More than two years after it held its first formal meeting, the V.I. Cannabis Advisory Board has approved the final draft rules and regulations that will govern the territory’s medical marijuana market, with an eye to serving patients starting in March or April 2023.
The six-member board, meeting Wednesday via Zoom, approved the draft regulations in a unanimous vote. They will be posted on the Office of Cannabis Regulations’ website on Friday for a 30-day public comment period that will close on Sept. 11, according to Executive Director Hannah Carty. They can be seen here. A town hall meeting to further gather public input is tentatively scheduled for Aug. 31 at 5:30 p.m., she said.
The rules were supposed to be in place within 120 days of the Medical Cannabis Patient Care Act being signed into law in January 2019 but were stalled as efforts to form an advisory board dragged on and during the search for an executive director. Carty, formerly the deputy Agriculture commissioner, was tapped for the post in September 2021.
The board also unanimously approved the Office of Cannabis Regulations’ three-year strategic plan Wednesday, though beyond giving a brief overview Carty declined to share the document with members of the media or the public at the meeting, pending that approval.
According to the plan’s tentative timeline that Carty did share after some prodding by the board, cultivator license applications will be available starting Oct. 3, followed by research and development licenses Oct. 26, manufacturing licenses Dec. 5, and dispensary licenses Dec. 27. A request for proposals for laboratory services is scheduled for release Oct. 12, physician registrations will be accepted starting Nov. 3, and patient applications starting Dec. 14.
Each of the license categories will be open to applications for a month from their start date, after which the Office of Cannabis Regulation will select a review committee to score applicants, and then publish a list of qualified candidates whose scores exceed 80 percent. The fee schedule for the various licenses was not disclosed at Wednesday’s meeting.
The district of St. Thomas/St. John can have up to eight level one cultivation licenses for St. Thomas, and St. John can have four licenses. The St. Croix District has 12 level one cultivation licenses.
Carty said in March that “the exact number of licenses to be released on an annual basis will be determined by the Cannabis Advisory Board. They shall not release licenses that supersede the amounts allowed by 19 V.I. Code; Chapter 34.”
As written, the rules called for a lottery system to select the final winners from among the qualified applicants for a limited number of licenses, but the board voted to amend that provision after board member and Licensing and Consumer Affairs Commissioner Richard Evangelista said he opposed such a system.
“The lottery system seems like it’s a duplicative effort and I don’t think it should be a lottery, I think it should be based on merit, as long as we have a valid, fair scoresheet,” said Evangelista. “I think it should be based on merit, not merit and a lottery.”
Board Chairman Dr. Catherine Kean said her understanding was that a lottery would be used only if applicant scores are tied and there are a limited number of licenses to distribute.
However, Carty said the system was previously chosen by the board because it avoids litigation. Both Colorado and Nevada have switched to lotteries after a history of lawsuits by applicants under merit-based scoring systems, said Carty.
Board member and Agriculture Commissioner Positive Nelson said he supported a lottery system. “We should leave the board with that discretion. I don’t think we should tie our hands,” he said. “Does the board still have the authority to recommend … to the Legislature to raise that capacity, the allowance of licenses, if we realize we are not meeting demand?”
Carty said yes, but if there is more product than needed, they could also reduce the number of licenses. The goal is to match production with the number of people who require medicinal cannabis, which is much smaller than if they were providing for recreational use, she said.
The way the rules and regulations are written, the board has the authority to increase or decrease the number of licenses once the need becomes clearer in the next two or three years, she said.
“If we sit around and wait for the perfect, we will be waiting forever,” said Nelson, whose bigger concern, voiced earlier, was whether the rules governing distance restrictions between medical marijuana businesses and facilities such as schools and churches — currently 500 feet — can be exempted for the territory’s town centers, where space is more cramped.
“There are so many churches in the downtown area that it’s hard to make that 500 feet. I’ve had several complaints on St. Croix already,” Nelson said. After some discussion, the board opted to table the issue until its next meeting.
Asked to weigh in on the lottery issue, consulting attorney Kye Walker said that as written the Medical Cannabis Patient Care Act that was sponsored by then Sen. Nelson and passed by the 32nd Legislature in December 2018 envisions a merit-based licensing process, though doesn’t explicitly state such.
“When you look at those criteria, it’s a merit-based criteria,” she said. “The concern with the use of the lottery system is, when someone is applying for this license, they are already making a considerable investment into this potential business. If the awarding of the license is lottery-based, I don’t know what the incentive and motivation would be for someone to invest as much capital as they would need to invest to even apply for the license.”
With a merit-based system, there is a scoring system, and it’s not just one person who makes the decision, but the board, a selection committee, and a panel of experts such as accountants, and engineers, said Walker. “I do think greater consideration should be applied to whether a lottery system is appropriate,” she said.
“I understand that amendments may be made, but when you’re looking at these rules and regs, and when people in the industry are looking at this, whether it’s a merit-based or lottery system is a huge deal. That is the headliner for the rules and regs. It’s not one of the smaller regulations that people may be less concerned about, this is the big one,” said Walker.
Evangelista made a motion to amend the section to say the selection system will be merit-based, and a lottery used only in the event of a tie, which was seconded by Nelson and passed unanimously by the board.
A vote on the draft rules and regulations followed and passed unanimously, though board member Dr. Gary Jett commented for the record that he opposes “non-medical physicians” such as chiropractors and naturopaths being permitted to prescribe controlled substances.
Carty also outlined the goals and objectives of the Office of Cannabis Regulation’s strategic plan at Wednesday’s meeting, including how it will ensure social equity in granting licenses, generate income, and repay a loan from the Office of Management and Budget, but declined to share the details with the public and the media prior to its approval.
The office, currently operating on a one-time $500,000 loan from OMB, split over this year and next, will be expected to be self-funded and function through the fees it collects. Carty told the board she will need to hire an assistant to help process applications and will likely need to return to the Legislature for supplemental funding to hire additional staff, such as enforcement officers, to successfully roll out the program.
Currently the office falls under the Department of Licensing and Consumer Affairs, whose staff has been assisting with back-office items through its finance department, for example, and will continue to do so until the Office of Cannabis Regulation is able to hire more employees, said Evangelista.
“The longer it takes to start the program, the longer it’s gonna take to generate the revenue to sustain itself, so that’s part of the hiccup right there, and we may have to ask for additional time from the Legislature if we don’t get to start up real soon,” said Nelson.
“With your current budget, do you have money to hire anyone?” he asked Carty.
“With the current budget we have the ability to hire one person,” an administrative assistant, said Carty, which she has included in the next fiscal year budget.
“I think we want the general public to realize that we never anticipated it taking this long to roll out,” said Kean. “All of the obstacles we encountered along the way, whether they were real obstacles or perceived to be obstacles … the last three years have been very trying. So, the $500,000 that we have been willing to pay back, I guess we have been whittling away at that to some degree,” she said.
“We’re just trying to really move forward. Once we get the rules and regulations out there, and utilizing this strategic plan, I think we can try and turn the corner so we can actually start to accrue some funding back once we get the licenses out,” she said.