Virginia Legislature Advances Competing Bills To Launch Adult-Use Marijuana Sales

The Commonwealth of Virginia has inched closer to (finally) launching an adult-use marijuana marketplace nearly 5 years after it legalized adult-use possession and home grow activities. On February 17, 2026, the Virginia House and Senate passed competing versions of a bill to legalize and regulate adult-use marijuana sales in the Commonwealth. Both bills (HB 642 and SB 542) were first introduced on January 13, 2026 following closely on the heels of the  recommendations of the Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market. Substitute bills were adopted by each chamber on February 11, 2026 (House) and February 12, 2026 (Senate), respectively. 

As described more fully below, the House and Senate bills are similar in many respects, including that they would both permit adults aged 21+ to purchase up to 2.5 ounces of marijuana/marijuana products in a single transaction and they would both license discrete activities within the cannabis supply chain (e.g., cultivation, processing, retailing, delivery). However, they also diverge in certain key areas, including the proposed taxation of marijuana and marijuana product sales. Now that the bills have passed their respective chambers of origin, House and Senate leaders are expected to negotiate and reach a compromise on the material differences between the bills. Critically, and as we  discussed previously, new Governor Abigail Spanberger has been an ardent supporter of adult-use marijuana in the Commonwealth.

Both bills would:

• Establish the Virginia Cannabis Control Authority (the “Authority”) as the prime regulator and licensor of businesses in the adult-use marijuana supply chain. Note, however, that SB 542 would require that, by January 1, 2028, the Authority shall become a division of the Virginia Alcoholic Beverage Control Authority to form the Virginia Alcoholic Beverage Cannabis Control Authority.
• Require the Authority to announce the commencement of a licensing period in advance of accepting applications, including the types of licenses available, the number of licenses (if limited), the date applications will begin being accepted, and the deadline for applications.
• Authorize the Authority to begin accepting applications as soon as July 1, 2026.
• Require applicants to submit applications in the form approved by the Authority, which would include background checks and fingerprinting, disclosure of any general partner, limited partner with 10% or more voting rights, officer, director, or shareholder owning 10% or more of capital stock, or member owning 10% or more of membership interest in a limited liability company, and submission of a labor peace agreement with a bona fide labor organization
• Authorize the following adult-use license types:
  • Marijuana Cultivation Facility  (5 tiers)
  • Marijuana Processing Facility
  • Retail Marijuana Store
  • Microbusiness
  • Marijuana Transporter
  • Marijuana Delivery Operator
  • Marijuana Testing Facility
• Require the Authority to award licenses using a qualified lottery if the number of qualified applicants seeking a type of license exceeds the number of licenses of that type that are made available
• Require the Authority to set and collect application fees and annual license fees.
• Impose caps on the number of Tier V cultivation licenses (5 total) and retail marijuana stores (350 total). Both bills also state that, beginning January 1, 2028, the Authority shall determine the number of retail marijuana stores and Tier V cultivation facility licenses consistent with identified goals.
• Limit the number of licenses per person/entity to no more than five total licenses (not including marijuana transporter licenses) or more than one Tier V marijuana cultivation facility license. In addition, both bills state that: 1) no person holding interest in a cultivation, processing, transporter, delivery, retail, or microbusiness license may hold interest in a marijuana testing facility license; and 2) no person holding interest in a microbusiness license may hold interest in any other marijuana establishment.
• Prohibit sales/assignments/transfers of licenses without prior written approval of the Authority. Both bills would also prohibit sales/assignments/transfers of >49% interests in “impact licenses” for 5 years.
• Prohibit localities from opting out of the adult-use marketplace, though both bills would allow localities to:
  • Adopt ordinances fixing hours during which marijuana and marijuana products may be sold.
  • Adopt ordinances that decrease the minimum distance requirements between retail marijuana stores and microbusinesses, or between such establishments and places of religious worship, hospitals, schools, playgrounds, child day programs, substance-use disorder treatment facilities, or government facilities.
  • Adopt and enforce local zoning and land use requirements and business license requirements.
  • Adopt ordinances prohibiting consumption in local public parks, playgrounds, public streets, or sidewalks.
• Establish potency caps of 10 mg THC per serving and 100 mg THC per package.

Finally, neither bill would require applicants to secure a place or premises until the final stage of the license approval process. Following selection in a lottery for preliminary license approval, applicants would have 18 months to provide the address and legal property description of the location where the licensed marijuana establishment will operate.

Key differences between the bills include:

• The projected launch date for adult-use cannabis sales: HB 642 proposes to commence adult-use sales as soon as November 1, 2026, while SB 542 proposes to commence adult-use sales as soon as January 1, 2027.
• The proposed conversion fee for pharmaceutical processor licensees: HB 642 would require a one-time $5 million fee, while SB 542 would require a one-time $15 million fee. Note that under both bills, pharmaceutical processors would also be required to apply to the Authority for “dual-use” privileges, which application would require submission of a detailed medical cannabis program preservation plan.
• The taxation of the marijuana and marijuana product sales: HB 642 proposes a 6% state cannabis tax plus a local tax of not less than 1% but not greater than 3.5%, while SB 542 proposes a 12.875% state cannabis tax and 3% local tax. Note that while SB 542 has a higher state cannabis tax rate, it also caps the general sales and use tax on such products at 1.125%

We will continue to monitor the progress of both bills and the attendant negotiations between the House and the Senate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.