Cannabis-related stores are popping up across Virginia amid confusion over the state’s marijuana laws

September 6, 2023 Staff Reporter 810 Views 0 Comments

The parking lot for The Zarati Shop, located in a former trailer warehouse off Lee Highway in Abingdon, was busy on a recent Wednesday afternoon, with vehicles, some with Tennessee plates, constantly coming and going.

At the door, several employees checked identification to make sure customers were at least 21 years old.

Those who stepped into the large, smoky space were immediately hit by the pungent and unmistakable aroma of marijuana. People milled around in a relaxed, party atmosphere, many of them smoking.

The building, filled that day by about 40 people, has two large rooms like wings on either end. On one side sit several gaming machines, a pool table, a foosball table, a couch and a TV. Against the far wall, a cash register is surrounded by delicate glass knickknacks.

On the other side, a line of about a dozen people snaked around the room, ending at a cash register. One customer showed off the gift he said he’d received with his purchase: a finger-length bit of dried material shaped like a thin mushroom.

A flyer handed out at The Zarati Shop in Roanoke County. Photo by Dwayne Yancey.

About 130 miles away at a strip shopping center in the Hollins area of Roanoke County in early August, two women waved signs stating “Free Pre-Roll” and “Ask Me About Zarati” while standing outside a new store also called The Zarati Shop.

The store was brightly lit, and there was no smell of pot in the air. A clerk described the business as an “agricultural grow” store that also engages in “adult share.”

Colorful stickers were offered for sale to customers, and some gardening implements and a number of bongs were available for purchase.

On a recent night, a Cardinal News employee bought a set of pruning shears for $15, showed the clerk a flyer that said “1 FREE PRE” and “ADULT SHARING” and was handed a plastic baggie that contained what appeared to be a marijuana cigarette.

Cardinal News has sent the sample to a lab for testing and is awaiting results.

The stores are among a growing number of cannabis-related retail shops that are opening across Southwest Virginia and other parts of the state. Some of these stores are referred to as marijuana “pop-up shops” by industry officials, although a couple in Bristol and Abingdon have been open for about two years.

A “gift with purchase” from the Roanoke County Zarati Shop. Photo by Dwayne Yancey.

Some of the stores “gift” marijuana to customers when they buy something like a T-shirt, hat, sticker or CBD product; an employee at one even offered to sell the art off the wall. Others operate like clubs whose members “share” with new members who buy something or pay for membership.

The products are unregulated, untaxed and untested, although a couple of the shops say they offer in-store testing. The dollar amount of the purchase determines the quality and quantity of what the customer receives.

The shops operate amid much confusion about the state’s marijuana laws, which in 2021 legalized personal possession of cannabis but didn’t create a legal retail market. The stores have caught the attention of state Attorney General Jason Miyares, who recently issued an opinion that gifting is illegal.

‘Abolish[ing] the stigma’

In Southwest Virginia, dozens of cannabis-related stores are now open, and that doesn’t include the many vape and smoke shops.

In Abingdon, just down the hill from the old Kmart shopping center, is The Good Vibes Shop, owned by Teresa Green and a partner, who own nine shops of the same name across Southwest Virginia.

Teresa Green and a partner own several Good Vibes shops across the region, including this one in Abingdon. Photo by Susan Cameron.

The store in Abingdon resembles a spa or a medical office. Its small waiting room is quiet and softly lit, with a faint scent of incense and a window staffed by the store’s manager.

Green said she’s originally from Bristol and returned to the area from Florida to open what she calls “adult share stores.” The Good Vibes stores do not gift cannabis, which is illegal, she said.

Asked how the sharing arrangement works, Green said, “That’s as clear as I can get with it.”

She said she’s aware of the attorney general’s opinion, adding that anyone can have an opinion.

Green said she also hopes to help “abolish the stigma on cannabis.”

Her other stores are in Wytheville, Marion, Radford, Blacksburg, Roanoke County and Bluefield, and she’s opening another in the Exit 7 area of Bristol in September.

The attorney general’s April 20 opinion was issued at the request of Tazewell County Commonwealth’s Attorney Chris Plaster.

Miyares said that based on the information provided, “a CBD store or smoke shop engages in the illegal distribution of marijuana, in violation of Code 18.2-248.1 when the shop ‘gifts’ marijuana to customers contemporaneously with, or contingent upon, the sale of merchandise as described in the scenario presented.” Although sharing is mentioned in the full opinion — which says the practice is illegal if you have to buy something to receive cannabis — the word sharing is not mentioned in the conclusion.

Multiple attempts to contact Plaster about why he sought the opinion were unsuccessful, as were efforts to talk about these shops with a number of other commonwealth’s attorneys and law enforcement officials in Southwest Virginia, including Bristol officials, Washington County Sheriff Blake Andis, Washington County Commonwealth’s Attorney Joshua Cumbow, Abingdon Police Chief Jon Holbrook and Russell County Commonwealth’s Attorney Zach Stoots.

Greg Habeeb, a former Republican state delegate from Salem, president of Roanoke-based Gentry Locke Consulting, and representative of the Virginia Cannabis Association, said he’s talked to several in law enforcement who are angry about what’s happening.

“There are so many gray areas that it’s just become impossible to enforce,” Habeeb said. “So, a lot of law enforcement just aren’t enforcing it. They feel like their hands are tied.”

Doing business in a legal gray area

Habeeb and many others attribute the proliferation of these businesses to Virginia’s new marijuana laws, which have resulted in a lot of confusion about what is and isn’t legal. Those operating the stores are taking advantage of that confusion and legal gray areas, according to some local legislators and cannabis industry officials, while others say the shop owners are merely taking advantage of the only option open to them.

Three officials interviewed for this story compared what’s happening in Virginia to the “Wild West.”

One was longtime Roanoke Commonwealth’s Attorney Donald Caldwell. “I don’t keep up with the popup marijuana stores and so I really don’t have an opinion, except to say that … it’s the Wild West out there,” he said. “To simply legalize marijuana and not have any restraints on it. And so, I think God knows what’s going on there. I certainly don’t.”

In 2021, with a Democratic governor and Democrats in control of both the House of Delegates and Senate, Virginia became the first state in the South to legalize cannabis. But legislators failed to set up a retail market for recreational marijuana, opting instead to come back to that the next year.

But that never happened. Come November, Republican Glenn Youngkin was elected governor and Republicans gained the majority in the House. Since then, Youngkin appears to want nothing to do with a retail market for marijuana and all legislative efforts toward that end have gone nowhere.

What is legal in Virginia is possession at home for personal use, four cannabis plants per household and public possession of up to an ounce for personal use.

Medical cannabis sold by a licensed pharmaceutical processor or dispensing facility is also legal.

The law also allows “adult sharing” of 1 ounce or less between adults who are 21 years old and older without the exchange of anything valuable. But the sharing can’t happen in a public place.

Amanda Reiman, chief knowledge officer with New Frontier Data, a cannabis research firm, said marijuana popups have opened in parts of the country like Washington, D.C., where cannabis possession has been legalized and sharing is allowed between adults but there’s no retail market. They also have been prevalent in New York state, which legalized cannabis but didn’t create an immediate retail market, she said.

“So you’ll see bodegas and other types of stores where people will come in and buy goods, which is legal, and give them money for those goods, which is legal,” Reiman said. “And then in exchange for that, they’re sharing cannabis with that person, but not charging any money for the cannabis, which is legal.

“So that’s really kind of the scheme in which these types of transactions exist, and until a state like Virginia actually has a store where somebody can go legally, give someone money in exchange for cannabis, you’re likely to continue to see this.”

Reiman cautioned that not all the owners of the stores are “nefarious,” saying they are doing what they can within the law. But there are others who are going to operate as long as they can by sharing or gifting and then shutting down and opening somewhere else, if necessary, she added.

The Zarati Shop on Lee Highway in Abingdon. A number of stores with the same name have opened across the region, including in Roanoke County. Photo by Susan Cameron.

On its website, The Zarati Shop touts community service and promotes concerts, including one at the Abingdon store earlier this year that featured country and rock singer/songwriter and rapper Jelly Roll, and family-friendly events.

The owner of The Zarati Shop in Abingdon could not be reached for comment. There are many shops across the region with that same name, but it’s not clear if they are owned by the same person.

If there were a legal retail market, there would be licensing and land use restrictions and public hearings. In other states, store owners have had to go before local boards and present a business plan. If the project gained local approval, they’d then have a lot of state hoops to jump through, Reiman said.

“All of this is to ensure they are selling to the right people and they’re located in a place that’s appropriate, so all of the cannabis zoning comes into play. Cannabis retailers may be zoned very differently because they have to be a certain distance from churches and schools,” she explained.

As it stands now, the stores can open just as easily as a T-shirt shop, and the community has no say over where and how cannabis is sold, she said.

Deciphering ‘legislative intent’

Like the attorney general, Jeremy Preiss, acting head of the Virginia Cannabis Control Authority, believes that the gifting and sharing of marijuana that’s occurring at some of these stores is illegal. The authority was set up by the General Assembly in 2021 and has three roles, according to Preiss: policy advising, regulating and educating.

“When legalizing limited possession and sharing of cannabis, the General Assembly, this is 2021, was very skeptical of various gifting schemes designed to circumvent the prohibition on retail sales,” Preiss said. “They looked at what was happening in Washington, D.C., and elsewhere with respect to those practices. They saw them [cannabis stores] proliferate just across the river and they wanted no part of gifting cannabis. So, as a result, when they legalized limited possession, limited private sharing, they expressly and broadly prohibited gifting schemes in the commonwealth.”

Ascertaining “legislative intent” is the primary objective when interpreting a statute, the attorney general said in his opinion. Courts presume that the words used were chosen with care and serve to “foreclose potential loopholes for schemes where there are transactions comprising direct or indirect exchanges that involve items of value in an attempt to circumvent the law,” the opinion states.

To stem some of the confusion, the authority has placed a growing library of educational resources on its website. One resource specifically addresses marijuana popup shops and another is about adult sharing vs. illegal exchanges.

Preiss said the authority also has answered questions from law enforcement and the public during seven town halls held in recent months across the state, including in Abingdon and Roanoke.

“We’re always willing to partner with law enforcement to help them understand what’s lawful and what isn’t,” he said.

A recent drug bust

The only sheriff or police chief in Southwest Virginia contacted who would talk to Cardinal News for this story was Russell County Sheriff Bill Watson, who said the only cannabis-related shop he was aware of in his county was in Lebanon, where there was a drug bust earlier this summer.

On July 19, three people were arrested at the Let’s Grow store following the execution of a search warrant, according to a news release issued by Stoots. The trio was charged with distribution offenses, according to the release.

The county sheriff’s office and Virginia State Police conducted “controlled marijuana transactions” and the purchased substance was analyzed and determined to be marijuana and not CBD, the release states.

“Marijuana is now legal to possess in small quantities, however, distribution is still illegal, and our office will prosecute this offense,” Stoots said in the release. “Let’s Grow sold marijuana on multiple occasions near Lebanon High School and those actions will not be ignored by law enforcement.”

Attempts to contact Stoots about the drug bust and the stores that share and gift marijuana were unsuccessful.

Watson said the three arrested were “outright” selling more than an ounce of marijuana and there was no gifting or sharing involved.

Asked his opinion about that practice at some stores, he said his job is to enforce the laws, which are created by the General Assembly. He also said there are people who are strongly for and against marijuana and everyone is entitled to their own opinion.

The sheriff said he had read the attorney general’s opinion stating the gifting arrangements are illegal.

The Virginia State Police released the following statement when asked about the cannabis stores: “The Virginia State Police is aware of such activity due to various complaints received. As a result of a recent Holston River Regional Drug Task Force investigation, three individuals were arrested and charged in Russell County.”

‘A regulated market versus … a free-for-all’

Del. Will Morefield, R-Tazewell County, has seen the marijuana retail stores open in his district and he’s concerned, mostly about the safety of the products. And although he’s a Republican, Morefield believes the answer is to establish a retail market.

Del. Will Morefield, R-Tazewell County

“We decriminalized marijuana in Virginia and unfortunately, I think the setup that we now have is only promoting the illicit market,” he said. “I don’t think the state has the resources to enforce the current laws. To garner enough tax revenue to do that, I believe would be to establish a retail sales market because … there are products out there that may be unsafe.”

Asked if he plans to introduce legislation to set up a retail market for marijuana, the delegate noted the governor’s disinterest in the subject but said if that changed and there was support in the House and Senate, he would consider it.

“In my opinion, I would rather see this fall under a regulated market versus just a free-for-all of unregulated marijuana floating around the streets right now,” Morefield said.

State Sen. Travis Hackworth, also a Republican from Tazewell County, said he has spoken with several commonwealth’s attorneys in his district who told him that they are seeing marijuana laced with fentanyl to give it more “buzz.”

State Sen. Travis Hackworth, R-Tazewell County. Photo by Markus Schmidt.

“It’s very dangerous and people can die from it,” he said.

Fentanyl is a powerful synthetic opioid that is up to 50 times stronger than heroin and 100 times stronger than morphine. Illegally made fentanyl is often added to other drugs because of its extreme potency, which makes drugs cheaper, more powerful, more addictive and more dangerous, according to the Centers for Disease Control and Prevention.

Until the General Assembly takes some action regarding its current marijuana laws, Hackworth said he thinks the issue of sharing and gifting at these stores will have to be settled in court, where a precedent could be set for how the stores operate.

What’s next in Virginia?

Many believe that Virginia’s best chance for establishing a retail market for recreational marijuana would come if Democrats can take back control of the House in the election in November, when all Senate and House seats are on the ballot. However, any legislation could still be vetoed by the governor.

Greg Habeeb in his Richmond office. Photo by Dwayne Yancey.

In late June, Joseph Guthrie, commissioner of the Virginia Department of Agriculture and Consumer Services, said Youngkin — increasingly rumored to be contemplating a presidential run — is “not interested in any further moves towards legalization of adult recreational-use marijuana.”

Habeeb said he thinks those who hold the position that the governor is taking are “so focused on their opposition to marijuana that they don’t recognize that the current situation is causing a proliferation of marijuana. And I know it sounds ironic or backwards to say the way you control the product is by allowing its sale, but that’s the reality and as long as it’s unregulated, unlicensed, untaxed, it’s just going to proliferate in the black market.”

Dwayne Yancey contributed to this story.