Virginia Governor and Lawmakers Announce Agreement on Legal Cannabis Sales

RICHMOND – Governor Abigail Spanberger, State Senator Lashrecse Aird (D), and Delegate Paul Krizek (D), announced they had reached a compromise to establish a legal, regulated retail cannabis market. This marks the culmination of a process that began with the decriminalization of Cannabis possession and the passage of measures to expand access to the medical Cannabis program in 2020.

Under the agreement, retail sales would launch on July 1, 2027, giving the Virginia Cannabis Control Authority (CCA) time to write regulations and build out testing and licensing systems. The CCA would start taking license applications on February 1, 2027. The legislation caps retail licenses at 350 statewide, splitting the difference between the figure lawmakers originally passed and the lower cap the governor had sought. It also raises the legal possession limit for adults from one ounce to two ounces.

On taxes, the bill sets an initial state rate of 6%, rising to 8% after July 1, 2029. Localities could add 1 to 3.5% atop existing sales tax – a phased approach, Aird said, gives licensed retailers room to compete with the unregulated market that took hold after possession became legal without a retail system to match.

The deal also closes what the governor’s office called the “25:1 hemp loophole,” a provision from the prior administration that let intoxicating THC products circulate with little regulatory oversight. Regulation of industrial hemp would shift from the state agriculture department to the CCA.

The agreement adds child-safety requirements, including bans on cartoon imagery in advertising and on products shaped like animals, fruit, vehicles or people. Retail stores would have to sit at least 1,000 feet from schools, hospitals, playgrounds and drug treatment centers, and the CCA would gain authority to revoke licenses for repeated sales to minors.

Public consumption penalties would rise to a $250 civil fine, up from $25, though the increase would not take effect until July 2027, leaving lawmakers room to revisit it before then. Cannabis businesses would also need labor peace agreements with workers. Sales revenue would flow toward early childhood and K-12 education, behavioral health and substance use programs, and the Cannabis Equity Reinvestment Fund, which supports scholarships, workforce development and reentry services in communities affected by past drug enforcement.

NORML welcomed the broader agreement but flagged concern over the higher public-consumption penalty. Aird called the framework a path that protects consumers without criminalizing adult use; Krizek said it restores protections for small businesses and impact licensees against predatory investment.

The Cannabis provisions are attached to the budget bill, which must pass by June 30  to avoid a lapse in state spending authority.

For now, this compromise settles a debate that has run since Virginia legalized possession in 2021 without a retail system to support it. The 2027 timeline gives operators a longer runway than earlier proposals, and the license cap and tax structure suggest regulators want the market to establish itself before the full 8% rate applies. For MSOs eyeing the mid-Atlantic, the framework offers a clearer entry point than the gray-market conditions of recent years, though the labor peace requirement and proximity rules will narrow the field of likely applicants. The real challenge comes once the CCA opens applications in 2027 and the state learns how many of the 350 licenses operators are ready to use.