commission will develop protocols for vetting and approving businesses for cultivation, manufacturing and distribution, supply chain, retail shops, delivery services, and more.
“It's a very complex matter, cannabis regulation is like no other regulation,” Felix said. “What we see very often is a major disconnect between technology and policy.” Virginia is developing an integrated technology plan which will assist with 'track and trace,' which helps to maintain controls across the lifecycle of cannabis products. New data analytics technologies can help regulators compile and review complex data sets for accuracy."
For example, regulators may be able to review a commercial cultivator’s electricity and water usage to make sure utility consumption is on par with reported crop production. Felix said protocols like this help discourage businesses from participating in illegal markets for greater profits. Creating a database of serial numbers for all retail products that is usable by a secure network is another method for maintaining viable “track and trace”. There must also be a comprehensive user registry to track consumer purchases as well as integrated data sharing between state and local regulators.
To Felix, embracing automation and information technology systems is critical for successful commercialization. “We can drill into this information, we can slice and dice it,” he said. “You can only do this when you have a fully integrated end-to-end digital solution.”
Building smart systems will also help states pivot for interstate commerce when federal prohibition ends, a legislative move that seems likely in coming years. “We're skating to where the puck is going to be,” Felix said.
States are wise to anticipate and plan proactively and holistically, according to Felix. “We're already starting this process of looking towards what happens when, in fact, federal prohibition is removed,” he said. “We don't want to be dealing with this situation where a jurisdiction has kind of like created a silo unto themselves.”
Building equity into legalization
Felix expressed that developing equitable systems is also vital for commercial success. There are many factors to consider, but public safety and taxation are generally the top issues related to equity, Felix said.
State health departments must invest in educational programs to discourage early use by adolescents. Because most federally-insured banks will note process cannabis digital sales, businesses operate on cash, which creates public safety concerns related to robberies. Setting fair taxation rates is also essential because if taxes are too high, consumers will flock to illegal suppliers, which may provideunsafe products or be connected to organized crime.
Another equity concern Felix noted is the need for a fair licensing system for applicants who want to enter the cannabis industry in Virginia. He noted that many states have relaxed costly application fees and that others include measures to solicit applicants from underrepresented groups. “State and local governments are putting their money where their mouth is,” Felix said. "They're actually providing a significant amount of money for social equity."
About Greg Felix: Felix brings nearly 30 years of leadership experience to his role as Vice President, Strategic Solutions at Accela. In this role, he is responsible for providing the Accela Cannabis Civic Application to state and local government agencies across the U.S. to regulate the emerging, legal and often complicated cannabis industry.