Virginia’s marijuana gray market is thriving

THC-infused pies, Tupperwares of bud: Businesses are making it work in the unregulated gray market

Demetrius Robinson smokes cannabis with his brothers during a Coastal Cannabis Club event in Chesapeake, Va.
Demetrius Robinson smokes cannabis with his brothers during a Coastal Cannabis Club event in Chesapeake, Va. (Parker Michels-Boyce for The Washington Post)

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Sitting on a party bus next to his son and a vacant stripper pole, Erik Jorgensen, 62, ran his thumb along a hand-carved pipe and passed it to a woman sitting next to him.

“Trust me,” he said over blaring music. “Every hit you get off this will blow your mind.”

A longtime woodworker, Jorgensen for years carved jewelry boxes and back scratchers. He’d stopped smoking pot when his sons were born, to set a good example. But now the Jorgensen kids are grown and married, and Virginia’s laws have changed.

So on a muggy Friday evening in July, he bounced along the back roads of Chesapeake, Va., on his way to a “Cannaversary” event marking a year since Virginia became the first state in the South to legalize possession. When the bus stopped, he carried his art down the stairs and into a wooded clearing where vendors lined tables with THC-infused pies and Tupperware containers full of bud for sale and show.

“It’s like the wild, wild west,” Jorgensen said.

While having marijuana is legal in Virginia, recreational sales are not, leaving people eager to smoke with few legal options to get their hands on bud and entrepreneurs eager to operate within the law increasingly weary of working in the shadows. For budding cannabis businesses around the state, navigating Virginia’s gray area has required creativity and a brash willingness to push boundaries while they watched lawmakers spar this year over how to best establish the framework for a legal market.

That means pop-up events, growing classes, clothing products and creating memorable brands with eccentric logos that customers are already familiar with once there’s a legal route to sales.

“We’ve succeeded in determining what the word is for a cannabis company in Virginia,” said Liam Perkins, owner of CCC Events, the Cannaversary host, “when they’re not really supposed to have cannabis companies in Virginia.”

The tension over how to operate a legal market for a substance once revealed as a gateway drug to heroin is not new. A decade after Colorado and Washington became the first to legalize recreational marijuana, debates over how to develop and regulate selling something that’s readily available in the shadows persist. Even states with legal markets have struggled to eliminate the influence of unlicensed sellers. In California, the illicit market is so vast and taxes are so high that legal operators struggle to compete.

But the conflict of wanting to get into that market — and the hurdles to doing it legally — echoes nationally as more states move to legalize recreational pot.

Perkins would love a shot at a license once lawmakers in Richmond establish a framework for legal dispensaries.

In the meantime, there’s money to be made.

When Virginia legalized pot last summer, Perkins, 32, decided to celebrate with his first big party. He invited vendors and a DJ. Smoke filled the air as a couple hundred people celebrated legalization. He thought he could make a business out of it — a members-only social club for cannabis consumers to connect and enjoy the newly legalized plant together.

Perkins, who used to work in media and marketing, feels confident that his business is compliant. He advertises publicly on social media and he’s adamant that he’s operating completely within the confines of the law. Everything the club does is private. Everyone is an adult.

Perkins knows there are other pop-up events and vendors around Virginia Beach with less regard for the rules. He could go rogue and just hope the police have other things to worry about, but he also knows that distributing more than one ounce of marijuana, but less than 5 pounds, is a Class 5 felony in the commonwealth.

Virginia Beach Police Special Investigations Bureau Captain Reo Hatfield said the department is aware of pop-up markets and businesses like Perkins’ and that while some are not in compliance with the law, police are not seeking out sellers. They mainly work off complaints, and aim to first educate people about the complex laws.

“It is definitely difficult because it’s ‘if this, then that, if this, then that,'” Hatfield said. “It’s not just that this is blanket illegal.”

In many states, recreational legalization and commercialization happened at the same time, opening the door to the lucrative new market. Like the gold miners who surged out west more than 150 years ago for a shot at finding fortune, “green rush” entrepreneurs fled to early legalization states on the West Coast, hoping for a slice of the new market.

For now, Virginia has only authorized personal possession of up to one ounce of cannabis and cultivation of up to four plants.

The Virginia State General Assembly passed legalization in 2021 as a bill originally intended to go into effect in 2024. Then-Gov. Ralph Northam (D) expedited and signed the bill, fully legalizing the plant on July 1, 2021. But sales were still not to begin until 2024, giving the legislature time to develop a regulatory framework for the new market.

After Democrats, who championed legalization, lost control of the state Senate and Governor’s mansion last fall, legalization became one of the most anticipated debates during this year’s legislative session. Advocates argued over who should get first access to the billion-dollar industry; lobbyists pleaded with lawmakers to establish a licensing framework and speed up the timeline for legal sales to start this year. Nothing passed, and Virginia’s marijuana market remains in limbo.

“Without a legal marketplace Virginians interested in using legal cannabis are at risk of unsafe, unregulated products,” said Sen. Adam P. Ebbin (D-Alexandria), who sponsored this year’s main legalization bill and was frustrated by the legislature’s inaction.

Entrepreneurs trying to interpret the rules are often left with more questions than answers, Perkins said. What can he say? What should he avoid?

The answer is to keep hustling, said vendor Richard Anderson, who uses the nickname ‘Fez’.

Fez, who said he’s sold pot for nearly 25 years, now appears at about four pop-up events per week, his table covered in pre-rolled joints, plastic containers filled with flowers and small jars of rosin — a dense cannabis concentrate often smoked by connoisseurs and sold for $120 a container.

“Man, those pre-rolls are fine,” he said to a couple browsing his table at an event earlier this summer. “They’re made in Virginia, too.”

Fez, 46, said he’s not worried about law enforcement. He’s been arrested before.

“Scared money don’t make no money,” he said, leaning behind his table, taking drags of a cigarette.

There’s a lot of money to be made for those who do get in the legal market. Legal cannabis sales reached $19 billion in 2020, and are expected to balloon to $41 billion by 2025, according to the Wall Street research firm Cowen.

But how Virginia sets up its legal market — and how long it takes to decide — will shape who stands to benefit.

“Prior to regulation and even now, most people when they buy it are probably buying it from a Black or Brown person,” said Chelsea Higgs Wise, executive director of Marijuana Justice, which advocates for an equitable cannabis industry in Virginia.

Higgs Wise is pushing for Virginia to implement social equity programs and licensing practices that would prioritize communities historically harmed by the War on Drugs. According to the ACLU, Black people are more than three times as likely to be arrested for marijuana possession as White people.

Sitting in a coffee shop in DC, wearing earrings with the words “legalize it right” curved around each side, Higgs Wise urged people to remember that there are two sides to the legacy market — people who sell and people who buy.

“If they’re still in business, that means there’s still a demand for them,” Higgs Wise said. “We have to understand that legalization is also a cultural movement. People aren’t just going to switch to a legal dispensary because the law changed.”

When legalization came to his home state, Nick Austin, owner and founder of Royal Family Cannabis Co. in Virginia, saw an opportunity to bring his business back home after working in and out of the pot industry since 1998, bouncing from state to state.

Although, instead of hosting events like Perkins, Austin found success in the gray market by teaching growing techniques and building a brand.

“I’m just really trying to force my way into the market one way or another,” said Austin.

At the Cannaversary, he proudly held up a sheet printed with all the strains of pot he’s grown to show to a member. He unscrewed a Mason jar with nuggets of flowers and inhaled through his nose — smelling the synthesized scent of cherry lime soda.

“I’m tired of being hidden in a closet,” Austin said. “I’m tired of lying about what I do.”

But even with an operating legal market in Virginia, Austin recognizes that it will likely be difficult to get a legal license. When the state launched its medical program, it only awarded five licenses to serve the entire state, many of which were awarded to out-of-state companies.

“It’s an industry where you want to feel safe, but are only safe if you go pay $10,000 to get a license,” said one vendor who asked not to be named. “It’s really unfair because that may get to the point where people who are lower on the totem pole already can’t get a chance. Even if they’re good.”

Even in states with a path to legal recreational sales, the illicit market still thrives because high tax rates, limited licenses and oversaturation make it difficult to compete. Other parts of the country have seen a similar gray market emerge like the one in Virginia. After New York legalized last year, an unlicensed, gray market emerged in the city while lawmakers set up a framework for legal dispensaries.

Even just outside Virginia, in the nation’s capital, the gray market is thriving. District of Columbia voters legalized recreational marijuana in 2014, but Congress, which has federal oversight in DC, stymied regulatory plans and pot remains illegal to sell. Instead businesses profit off the relaxed enforcement by opening “gifting” stores where, through a legal loophole, customers can buy a $40 lighter, mask or motivational speech, and receive a free “gift” of weed with their purchase.

But, this year, city leaders attempted to address the gifting loophole, as the shops operate mostly unregulated and take business from medical dispensaries.

Perkins has hosted dozens of events since that first one. He welcomed more than 200 members to the club in its first year. The club hosts events like “puff and paint” and “wine and weed” nights for people to come together and enjoy the newly legalized substance.

At the Cannaversary, Jaynie, a 57-year-old who spoke on the condition that her last name not be used, sat under the tent eating tacos. A club member for more than a year, she’s smoked weed for more than 30.

“We love them,” Jaynie said about the events. “I mean, look around. It’s a really nice, calm, cool crowd.”

Behind her, the event began to wind down. The band still blared, but the crowd of about 150 started to wane as the sun set.

Jaynie said she has a medical card in Virginia, but that she prefers to get her weed from events and underground vendors she trusts.

They were there for decades before legalization. And they will be long after.