After vetoing legislation last month that would’ve established a retail market for cannabis, Virginia Gov. Abigail Spanberger (D) has agreed to establish a market through an addition to the state budget.
The compromise between Spanberger, Fairfax County Del. Paul Krizek (D-16) and state Sen. Lashrecse Aird (D-13) would allow recreational marijuana sales to begin on July 1, 2027. The governor’s office says this allows time for the Cannabis Control Authority to develop regulations, testing and safety standards and oversight framework.
“Today, I’m excited to stand alongside Senator Aird and Delegate Krizek to announce that we have agreed to a compromise proposal that will create a safe, legal, and well-regulated cannabis marketplace here in Virginia — with recreational sales beginning on July 1, 2027,” Spanberger said in a release. “We will do it in a way that protects consumers, targets the illicit market with clear enforcement and regulatory authority, and creates a more competitive market for small businesses and farmers.”
Spanberger had vetoed the General Assembly-passed versions of Krizek’s HB 642 and Aird’s SB 542 on May 19. The bills originally proposed a start date of Jan. 1, 2027 for the market. Before the veto, the General Assembly did not accept Spanberger’s substitute that proposed a July 1, 2027 start date and adjusted provisions of the retail market.
Krizek, who represents southeastern Fairfax County from Belle Haven to Mount Vernon, said the agreement helps build a market that is “legal, but fair, safe, and workable.”
“This compromise restores important support for small businesses, protects impact licensees from predatory investment, and gives microbusinesses a real opportunity to succeed,” Krizek said. “The benefits of legalization should not be limited to the largest and best-capitalized players, and this agreement helps ensure Virginia entrepreneurs have a fair shot to thrive in this emerging market.”
Aird said the lack of a framework for legal sales has enabled an illicit marijuana market to thrive after Virginia legalized adult possession of the drug more than five years ago.
“This compromise gives us a smarter and safer path forward — one that protects consumers, keeps products tested and accurately labeled, and creates a legal marketplace that is affordable and accessible enough to actually compete,” Aird said. “Too many have suffered real harms for us to get here, and this agreement reflects responsible regulation that protects young people, gives Virginians a safe legal option and avoids criminalizing adult use.”
According to the governor’s office, the proposed retail market:
- Creates a maximum of 350 retail cannabis establishment licenses — comparable to commercial markets in other states — and increases the possession limit from 1 ounce to 2 ounces. The CCA would begin accepting applications for licenses on February 1, 2027.
- Strengthens child safety protections — including prohibitions on cartoon advertisements, requirements for child-safe packaging, and prohibitions on products sold in the shape of animals, fruits, vehicles, or humans.
- Authorizes the CCA to create escalating penalties for failing to do ID checks — including license revocation for repeated underage sale and requirements that retail stores be no less than 1,000 feet from schools, hospitals, playgrounds, and drug treatment facilities.
- Strengthens oversight of industrial intoxicating hemp — which is currently regulated by the Virginia Department of Agriculture and Consumer Services — by transferring regulation to the CCA.
- Allows the CCA to maintain a public licensee registry, establish a tip line for members of the public to anonymously report concerns about illicit practices, investigate the ownership and control interests of licensees, and develop policies regarding the audit of ownership and financial relationships across licensees.
- Allocates the revenue of cannabis sales towards early childcare and education, K-12 education, behavioral health programming for substance use disorder prevention and treatment programs, public health programs, and the Cannabis Equity Reinvestment Fund.
- The fund — established in the 2021 legislation — supports scholarships, workforce development, small business growth, reentry services, and community-based initiatives designed to expand opportunity, strengthen economic mobility, and help address longstanding disparities in communities historically and disproportionately targeted and affected by over-policing.
- Establishes a 6 percent state tax rate on cannabis products to transition Virginia to a regulated market from the current illicit market. After July 1, 2029, the state tax will increase to 8 percent to generate additional revenue for education and public health programs. The bill further allows localities to adopt an additional 1-3.5 percent local tax combined with the existing retail sales and use tax.
The agreement would also end the 25:1 hemp ratio introduced by former Gov. Glenn Youngkin’s administration. The allowance restricted products to 2 mg of THC, the main ingredient in cannabis that produces a psychological effect, but the amount could be increased if it followed a ratio of 25 times more cannabidiol (CBD) than THC.
Spanberger’s office said this policy “allowed highly intoxicating THC products to proliferate in Virginia with limited oversight.”
The state budget must pass before July 1 to avoid Virginia’s first-ever partial government shutdown. Budget divisions remain over a sales and use tax exemption for data centers that Virginia Senate leaders want to end.
Image via Rick Proctor/Unsplash
