Virginia Adult-Use Cannabis Proposal Scraps Local Opt-Outs; Privileges Small Operators  

The Virginia Legislature’s Joint Commission on the Future of Cannabis Sales
final proposal is expected to get rid of local opt-out provisions for
municipalities, increase local taxing authority, and privilege small,
independent businesses based in the state over multistate medical cannabis
companies, the Virginia Mercury reports. Commission Chair Paul Krizek (D)
told the Mercury that the commission’s goal “has been to make sure it is a
decentralized market structure, competitive, sustainable, prioritizing
independent Virginia-based businesses.”

The proposal comes about a month after the election of Abigail Spanberger,
a Democrat and former Congresswoman, who has backed the rollout of the
adult-use program some five years after the reforms were approved by
lawmakers, but regulations were consistently blocked by Republican Gov.
Glenn Youngkin.

Krizek told the Mercury that the regulations do not include the local
opt-out provisions because unregulated cannabis sales would flourish in
so-called “dry” areas, but that localities would retain full control over
zoning, buffer-zoning, and licensing requirements. Municipalities would
also be allowed to place a 3.5% excise tax on cannabis products – higher
than the 2.5% allowed under previous proposals. The state cannabis
tax remains at 8% under the proposal, which also removed the state sales
tax on paraphernalia.

The proposal also allows cannabis businesses to deduct certain costs from
their state taxes, despite being unable to do so currently on their federal
taxes.

At least half of the new licenses would be reserved for micro-businesses,
while multi-state operators that currently hold medical cannabis licenses
in the state would be limited to one of five total retail, cultivation, or
processing authorizations.

If the regulations are adopted, adult-use sales could begin by November 1,
2026.