Virginia cannabis retail plan in limbo after lawmakers reject Spanberger changes

Five years after Virginia legalized simple adult possession of marijuana, lawmakers are at an impasse over how to finally stand up a legal retail market, after the General Assembly last week rejected more than 40 changes proposed by Gov. Abigail Spanberger and sent the legislation back to her desk.

The move leaves Spanberger with a binary choice: sign a long-debated proposal to launch retail sales or veto it and prolong a yearslong stalemate that has left Virginia in a legal gray area, where cannabis is allowed to be possessed, but not legally purchased.

The governor’s substitute, which frustrated many lawmakers and stakeholders, would delay the start of retail sales to July 1, 2027, while restructuring much of the framework lawmakers had negotiated during the session.

“Five years ago, the commonwealth took the first steps to legalize marijuana — and for five years, the work sat unfinished,” Spanberger said in a statement. 

“We are working to set up a marketplace that is controlled, regulated, and responsible — because legal markets only succeed when there are clear guardrails and enforcement to back it up.”

Under her proposal, regulators would begin accepting license applications by Sept. 1, 2026, with various licenses issued in early 2027 ahead of the planned launch. 

Lawmakers reject extensive rewrite

At the heart of the dispute is the governor’s attempt to rewrite large portions of House Bill 642 and Senate Bill 542, the companion measures aimed at establishing an adult-use cannabis market in Virginia.

Del. Paul Krizek, D-Fairfax, who sponsored the House bill, said the modifications went too far.

“Some of the changes in there were fine, but most of them were contrary to where we had arrived through the legislative process,” Krizek said. Legislators and the governor “want a well-regulated, adult-use cannabis retail market in Virginia, and we’re going to get there. It’s just a process right now.”

Krizek said he hopes Spanberger ultimately signs the bill but acknowledged the uncertainty ahead.

“Whether it takes another session, or if she doesn’t veto it, then we’ll work with her on some of the changes that maybe she needs to see,” he said.

Pressed on whether the process has been challenging, Krizek did not hesitate.

“I can’t lie and say I’m not frustrated. I am a little bit frustrated, but she is the governor, I’m not the governor,” he said. “It’s a long process, but good legislation sometimes takes time.”

Spanberger, in a separate statement, said she intends to keep negotiating with lawmakers.

“I will continue to work with the patrons of the bills that are coming back to my desk to make sure that when these bills become law, we get it right,” she said. 

Shift to regulatory framework, tighter controls

The governor’s proposed changes would fundamentally shift how the legislation that lawmakers sent to her desk structures Virginia’s cannabis market.

Rather than embedding detailed licensing rules in state law, Spanberger’s substitute would remove large portions of the statutory framework and instead direct the Virginia Cannabis Control Authority to establish those rules through regulations.

The proposal also reduces the number of retail licenses from 350 to 200 and extends that cap through Jan. 1, 2029, after which regulators would determine future limits.

It further restructures oversight of the Cannabis Control Authority by eliminating legislative appointments to its board and making all members gubernatorial appointees, while reducing required agricultural representation.

Other provisions of the enrolled bill would be stripped entirely. 

Those include the Cannabis Equity Reinvestment Fund, authority for the governor to negotiate cannabis-related agreements with tribal governments — federally recognized Native American tribes that can operate with a degree of sovereign authority — and a requirement for the Alcoholic Beverage Control Authority to operate a tip line for reporting illegal activity.

The substitute would also change how cannabis tax revenue is distributed, eliminating fixed percentage allocations and instead directing lawmakers to allocate funds through the state budget for priorities such as public health, education and workforce development. 

The state tax rate would be set at 6% until July 2029, rising to 8% thereafter.

Spanberger framed the changes as necessary to strengthen enforcement and public safety, particularly as the state grapples with an illicit market offering unregulated products.

“To keep our next generation safe, we must also ensure real consequences for vape shops that have spent years targeting Virginia’s kids,” she said. “We need to rein in these shady businesses and make sure a legal marijuana market does not make the problem worse.” 

Penalties, timelines and market uncertainty

The substitute also proposes tougher penalties in several areas. Public consumption would increase from a civil penalty to a Class 4 misdemeanor, while underage possession would be treated as a Class 1 misdemeanor, with potential fines, community service and license suspension. 

The personal possession limit would be reduced from 2.5 ounces to 2 ounces.

Additional changes target advertising restrictions, medical cannabis delivery requirements and hemp regulations, including delaying the elimination of the state’s 25:1 hemp ratio — a standard used to distinguish legal hemp products from marijuana based on THC concentration — until November 2026.

Beyond the retail legislation, lawmakers also rejected the governor’s proposed amendments to HB 26 and SB 62, which would allow reconsideration of sentences for certain marijuana-related convictions. 

Her changes would have clarified that individuals convicted of violent offenses or serious drugcrimes would not be eligible for reconsideration.

At the same time, Spanberger signed separate legislation targeting vape retailers, including HB 308 and SB 620, which establish enforcement mechanisms to shut down shops that repeatedly sell to minors. 

The measures require the Virginia Alcoholic Beverage Control Authority to conduct periodic compliance checks.

Stakeholders warn of continued delays

Advocates and industry stakeholders offered different reactions to the legislature’s rejection of the governor’s substitute.

Chelsea Higgs Wise, executive director of Marijuana Justice, called the move a victory for equity-focused organizers.

“Virginia’s General Assembly rejecting the governor’s substitute is a testament to the work of equity, racial and criminal justice organizers,” she said. 

“Not only would the governor’s substitute be worse for Black, brown and low income communities than the status quo, her language ignored the reform, repair and redress required to acknowledge the decades of racist enforcement.”

She urged Spanberger to allow the legislation to become law without further changes.

“The leader Virginia needs right now would listen to her constituents and allow the marijuana bills to become law this year,” Wise said.

Industry leaders, however, warned that continued delays risk prolonging an unregulated market.

“While we are disappointed by delays in establishing an adult-use cannabis market, we remain hopeful that the governor and lawmakers can come together to chart a clear, workable path forward for Virginia,” said Rodney Holcombe, vice president of public policy at LeafLink.

“Unfortunately, every day without a regulated market is a day the illicit market continues to operate unchecked, undermining public safety, consumer protections, and, ultimately, legitimate businesses,” he added. “Virginia has done the hard work to get to this point, now it’s time to finish the job.”

Spanberger must take action on the cannabis retail bill — approve it without her tweaks or reject it completely — within 30 days.

Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Samantha Willis for questions: info@virginiamercury.com.