(The Center Square) – Virginia’s long-delayed marijuana retail market is facing another reset, as Democratic Gov. Abigail Spanberger’s proposed changes delay sales, reduce licenses and raise new questions about how much revenue the commonwealth can expect.
Lawmakers are set to take up those changes April 22.
The legislation, House Bill 642 and Senate Bill 542, would establish a regulated market for adult-use cannabis. Under the governor’s substitute, retail sales would not begin until July 1, 2027.
The proposal reduces the number of retail licenses from 350 to 200 before 2029 and keeps a 6% cannabis tax before increasing it to 8% beginning in 2029, while allowing local taxes to continue.
It also removes some dedicated funding streams tied to cannabis tax revenue, including allocations previously directed to early childhood programs and a cannabis equity reinvestment fund.
That means the state could collect marijuana tax revenue differently than originally planned, with fewer guarantees on where that money would go.
Spanberger said in a statement the changes are meant to create a “controlled, regulated, and responsible” market with stronger enforcement and consumer protections.
The substitute also expands enforcement and increases penalties tied to illegal sales, cultivation and underage access.
A fiscal impact summary from the Virginia Criminal Sentencing Commission found the changes could increase incarceration or supervision costs, assigning a minimum fiscal impact of $50,000 to the state’s correctional system.
That signals potential new costs for taxpayers tied to enforcement under the revised structure.
At the same time, lawmakers said the changes could reduce expected revenue.
During a Senate Finance and Appropriations meeting, Sen. Scott Surovell, D-Fairfax, said the state had been planning for cannabis-related revenue, including proceeds tied to retail licenses.
He said delaying sales and reducing licenses removes a revenue source lawmakers had already factored into the budget.
Administration officials said there has been no formal consideration of replacement revenue sources.
Lawmakers also raised concerns about timing.
They said many of the governor’s amendments were introduced after legislation had already passed, making it harder to plan the state budget and evaluate long-term impacts.
The changes drew pushback from the bill’s sponsors.
Del. Paul Krizek, D-Fairfax, and Sen. Lashrecse Aird, D-Henrico, said the governor’s substitute “substantially rewrites” the legislation and could make it harder for legal businesses to enter the market.
“The governor’s substitute represents a significant departure from the framework passed by the General Assembly, raising serious concerns about fairness, access and public safety,” Aird said.
They said reducing licenses and shifting decisions out of statute could limit access and create uncertainty for small businesses.
They also raised concerns about increased penalties, saying the proposal could move away from the original goals of legalization.
Krizek pointed to concerns that the changes would redirect demand to the illicit market.
Advocacy group NORML echoed those concerns, saying it could continue to drive consumers to the illicit market and delay the development of a regulated system.
Lawmakers will take up the governor’s amendments when they return to Richmond.
They can accept, reject or modify the changes before deciding the final structure of Virginia’s marijuana retail market.
The Center Square was unsuccessful prior to publication getting comment from Spanberger.
