Virginia is on its way to joining 16 other states that allow the production of cannabidiol (“CBD”) oil for medicinal purposes. On April 16, 2018, the Virginia Board of Pharmacy announced that it is now accepting applications for “pharmaceutical processor” permits, which will allow permit-holders to begin producing and dispensing CBD oil. The Board announced that the application process for pharmaceutical processor permits will occur in three stages: submission of initial application, awarding of conditional approval, and granting of a permit. The Board will grant a maximum of five permits – one for a processor location in each of the health service areas in the Commonwealth. The deadline to apply for a processor permit is 2:00 PM on June 8, 2018.
In 2015, the General Assembly passed Senate bill 1235, which paved the way for the legalization of the medicinal use of CBD oil in Virginia. Under the bill, physicians who specialized in neurology were authorized to issue written certifications to patients with “intractable epilepsy” allowing the use of CBD oil. The law does not, however, create any legislative or regulatory scheme for the manufacturing or dispensing of cannabidiol oil. Thus, patients who wanted to use CBD oil had no way of legally obtaining it in Virginia.
In 2017, the General Assembly passed additional legislation addressing those open issues. This bill authorized the Virginia Board of Pharmacy to create a permitting procedure for “pharmaceutical processors” that would be authorized to cultivate cannabis plants, manufacture the plants into CBD oil, and distribute the oil to approved patients.
The Board of Pharmacy promulgated a set of regulations for pharmaceutical processors in 2017, but a slew of new legislation from the 2018 General Assembly changed the CBD oil landscape once again. Most significantly, the General Assembly amended the law so any physician, not just those who specialize in neurology, can write a CBD oil certification for any patient with a “diagnosed condition or disease determined by the practitioner to benefit from such use [of CBD oil].”
With the 2018 General Assembly now concluded, the Board of Pharmacy has released information detailing the process for obtaining a pharmaceutical processor permit. Only five regional permits will be granted, and only one location will be allowed in each of Virginia’s five health service areas (one for Southwest Virginia, one for central and Southside Virginia, one for Tidewater, and two covering the Northern Virginia and the Shenandoah Valley regions). While applicants will be allowed to seek permits for different locations in more than one health service area, the applicant must submit a complete application for each proposed processor location.
The application process will occur in three stages. First, applicants must submit an initial written application to the Board of Pharmacy before 2:00 PM on June 8, 2018. The written application must include information in each of the criteria areas listed below. A nonrefundable $10,000 fee must also be paid with the initial application. The Board of Pharmacy will use a point-based system to evaluate the initial applications, with points being awarded in each of the following criterium:
- Financial position (25 points)
- Location within the Health Service Area (25 points)
- Security Plans (25 points)
- Authorization to Conduct Business (20 points)
- Industry Involvement and Disciplinary Action (25 points)
- Agriculture, Production, and Dispensing Expertise (50 points)
- Marketing plans (20 points)
- Facility Exterior and Blueprint (25 points)
- Product and Site Safety (20 points)
- Expected Hours of Operation (15 points)
- Miscellaneous Information, including compassionate need plan, delivery service, and research plan (25 points)
A total of 275 points will be available, as determined and scored by an ad hoc committee appointed by the Board of Pharmacy. That committee’s findings will then be reported to the full Board. In order to be considered for a permit, an application must receive at least 160 points. If an insufficient number of applications clock in at 160 points, the ad hoc committee may request modifications from certain applicants whose scores are closest to 160. Alternatively, the ad hoc committee may recommend that the Board of Pharmacy reissue the Request for Application process. The ad hoc committee, whose membership is to be anonymous, will meet July 30-31, 2018 to discuss scoring of applicants, and is scheduled to issue its recommendations to the full board by August 14, 2018.
After completing the scoring, the ad hoc committee will recommend issuance of conditional approval to the top ranked applicant in each health service area, and also may recommend a “qualifying alternative applicant” for consideration should the top application withdraw or not accept conditional approval. Those applicants who are notified of the Board’s willingness to grant them conditional approval must then submit fingerprints by August 24, 2018 so that the Board can obtain a criminal history. If the applicant passes the criminal history check, the applicant will be awarded conditional approval for its pharmaceutical processor permit.
The second phase of the application process will take place in the year following the granting of conditional approval. An approved applicant will have one year to complete all requirements for issuance of a final permit, including construction of the facility, installation of equipment, local zoning approval, and hiring a pharmacist-in-charge and other necessary personnel. The applicant will also have to pay a $60,000 permit fee. Upon completion of all requirements, a Board of Pharmacy agent will conduct a facility inspection. If the facility passes inspection, the Board will grant its pharmaceutical processor permit. Only then may the processor obtain Cannabis seeds and begin operation. Barring suspension or revocation, permits will be good for one year from the date of issuance and must be renewed annually.
The Board of Pharmacy hopes to conclude its application process and award conditional approvals by September 25, 2018. Given the limited number of permits available, the application process is likely to be highly competitive and will move very quickly under the designated deadlines. Hancock Daniel has been closely monitoring developments in this area and the application process.
If you have any questions about the process or are interested in securing a processor permit, please contact Scott Johnson, Jerry Canaan, or Mike Gill.
The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson P.C., is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel & Johnson P.C. be liable for any direct, indirect, or consequential damages resulting from the use of this material.
