Virginia lawmakers are eyeing adult-use cannabis legislation as a possible path out of a stalled state budget negotiation, even as a single operator tightens its grip on the state’s limited-license medical marijuana market.
Gov. Abigail Spanberger is indicating she could support folding a regulated adult-use retail framework into the budget, weeks after she vetoed a standalone sales bill, according to WWBT.
The budget faces a June 30 deadline, and talks have stalled over unrelated issues, chiefly tax exemptions for data centers.
“It is a way out of an impasse,” Larry Sabato, executive director of the University of Virginia Center for Politics, told WWBT.
“And clearly, at this point, the Democrats running the governorship and Legislature need ways out of impasses.”
Why hasn’t Virginia’s adult-use cannabis market launched?
The pivot follows a stunning reversal in May. Spanberger, a Democrat who campaigned on signing adult-use legislation, vetoed a bill that would have launched recreational sales Jan. 1.
At the time, she cited a “rushed” timeline, a retail cap she viewed as too high at 350 stores and a desire to avoid “the mistakes of other states.”
Lawmakers had set a 6% state tax and allowed existing medical operators to convert for a $10 million fee.
Spanberger countered with a July 2027 launch date, a 200-store cap until 2029, a tax that would rise to 8% in mid-2029 and a 70,000-square-foot cultivation limit. The General Assembly rejected those changes, and Democrats lack the supermajority needed to override the veto.
Virginia legalized adult-use possession in 2021 but never established a retail sales system. The MJBiz Factbook projects first-year sales could reach $780 million, with billion-dollar potential by year two.
Why are so few cannabis operators in Virginia?
While the retail debate stalls, the state’s five-permit medical market is consolidating. Arboretum Virginia, which shares a Boston address with affiliates of Millstreet Capital Management, now controls two of the five geographically restricted permits.
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Arboretum acquired The Cannabist Co.’s central Virginia business in a $130 million deal that closed in February, then took over assets from debt-laden Ayr Wellness in the Shenandoah region.
The company now controls about 40% of Virginia’s $180 million annual medical cannabis market.
The House returns June 18 and the Senate returns June 22, with budget negotiations expected to resume ahead of the June 30 deadline.
