March 19, 2026
On Saturday, March 14, Virginia legislators sent the final reconciled version of HB 642 / SB 542 to the Governor's desk. If signed, this bill creates a commercial cannabis market in the Commonwealth.
Here's what it actually means in plain English.
The Timeline
The Virginia Cannabis Control Authority (CCA) has until September 1, 2026 to finalize regulations and open license applications. By December 1, 2026, the CCA must begin issuing licenses across several categories. Retail sales start January 1, 2027.
No one is selling legal recreational cannabis in Virginia before that date.
The Licenses
There are several license types in the bill:
- Cultivation Facility -- grow cannabis, available in five tiers based on canopy size (5,000 to 35,000 sq. ft.)
- Processing Facility -- turn raw cannabis into finished products
- Retail Store -- sell directly to consumers (floor space capped at 2,500 sq. ft., deliveries allowed)
- Microbusiness -- a vertically integrated license that lets you cultivate, process, and sell under one roof (canopy capped at 5,000 sq. ft. indoors or 10,000 sq. ft. outdoors)
- Transporter -- business-to-business transport and storage
- Delivery Operator -- direct-to-consumer delivery and storage
- Testing Facility -- lab testing and research
Existing medical operators (pharmaceutical processors) can convert to dual-use for a $10 million fee. Industrial hemp growers and processors registered before January 1, 2021 have a pathway in as well.
How You Get a License
Licenses are awarded by qualified lottery. There are separate lotteries for Impact License (social equity) applicants and general applicants. If Impact applicants don't get selected in their dedicated lottery, they roll into the general pool.
You don't need to have a property secured when you apply. If you win the lottery, you get preliminary approval and 18 months to lock down a location, pass inspections, and meet zoning requirements. There's also a one-time 8-month extension available if you're making a good-faith effort.
All applicants will need background checks, a labor peace agreement, and application fees (amounts TBD by the CCA). Past marijuana convictions won't automatically disqualify you.
Impact Licenses (Social Equity)
The bill creates a dedicated track for people disproportionately affected by cannabis enforcement. To qualify, you need to show you lived in a disproportionately impacted area between 1999 and 2025, or in a historically economically disadvantaged community for at least three of the past five years. You also need to meet one of several additional criteria, including prior marijuana convictions (yours or a family member's), Pell Grant eligibility, veteran status, or USDA distressed farmer status.
Impact Licensees get benefits like licensing preferences, fee waivers, and access to loan programs. They can also enter into cooperative agreements and share space with other licensees.
One important restriction: Impact Licensees can't sell more than 49% of their license for five years.
License Limits
Before January 1, 2028, the state will cap retail stores at 350 and Tier V cultivation facilities at 5. Other license types don't have hard caps yet, but at least 50% of any limited licenses must go to Impact applicants.
No person can hold interest in more than five total licenses (excluding transporter licenses). If you hold a Microbusiness license, you can't hold any other license type.
Taxes
Cannabis retail sales carry a 6% state cannabis tax plus Virginia's existing 4.3% sales tax. Localities must add a local tax between 1% and 3.5%. So total tax on a retail purchase will land somewhere around 11-14% depending on where you are.
The cannabis tax does not apply to hemp products.
What About Hemp?
The CCA is taking over oversight of the hemp program from the Department of Agriculture and Consumer Services. Hemp operators should expect new regulations on testing, labeling, packaging, and advertising.
A new retail hemp registration is required to sell regulated hemp products intended for consumption. The fee is $1,000.
What Comes Next
The Governor still needs to sign the bill. Assuming he does, the CCA will spend the summer writing regulations and building out the application process. We'll be watching closely and breaking down each development as it comes.
If you have questions about how this affects you or your business, reach out. We're in it with you.
Chester Cannabis Co. | Richmond, VA
