The Virginia legislature and Governor Abigail Spanberger remain at a stalemate over a bill that would make the Commonwealth the latest state to approve an adult-use cannabis market.

After years of false starts—largely precipitated by former Governor Glenn Youngkin, who twice vetoed adult-use legislation during his term—there was renewed hope that the Commonwealth would enact an adult-use cannabis law this legislative session. Indeed, the election of Governor Spanberger last fall and the return of a Democratic trifecta represented Virginia’s best opportunity since 2021 to finally push an adult-use cannabis law across the finish line. But instead of striding across the finish line and validating the work of the Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market and cannabis stakeholders throughout the Commonwealth, the Governor and legislature have stumbled.

In March, the legislature passed companion bills (House Bill 642 and Senate Bill 542) proposing to commence retail cannabis sales as early as January 1, 2027. Rather than sign the legislation into law, Governor Spanberger returned the bills to the legislature on April 13, 2026, with a substitute containing significant proposed amendments, including a six-month delay to the start of retail sales and a host of other substantive changes. On April 22, 2026, the legislature rejected the Governor’s proposed amendments and sent the original legislation back to the Governor’s desk. The Governor now has until May 22, 2026, to either sign the bill as passed by the legislature, veto it, or allow it to become law without her signature. If she vetoes the bill, lawmakers would have to start anew in 2027—a painful prospect after years of stymied efforts.

The disagreements between the legislature and the Governor are more than trivial and reflect different visions for how Virginia’s adult-use market should be launched and regulated. The most prominent difference concerns the start date for retail sales. The legislature’s bill would permit adult-use sales to commence on January 1, 2027, while the Governor’s substitute would delay the commencement of sales until July 1, 2027, citing the need for “additional time to implement a legal market safely and curb the illicit market.”¹

The two versions also diverge on several structural elements of the market, including license caps for retail establishments. Critically, the legislature’s bill would cap retail marijuana store licenses at 350 before January 1, 2028, whereas the Governor’s substitute would reduce the cap to 200 and extend the limitation through January 1, 2029. For prospective licensees, this difference is meaningful. The Governor’s version would mean significantly fewer retail opportunities during the market’s critical early years, intensifying competition in the license lottery and increasing the value of each license.

The legislature and the Governor also propose different tax structures for the adult-use market. Both versions would impose a 6% state cannabis excise tax (in addition to the state’s 5.3% retail sales and use tax and local taxes of up to 3.5%), resulting in a combined tax rate of approximately 12.3% to 14.8%, depending on the locality. However, the Governor’s substitute would increase the excise tax to 8% effective July 1, 2029, raising the combined tax ceiling to approximately 16.8%. For prospective licensees building multi-year pro formas, a roughly two-percentage-point increase within three years of market launch is significant.

Finally, for existing pharmaceutical processors (i.e., current medical licensees in the Commonwealth), the conversion pathway and the $10 million dual-use fee are consistent across both versions. However, the Governor’s substitute would shift the application window for pharmaceutical processors seeking dual-use privileges from September–December 2026 to January–May 2027, consistent with the delayed launch date for adult-use sales.

We will continue to follow these developments in Virginia closely and will report on any further action by the Governor—or any indication of her intentions—between now and the looming May 22 deadline.

 

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1https://www.governor.virginia.gov/newsroom/news-releases/2026/april-releases/name-1116400-en.html