Bette Brand grew up on farms, first in Arkansas, then in Bedford County.
She has worked with farmers and agribusiness owners her whole career.
But since July, she has been a serious student of a whole new side of the business: cultivating and processing and selling cannabis.
Brand’s job over the next two-plus years will be to help the state figure out exactly how to get to a fully functioning legal cannabis marketplace.
Brand, who now lives in Roanoke County, was named this summer to the board of the Virginia Cannabis Control Authority, the body that will determine what the state’s cannabis industry will look like.
She’s the only member of the five-person board from west of Richmond, and she counts her understanding of the state’s rural areas as a key contribution to its work.
“When they called me and said, ‘Would you be interested in this?’ I said, ‘Are you kidding me?’” she said. “But then again I thought, You know what, this is the law, and we need to do it right, and if I can offer a perspective that may enhance the others on the committee, then that’s what I want to do.
“I would like to make sure rural communities are represented and have a stake in how things are developing so the economic opportunities are across the state, not just for certain areas, certain demographics, whatever,” she said.
“It needs to be surely an opportunity for anyone who has the desire to participate.”
How cannabis will be regulated
In July, soon after personal possession and home cultivation became legal in Virginia, Gov. Ralph Northam announced appointments to three boards that will manage the road to full legalization, which is expected to take effect Jan. 1, 2024.
The five-member board of the Cannabis Control Authority will create the framework for state’s cannabis marketplace, from cultivation to sales to distribution.
The authority board will work closely with the Cannabis Public Health Advisory Board, which will focus on public health issues related to marijuana legalization and must approve any health-related regulations.
The 20-member Cannabis Equity Reinvestment Board will decide how to distribute the tax revenue that will be set aside to help communities that have been disproportionally affected by drug enforcement and economic disinvestment. The law earmarks 30% of tax revenue from marijuana sales for the Cannabis Equity Reinvestment Fund.
Brand’s career has focused on rural development. She spent more than 35 years at Farm Credit of the Virginias, a lending cooperative, and in 2018 she moved to Washington, D.C., for what would be a three-year stint at the U.S. Department of Agriculture. She served as deputy undersecretary for rural development and administrator of the Rural Business Cooperative Service.
And she watched the regulatory sausage being made: She was at USDA when hemp-growing regulations were being written and at Farm Credit of the Virginias during the Dodd-Frank era.
Earlier this year, Brand launched her own consulting firm and continues to work with farmers and other businesses in the agriculture sector.
While a certain amount of personal possession and home cultivation became legal in July, the state’s legal marijuana marketplace won’t launch until Jan. 1, 2024. New Frontier Data, a research firm that focuses on the cannabis industry, projects that in its first year, the recreational marijuana market in Virginia will reach $375.4 million, and that it will grow to $659.5 million by 2025.
But first, the authority board has to set up a regulatory structure, deciding how licenses will be distributed, how sales and distribution will be managed, how violations will be handled. The board won’t even start accepting applications for licenses until 2023.
(That hasn’t stopped some would-be cannabis entrepreneurs from trying to beat the rush, Brand said. The messages started coming in on LinkedIn as soon as the board appointments were announced: “People were very creative in finding me … and saying, ‘I want a license,” she said. “People are just so anxious to get into it and find out where they fit in.”)
One thing that could stand in the way of the board’s work: the General Assembly.
Legislators passed the pot legalization bill during their 2021 session but included a reenactment clause, which means that significant portions of the legislation — including provisions for production, sales, distribution and enforcement — won’t go into effect unless the General Assembly approves them again during its 2022 session.
Another challenge: Under federal law, cannabis remains illegal, which creates significant roadblocks to obtaining credit and to obtaining even simple banking services, like a checking account.
Brand talked to Cardinal News last week about the challenges, and about why she thinks it’s so important for the state’s rural residents to be represented in the process.
The interview has been edited for length and clarity.
What do you bring to the board?
People are like, “You, Bette? What do you have to do with cannabis?” But it can be a very viable crop for agriculture. It can be an economic boost for rural communities if done correctly and younger kids are protected from it and we continue to study the effects of THC and CBD and some of the other cannabinoids. We need to be smart.
I’m the only [board member from] west of Richmond, and I’m the only one, I think, who has an agricultural background. There’s going to be a lot of aspects of this industry as it grows, but the knowledge of our rural communities and what they need, how to be economically successful and help them grow, being careful that somebody from the outside doesn’t come in and take advantage — it could be a really big boost.
I really have a commitment to rural communities. When I say rural, I even think Roanoke — I don’t consider Roanoke really rural, by the definition it’s not. But I think we’re impacted enough by the surrounding communities, and these communities may not have the representation or the experience that a larger population might have. And yet they may have people coming in looking to put production facilities, processing, any number of things. We hope to make sure they’re represented.
I’m probably a little bit of an outlier. I worked in a previous Republican administration. But before I went to D.C., I was very active in advocating for farmers and rural communities in Virginia, no matter who was in office. It’s not smart to be so one-sided. … You need to work with whoever is in office.
I was at USDA when they were developing the hemp regs. I didn’t help directly with the development, but I was in charge of the business-type loans in rural communities. … [Businesses] would come to us for loans — to process the hemp, to develop hardwood flooring, all of the many products that hemp can be used for. And so I saw the other side: Here are the production regs, here’s how it’s going to impact the businesses.
It was federal as opposed to state, but patience is needed for both of them, so my expectations are probably a little more realistic about just what it’s going to take to get the nitty-gritty stuff written down.
How much does it complicate the board’s efforts that cannabis is still illegal on the federal level?
Any federally regulated lending organization cannot participate in [supporting] a federally controlled substance. There’s been some speculation that Congress may do something about that. But I think there’s a lot of other things on their plate right now and that might not happen.
The whole issue of banking is two-fold. One is the capital needed, and the other is the actual traditional banking services and not having to operate on a cash basis.
Any depository is either regulated by the federal reserve board or the FDIC. And of course the federal government says, There’s a controlled substances act that says you cannot manufacture, sell or distribute cannabis. Any bank that is a depository is concerned about No. 1, losing their reputation. No. 2, they could even lose their license.
Being able to borrow money for the capital that’s needed — especially, I would think, in some of the more high-tech production facilities, say, a vertical operation that was completely self-contained as far as lighting and water — that’s a significant investment. The capital needs could be considerable.
There are services where companies will — I don’t want to call them payday lending, but they’re operations that are set up to help people. Very similar to payday lending, though — their fees and rates are usually very, very expensive.
But that’s only part of what a cannabis business would need. Even if you could get loans, you still have to pay in cash — things like a traditional checking account, you can’t have that. You can’t have payroll. Of course you couldn’t get lines of credit. You can’t even accept credit cards.
Most of the cannabis business has been strictly in cash. That creates other issues. It’s harder to uncover fraud when you don’t have that paper trail.
Everybody knows that these facilities probably are pretty cash-flush, which could then cause thieves, just local walk-in robberies, or could also hide a lot of things that bad actors might want to hide, including how much they need to pay taxes on.
With a federally controlled substance, depending on who’s at FDA and how they want to enforce, they could cause havoc. Is that politically a good move at this point in time? I don’t know. That’s always going to be a bit of a contradiction. And states’ rights vs. federal jurisdiction — all of those questions may not get answered until somebody really pushes it one way or the other.
Is there anything the state can do?
I think the answer would be to look at options of some sort of loan fund for the capital. But even at that, I’m not sure where they would be able to generate enough money to supply the funds. You have to have the capital to finance something like that, and I don’t know if the state is in a position to do that. … That’s something we would have to ask about.
As far as the state being able to set up a nonconforming lender — there are nonconfomring lenders for the housing market and some other areas. I think there’s more flexibility — and I’m not an expert on all the banking laws and rules and everything — but I think there is more flexibility for a loan fund to be set up that doesn’t have to comply with the other banking regulations.
Even things like the [Cannabis Equity Reinvestment Fund], they’ve been talking about maybe putting that money through a CDFI [a community development financial institution, which caters to underserved and low-income communities]. Preliminary conversations with a specific CDFI said that they are able to do that, and my question was, How? A CDFI is regulated by the Treasury. We haven’t explored that.
We’re not the only ones that are struggling with this. The industry across the country has had to deal with that, and so there’s some comfort in knowing it’s a unified problem that we all need to work on. I don’t know if we’ll have the magic answer, but it’s certainly going to have to be part of the discussion, and part of what makes this whole thing very complicated — why we can’t just start issuing licenses just first-come, first-served, until we get some of this stuff sorted out.
It doesn’t do a business any good at all to get the license and not have thought through all the stuff, and have all this investment and then lose it because of the inability to transfer money or to pay their people, or to have someone rob them of their money, of their cash. You have to think about the whole process all the way through.
Lack of access to credit limits startups to people who can afford it on their own, or who can tap private financing.
Exactly. The [Cannabis Equity Reinvestment Fund] is supposed to help balance that out some. Of course, the funding has to be there before it can.
And even if you can [acquire private financing], and you can build the best dispensary you can, or build the best production facility or whatever, but then you have to do business in cash? That’s difficult.
That there are larger outside companies that are ready to come into Virginia. That’s good, but by the same token, you don’t want all the opportunities taken over by an outsider. Hopefully they will work to employ local people, invest locally and support local businesses — all the infrastructure that’s needed for any type of production, that it’s supported locally and not just come in and use the resources and leave it.
I’ve been reading articles about when they find oil on native tribal lands. And the stories I’m reading are like, There’s this many people [she holds her thumb and index finger barely half an inch apart] that benefit and a lot of people who really have lost out.
I started thinking, could something similar happen to Virginia? That’s why it so important for this committee to really look at all angles and be very deliberate in the regulations.
What do you say to people who are frustrated by the lag time between legalization for personal use and the creation of a legal retail marketplace?
We’re starting from scratch. … Three years is not a long time, especially when we’re kind of waiting to see what happens this next session with the reenactment.
What’s the worst-case scenario with that?
I talked with a member of the General Assembly recently and was asking him about that. I said, “Could a whole new legislature come in and say, ‘Look, this is not legal anymore,’ and cut it off completely?” It’s probably not likely that it would just stop it, but the regs could become tighter, it could become more restrictive, it could be more limited in the number of licenses. This was a Democrat that I was talking to, and he said, “You know, our point was just to get something moving. If it doesn’t happen in 2023, it’s OK.” I was kind of surprised that there was not more pressure, but I think people want to do it right, as opposed to pushing something through.
What can Virginia learn from other states?
I have started reading everything I can get my hands on the industry in other states.
I was just reading where California, I believe, has rewritten a bunch of their regs. We’re not the first, so we can learn from others’ mistakes. We can use those examples of what their regs are, and how they’ve handled situations, and then customize it for Virginia, what’s best for our citizens, both the users and the producers.
Will other states be open to helping Virginia?
It will help [the industry] nationwide if we’re successful. But I think there’s probably going to be a little bit of competition: Don’t be stealing our market. So it’ll have to be handled with finesse for sure.
Are you working with the medical marijuana industry?
At this point, it is controlled by the Pharmacy Board. But I think there’s some delay on some of their reg writing. I don’t know where they are, but I think they’re not fully up and going yet. But I think it’s also the intention that they will be combined, which makes sense because the production is going to be very similar. The harvest and the THC levels and those sort of things are going to be different, probably, but we will always make sure we’re always very much in step with the pharmacy board whenever that transition occurs.
There are some very good medical uses for it and we would like to make sure that those who need it have access to that. … People who suffer from sleeplessness, cancer, children with … seizures.
If it’s regulated, you know what you’re getting.
Right. The CBD that’s being sold — you can walk into almost any store — the mattress stores sell the stuff — and you have no idea what the strength is. I know some people aren’t so keen about the government telling them so much, but in this case, I would like to be able to look at a label and know for certain that it is what they say it is, and that there’s education about whether that’s safe for me or my child.
Will we see both indoor and outdoor cultivation?
There will be some opportunities for both. Indoor cultivation, there’s a lot of pluses for that, not just for cannabis.
If the initial investment can be made, ultimately you have better control of the whole environment. I don’t know what farmer wouldn’t love to wake up in the morning and say, “I know how much rain I’m going to get today, I know how much sunshine I’m going to get.” But you can only grow so much corn indoors.
As I understand it, there are operations already in Southwest Virginia for growing hemp that are hoping to be able to convert. You look at corn fields out in the country — the fields are just enormous and vast. Well, you’re talking about a product that needs to be regulated and could be a potentially valuable product, so there’s going to have to be some way of controlling access to the general public to these facilities. That may impact people’s decision [about indoor vs. outdoor growing] — do you just plant the back 50 and hope nobody gets to it?
What other changes might we see to the state’s agriculture sector?
If the production of cannabis really took off, it could have an impact on our agricultural infrastructure. Let’s say that our farm stores, especially in an area that grows mostly corn, silage, those kinds of things, even cattle — they focus on those industries. If they think, “You know what, our money’s going to be in helping people grow cannabis,” they’re not going to focus on some of these other crops.
The infrastructure of equipment, specialized equipment — if the dealers focus on that as opposed to the other types of equipment that they’re used to selling, will they just expand or will they quit selling some of the others?
You have only a certain amount of resources, and if something takes up an inordinate amount of resources, other commodities are going to suffer.
We do have a lot of areas that do have high population where land is very expensive and not affordable perhaps to grow any agricultural products, even a high-cash crop as cannabis could be. But there’s still other open land.
But you know, we’re not making any more land, and if anything, more of it is getting developed all the time. So at some point there will be a choice. When you have any type of limited resource, are you going to grow corn, are you going to have a dairy, or are you going to grow cannabis?
I don’t think that’ll be a problem as quickly as other issues. And I don’t mean to be negative about it at all, it’s just some of the things that I have been thinking about: How will it impact the resources that other current farmers have? When all of a sudden they find out that their extension agent is focusing most on helping cannabis growers and not available for them, or will we have to hire more people to do that sort of thing.
Whenever you have a new kid on the block, it’s going to have some sort of impact on the people that are already there.
I remember one time, oh, a couple years ago, there was a company that was going to move into Southwest Virginia and process cherry flavoring. There was a kind of a bush that could be grown in a field quickly, and it would be a natural cherry flavoring, which was apparently considered pretty valuable. They were going to have this processing plant up and running very quickly, and people were going to town, buying up land, in the hopes that they could get this product growing and get a contract with this company to have it produced all right there, and it was going to be wonderful.
The problem is that the timeframe from cutting that crop to when it had to be produced was like hours. I mean, you had to do it immediately. So the devil’s in the details, and people lost out. They lost money. They bought land that was now not being used. The plant never got built.
It was just an example of how people were very hopeful that this would be the next best thing, and kind of jumped before all the details were out, and some local people were harmed and invested in property that ended up not having any value, or minimized value.
You do think about these things. I have seen it happen before, so naturally it’s easy for me to say well, yeah, this happened, is it going to happen again?
There’s going to be give and take, and it’ll balance out. I don’t mean to be a doomsayer or anything like that, I’ve just been thinking about these things.
The good side is, it could also supplement [the industry], because more and more farms are having to diversify. Agriculture is the No. 1 industry in Virginia, and I think more than 90%, probably even higher than that, are family-owned farms. If you want your son or daughter to come back to the farm, or that son or daughter wants to get married and have a family, then they have to figure out, we either have to buy more cows, milk more cows, start another enterprise, do something.
So [cannabis cultivation] could very well give two things: It could give families an opportunity to bring their children or siblings or whatever to come back to the farm. It also is going to bring, I think, a whole new group of people that may not have farmed before. … Farming communities stick together, they’re very conducive to going to meetings and sharing ideas. They’re also very independent; they have to be because you spend a lot of time by yourself. But this whole new crowd is coming in, and they may not have ever seen a cow or had mud on their feet, and now all of a sudden they’re going to be kind of running in the same circles, and I wonder how that’s going to work.
To give people an opportunity to be able to grow your own food or to be in the agricultural industry is a good opportunity. It’s a lot of hard work but it’s great people, and there’s just something wholesome and satisfying.
I hope that people that move in and think they’re going to get rich also value what that means, that it’s not an easy task, that you value the hard work, that you collaborate and that you think about the impact on the environment. Farmers do, they always have. They don’t do it for the money, and hopefully that doesn’t change.
Megan Schnabel is a reporter for Cardinal News. Reach her at firstname.lastname@example.org.