Virginia will ring in the New Year with renewed momentum toward adult-use cannabis sales. After years of roadblocks following the legalization of adult-use cannabis possession and home cultivation in 2021, Virginia finally appears poised to launch a regulated adult-use cannabis market with statewide license caps, robust proximity protection and setback requirements among awarded licensees and adult-use product sales commencing as soon as November 1, 2026. When Governor-Elect Abigail Spanberger takes office on January 17, 2026 and succeeds current Governor Glenn Youngkin, long a vocal critic of adult-use cannabis sales, the stars will be aligned for what many expect to be an accelerated launch of a recreational market under the jurisdiction and oversight of the Virginia Cannabis Control Authority (“Authority”). Indeed, Governor-Elect Spanberger promised as much on the campaign trail this past fall and, in the wake of her decisive November election win, doubled down on her commitment by pledging to sign legislation establishing a regulated retail system in the Commonwealth.

That forthcoming legislation, expected to be introduced in early 2026, will almost certainly incorporate the recommendations of the Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market (“Joint Commission”). The Joint Commission was formed earlier this year and is tasked with, among other things, “oversee[ing] the administration of responsibilities assigned to the Authority under the Cannabis Control Act” and “oversee[ing] the implementation and enforcement of cannabis-related laws and regulations.” The Joint Commission’s legislative recommendations for commencing and regulating an adult-use market were recently published following a commission meeting on December 2, 2025.

The recommendations, which take the form of a matrix of modifications to statutory language contained in recent cannabis bills HB2485 and SB 970 (both vetoed by Gov. Youngkin in 2025), promise to catalyze development of an adult-use market while at the same time protecting consumers, children and other vulnerable populations. The recommendations would also formalize the licensing framework and application process for businesses in the adult-use cannabis supply chain, including the establishment of license caps for certain cultivation and retail businesses.

Regarding timelines for key licensing activities, the recommendations would:

• Require the Authority to:
  • Start accepting marijuana establishment license applications by July 1, 2026 and prioritize:
    • (1) Applications for temporary Direct-To-Consumer (“DTC”) microbusiness licenses (with the Authority to issue up to 100 by September 1, 2026).
      • Note: Temporary DTC microbusinesses would be allowed to begin authorized cultivation and processing operations, but could not engage in retail sales until November 1, 2026. The DTC microbusiness program would sunset once the Authority certifies at least 100 retail marijuana stores are operational statewide or once 24 months have elapsed from the program launch, whichever occurs first. Upon expiration of the program, the DTC microbusiness licensees could apply to convert to a standard microbusiness license.
    • (2) Streamlined applications for pharmaceutical processors and industrial hemp growers or processors.
    • (3) Applications for “impact” licenses, microbusiness licenses, and Tier I and Tier II cultivation facility licenses.
  • Process the above-described priority applications and issue licenses for such entities prior to November 1, 2026.
• Allow retail sales to commence on November 1, 2026 as long as conditions of licensure are met by licensees.

Regarding the obligations of the Authority, the recommendations would:

• Require the Authority to:
  • Develop and provide consumer education on responsible cannabis consumption and health risks and other dangers associated with consumption.
  • Conduct at least one annual audit of ownership and financial relationships across all licenses AND to “investigate the ownership and control interests of all licensees, approve or deny ownership, financing, management, and brand-licensing agreements or contracts, and issue divestiture orders as deemed appropriate.”
  • Promulgate regulations that establish an approval process for the Authority to approve or deny ownership, financing, management, and brand-licensing agreements.
  • Promulgate regulations to establish procedures governing ownership disclosure, prior written approval for the assignment, sale, or transfer of any license or any change in ownership or control, and background investigations of transferees. Such regulations shall (i) require that ownership interests be traced through all intermediary entities to the ultimate beneficial owners and (ii) include provisions specifying that a change of control occurs upon the (a) acquisition of 20 or more of equity or voting power; (b) execution of any instrument conferring appointment or removal rights over managers; or (c) cumulative transfers totaling 20 percent or more within any twenty-four-month period.
  • Promulgate regulations to establish market-concentration thresholds to prevent undue market concentration.
• Specify that for the purposes of the limit on multiple licenses awarded to one person, “interest” includes direct or indirect equity interest in an entity, regardless of percentage, including interests of 0.01% or less.
  • Note: Pursuant to HB2485 “(i) no person shall be granted or hold interest in more than five total licenses, not including marijuana transporter licenses, issued pursuant to this subtitle or more than one tier V marijuana cultivation facility license and (ii) no person that has been granted or holds interest in a marijuana cultivation facility license, marijuana processing facility license, marijuana transporter license, or retail marijuana store license shall be issued or hold interest in a marijuana testing facility license.”
• Provide that no license shall be assigned, sold, or transferred, nor shall ownership or control be changed, without prior written approval of the Authority. Any change without such approval is void and shall constitute grounds for immediate suspension or revocation of all affected licenses.

Regarding the licensure process, the recommendations would:

• Require the Authority to:
  • Provide for independent audits of license lottery processes and publish any such lottery processes and the results of all lotteries on a public dashboard.
    • Note: This indicates that the Authority may award certain license types by lottery, though SB 970 and HB 2485 do not explicitly reference a lottery.
  • Suspend or revoke any license if it finds that the licensee is not operational within 24 months of the issuance of the license.
• Modify the limitations on the number of each marijuana establishment license type so that there is still a maximum of 350 licenses for retail establishments and a maximum of 10 for Tier V cultivation facilities (i.e., the highest tier, up to 35,000 sq. ft.), but vest the Authority with discretion to establish the limits for all other license types (processing facilities, Tier I cultivation, Tier II cultivation, Tier III cultivation, and Tier IV cultivation) by regulation.
• Add a microbusiness license type (which would authorize the licensee to cultivate, process, and sell marijuana or marijuana products) and establish canopy limits for microbusinesses as follows: indoor 3,500 square foot and outdoor 10,000 square feet.
• Add marijuana delivery operator license type that would allow the licensee to delivery marijuana from a retail marijuana stores or micro businesses to consumers.
• Require marijuana establishment license applicants to enter into a labor peace agreement with a bona fide labor organization.

Regarding the location of retail stores and local control, the recommendations would:

• Change required minimum distance between retail marijuana stores from 1,000 feet to one mile.
• Provide that a retail marijuana store cannot be located within 1,000 feet of places of religious worship, hospitals, schools, playgrounds, child day programs, substance use disorder treatment facilities, or government facilities.
• Remove the option for municipalities to hold a local referendum to prohibit sales of marijuana (but local zoning rules would remain in place).
• Raise the local tax from 2.5% to “up to 3.5” percent.
  • Note: This local tax would be in addition to the 8% state excise tax.

Regarding the conversion of other license types, the recommendations would:

• Require the Authority to:
  • Create a streamlined process for the conversion of “pharmaceutical processor” licenses (i.e., vertically-integrated medical cannabis licenses) into applicable marijuana establishment licenses for any location in which a permit has been issued (up to 9 licenses) upon the payment of a one-time $10M conversion fee.
  • Create a streamlined application process for no more than five industrial hemp processors or growers who are or who were previously registered with the Virginia Department of Agriculture and Consumer Services to obtain a cultivation license upon the payment of a $500,000 conversion fee to the Authority.

Looking ahead, with Governor Youngkin no longer wielding veto power, cannabis businesses and enthusiasts alike have renewed hope that 2026 will (finally) be the year that adult-use cannabis sales become a reality in Virginia. We will continue to monitor and report on the work of the Joint Commission and the introduction of the forthcoming legislation. In turn, our Cannabis License Application Team is already mobilizing to assist prospective licensees on the Authority’s licensing requirements and to prepare materials and documents for the looming license application window, which is anticipated to open mid-2026. Please do not hesitate to contact us with any questions about these meaningful developments in Virginia or for assistance preparing your business to enter this new adult-use cannabis market.