Marijuana Moment: Virginia Lawmakers Reach Deal On Final Bill To Legalize Recreational Marijuana Sales

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Virginia House and Senate lawmakers have reached a deal on a final bill to legalize recreational marijuana sales in the commonwealth.

While both chambers approved companion versions of the cannabis legislation this session, with amendments adopted along the way that more closely aligned them, there were still key outstanding differences to resolve after the latest votes earlier this month.

Among the key areas of dispute were the start date for adult-use sales, the proposed tax rate on marijuana and what agency would be responsible for regulating the market.

Following bicameral negotiations in a conference committee, lawmakers arrived at a consensus and released the final bill on Friday. Shortly thereafter, the Senate voted 21-18 to approve the deal. The House of Delegates is expected to vote to send it to Gov. Abigail Spanberger (D) by the scheduled end of the session on Saturday.

“This conference report reflects months of collaboration and negotiation among legislators, regulators, industry representatives, advocates and public safety stakeholders,” Sen. Lashrecse Aird (D), the bill’s Senate sponsor, said on the floor. “Many parties did not get everything they asked for, but everyone got what they needed to legally and safely operate a marketplace. This is the hallmark of a good compromise, and this legislation represents a balanced path forward to responsibly regulate Virginia’s cannabis market.”

Under the new agreement, members landed on January 1, 2027 for the launch date of adult-use marijuana sales, as included in the Senate bill. The House had previously proposed starting sales on November 1, 2026.

Cannabis would be subject to an excise tax of 6 percent as well as a 5.3 percent retail sales and use tax, while allowing municipalities to set a local tax of up to 3.5 percent, which is what the House had passed as compared to a higher overall rate proposed by the Senate.

With respect to regulatory control, the existing Cannabis Control Authority (CCA) would be tasked with overseeing the program, facilitating licensing and more. The Senate had suggested merging CCA with the Alcoholic Beverage Control Authority into a new agency called the Alcoholic Beverage and Cannabis Control Authority (ABC), but the bicameral agreement simply mandates a study into the idea of giving ABC a role in marijuana regulation.

One new item in the final agreement that wasn’t contemplated in either the House or Senate legislation concerns hemp, with lawmakers agreeing to have authority for its regulation transferred to CCA from the Department of Agriculture and Consumer Services.

Both chambers’ original marijuana sales proposals, sponsored by Aird and Del. Paul Krizek (D), aimed to give adults a legal means of buying cannabis, the possession and home cultivation of which was legalized in the state in 2021.

Here are the key details of the Virginia marijuana sales legalization legislation, SB 542 and HB 642:

• Adults would be able to purchase up to 2.5 ounces of marijuana in a single transaction, or up to an equivalent amount of other cannabis products as determined by regulators.
• Legal sales could begin on January 1, 2027.
• There would be an excise tax of 6 percent on cannabis sales as well as a 5.3 percent retail sales and use tax, and municipalities could set an additional local tax of up to 3.5 percent.
• The Virginia Cannabis Control Authority would oversee licensing and regulation of the new industry, and would also take on oversight of hemp, which is currently under the Department of Agriculture and Consumer Services.
• Revenue would be distributed to the Cannabis Equity Reinvestment Fund (30 percent), early childhood education (40 percent), the Department of Behavioral & Developmental Health Services (25 percent) and public health initiatives (5 percent).
• Local governments could not opt out of allowing marijuana businesses to operate in their area.
• Delivery services would be allowed.
• Serving sizes would be capped at 10 milligrams THC, with no more than 100 mg THC per package.
• Existing medical cannabis operators could enter the adult-use market if they pay a licensing conversion fee that is set at $10 million.
• Cannabis businesses would have to establish labor peace agreements with workers.
• A legislative commission would be directed to study adding on-site consumption licenses and microbusiness cannabis event permits that would allow licensees to conduct sales at venues like farmers markets or pop-up locations. It would also investigate the possibility of the Virginia Alcoholic Beverage Control Authority becoming involved in marijuana regulations and enforcement.

Prior to the Senate’s passage of its version of the marijuana sales bill, members clashed in committee about amendments that would have added new penalties for illegal cannabis activity.

The proposed changes at issue from the Courts of Justice Committee included penalties for consumers who buy from unlicensed sources, the recriminalization of cannabis possession by people under 21 and making sales a class 1 misdemeanor for a first offense and a crime punishable by mandatory jail time for a second offense. As revised, the bill would have also raised the penalty for unlicensed cultivation to a felony punishable by up to five years in jail and made it a felony to transport with intent to distribute cannabis across state lines.

But the Finance and Appropriations Committee reversed the amendments last month amid pressure from a coalition of advocacy groups that sent a letter to senators saying they undermined the “intent” of the legislation and the “will of the people” by adding criminal penalties for certain cannabis-related activity.

Overall, both chambers’ commercial sales bills have largely aligned with recommendations released in December by the legislature’s Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market.

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Meanwhile, certain GOP members have found themselves ideologically aligned with their Democratic colleagues throughout this legislative process, breaking with the majority of their caucus in support of creating a regulated marketplace for adults to purchase cannabis.

Since legalizing cannabis possession and home cultivation in 2021, Virginia lawmakers have worked to establish a commercial marijuana market—only to have those efforts consistently stalled under former Gov. Glenn Youngkin (R), who twice vetoed measures to enact it that were sent to his desk by the legislature.

Spanberger, for her part, supports legalizing adult-use marijuana sales.

Meanwhile, Virginia lawmakers last week passed a bill to protect the rights of parents who use marijuana in compliance with state law, sending it to the governor’s desk.

Legislators have additionally sent the governor a measure to provide a pathway to resentencing for people with prior marijuana convictions.

Legislation to allow patients to access medical cannabis in hospitals is also set for Spanberger’s action.

Photo courtesy of Philip Steffan.

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