Cover Story | Economic Development
Farmers harvested hemp for baling at a field leased by Pure Shenandoah in Page County in October.
we’ve ever seen in our lives, where people are choosing not to work or choosing not to return to their job. Today, it’s a killer when employees walk out the door.”
Habeeb
Some companies — including Henrico County-based Altria Group Inc. and
Amazon.com Inc., which is building its HQ2 East Coast headquarters in Arlington — didn’t screen for marijuana use even before legalization. As with raising minimum wage, the market is ahead of the law in some cases.
Of course, drug testing remains impor- tant for jobs that involve public safety or require high alertness or federal government clearances, and researchers still are trying to develop more targeted tests to measure impairment.
Another challenge related to federal marijuana prohibition is taxing cannabis businesses. The IRS prohibits tax deductions for any business that “consists of trafficking in controlled substances” like marijuana. Habeeb calls federal taxes “really screwy on this. If you’ve got $30,000 a month in overhead and $60,000 a month in revenue, in most businesses, that means you made $30,000, and you pay taxes on $30,000. In cannabis, you pay taxes on $60,000. You can
28 | NOVEMBER 2021
pretty quickly get squeezed on the revenue side.” Federal law also restricts banks’ ability to engage with marijuana businesses, even those that are complying with state law. The emerging industry’s “access to the banking network is very limited,” says Bobby Herndon, senior vice president and director of treasury management at Charlottesville- based Blue Ridge Bank, which began working with Virginia cannabis businesses when hemp was legalized federally. “Most federally regulated banks do not want to jump into that space because of the gray area. Even though [marijuana] is legal at the state level, we still have audits and regulation at the national level.”
As a result, legal marijuana companies
unable to use banks accumulate large amounts of cash while otherwise operating normally. Herndon says Blue Ridge Bank supports passage of the federal Secure and Fair Enforcement (SAFE) Banking Act, which would allow state-licensed mari- juana businesses to work with banks and other financial institutions. The House of Representatives passed the act in September as a rider on its annual defense spending bill, but it appears stalled in the Senate.
Moving into position Herndon
On the ground, businesses are working to position themselves for the commercial marijuana market. A lot of this comes down to paperwork. Pure Shenandoah is seeking to acquire a medical marijuana license approved by the Virginia Board of Pharmacy, covering the northwest region of the state. The matter is tied up in court with multistate cannabis dispensary operator MedMen Enterprises Inc., which is fighting to keep its license. Meanwhile, Pure Shenandoah is taking other steps toward meeting medical requirements, including maintaining batch manufacturing records, traceability and test results. Even if it doesn’t receive the state license, company officials see these as steps to prepare for the commercial market.
Other hemp processors are taking a more cautious approach. Golden Piedmont Labs in South Boston intends to pursue a processing license to continue its mission of working with Southern Virginia’s agricul- tural community as farmers transition from hemp to marijuana. Rick Gregory, principal at Golden Pied-
mont Labs, and friend Sterling Edmunds co-founded the company to assist farmers who were adversely affected by tobacco’s decline as a crop.
Photo by Scott Elmquist
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