“This is just going way over the top, as we warned everyone. They’re fining people and they’re being very aggressive about it.”
By Graham Moomaw, Virginia Mercury
Several Virginia businesses have been hit with five-figure fines this month as state officials start enforcing stricter new rules on the contents and labeling of hemp products to try to crack down on alternatives to marijuana.
The Virginia Department of Agriculture and Consumer Services had sent five non-compliance letters as of July 24, assessing penalties ranging from $13,000 to $97,500, according to the agency. The letters, sent under a new civil penalty structure that took effect July 1, give the business owners an opportunity to pay a reduced fine of $10,000 if they agree to bring their stores into compliance and meet other conditions.
The largest fine so far was sent to a store in Southwest Virginia’s Gate City called Tobacco Discount. Of 36 impermissible products that VDACS inspectors said they found, 27 had a concentration of intoxicating THC above the 0.3 percent legal limit, agency records show. Others contained synthetic forms of THC or had labels that bore a “significant likeness” to mainstream snack brands, particularly cereal bars with names like “Lucky Marshmellow” and “Berry Crunch.” Many of the products tested were gummies and cereal bars labeled as containing delta-8, a hemp-derived compound that can produce a high similar to marijuana.
Inspectors reported finding a total of 26 violations at the business, ranging from paperwork, labeling and ingredient problems to “a heavy accumulation of dead insects and insect fragments” in some areas of the store.The total fines assessed on the business added up to $97,500.
“If the same violations are cited in a future inspection, the assessed civil penalties will increase,” VDACS said in the letters detailing the new enforcement system.
Tobacco Discount did not respond to multiple requests for comment sent to email addresses and a phone number listed in the state inspection paperwork.
The hemp/THC legislation was one of the more complex and contentious bills the General Assembly passed this year, drawing strong opposition from critics who said the proposal was overly punitive and could threaten Virginia’s entire hemp industry.
“This is just going way over the top, as we warned everyone,” said Jason Amatucci, president of the Virginia Hemp Coalition. “They’re fining people and they’re being very aggressive about it.”
Since the new law took effect, there have been several news reports about hemp-focused businesses scaling back plans in Virginia or leaving the state altogether.
During debates, supporters said the tougher regulations and penalty system would put needed curbs on unregulated and potentially hazardous products that have become widely available in smoke shops and convenience stores due to Virginia’s continued lack of recreational marijuana dispensaries. Proponents of getting tougher on products like delta-8 pointed to an uptick in poisoning reports among minors sickened by too much THC. The heavy fines, some lawmakers said earlier this year, were meant to make it prohibitively expensive for businesses to continue selling products deemed unlawful.
The office of Gov. Glenn Youngkin (R), who signed the new law earlier this year, said the revamped system “takes critical steps to strengthen consumer safety and regulations around edible and hemp-derived products as well as delta-8 THC products.” The high volume of products found to be violating state rules, the governor’s office indicated, shows the law is working as intended.
“As evidenced by VDACS’s enforcement of businesses with over 150 product violations, the legislation is effectively ensuring Virginians’ safety,” said Youngkin spokesperson Macaulay Porter.
The tougher enforcement is underway despite the ongoing partisan standoff over the state budget. The budget proposal lawmakers considered earlier this year included $2.2 million to fund 15 new positions within VDACS to bolster regulation of hemp products. Republicans and Democrats have been unable to reach a budget deal, leaving the funding for the expanded program stuck in limbo.
“VDACS has been unable to fill the anticipated 15 new positions due to the budget impasse,” agency spokesman Michael Wallace said in an email.
The enforcement letters give affected businesses 30 days to pay the reduced $10,000 penalty as long as they sign a “consent resolution” acknowledging the violations and waive their rights to dispute the penalties. Businesses that want to fight the fines can request an “informal fact-finding conference” that allows them to challenge inspectors’ findings.
All five businesses that received fines under the new system had not submitted necessary forms to VDACS disclosing that they were selling edible hemp products, according to the inspection reports.
In addition to the action against Tobacco Discount, the agency has assessed penalties of $18,500 and $36,500 on two stores in Warrenton, a $34,000 penalty for a store in Galax and a $13,000 penalty for a store in Christiansburg.
Along with the new penalty structure, the law that took effect a month ago imposes new limits on how much THC hemp products can contain. To try to exempt hemp-based CBD products from running afoul of the law, products must now have a 25-to-1 ratio of CBD to THC.
Under the penalty structure VDACS has laid out in its enforcement letters, violations of THC limits carry the steepest fines. First violations can bring a $1,000 penalty and “potential referral to law enforcement.” Subsequent violations carry a $5,000 penalty.
Virginia has a regulated medical marijuana program. Lawmakers have also decriminalized possession of small amounts of pot, and the state now allows people to grow up to four marijuana plants at home. Efforts to legalize a recreational retail market have stalled because Democrats didn’t create one when they had full control of the statehouse in 2020 and 2021 and Youngkin has not supported efforts to expand legal weed.
Photo courtesy of Pexels/Kindel Media.
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