Medical cannabis operators, aspiring business owners and non-medical consumers have been waiting five years for Virginia to enact an adult-use market that was legalized by the state legislature in 2021.
With a Democrat back in control of the governor’s office, Virginia is now one signature away from beginning the process of issuing licenses and launching the new market.
Gov. Abigail Spanberger, who repeatedly pledged to launch an adult-use market while on the 2025 campaign trail, has until April 13 to sign, veto or allow the bill to be enacted without a signature. Lawmakers sent her the bill March 31.
Existing medical businesses need to convert
The progress is welcomed by the state’s current medical cannabis licensees.
Existing medical operators will likely get the first crack at the market, but they must convert into hybrid business models by Dec. 1, 2026. Conversion licenses include a $10 million fee that can be paid over three years, and dispensaries will still be restricted to the existing public health regions that currently make up the state’s medical market.
“We are encouraged by the regulatory process made and are very excited to transition Virginia to adult-use sales on Jan. 1, 2027,” said Jushi CEO Jim Cacioppo during the company’s March 31 fourth quarter earnings call. “In preparation, we are expanding cultivation capacity at our current facility and are exploring development of a second cultivation site to support future demand. Importantly, our manufacturing and retail infrastructure are currently prepared to support adult-use sales with minimal incremental capital investment.”
He added that based on previous markets that transitioned from medical to adult-use sales, he expects to see cannabis revenue in Virginia grow by about 3.4 times what it currently is in its medical market.
“We are hopeful that Governor Spanberger signs the bill within the next couple of weeks,” he added.
Jushi, operating as Dalitso LLC, is one of just four companies that currently operate in the state’s medical market, along with Verano Holdings, Green Thumb Industries and Millstreet Credit Fund, which recently purchased the last set of assets that The Cannabist Co. owned in the commonwealth.
“In the near term, we are preparing for the historic launch of retail adult-use sales in Virginia which may begin as soon as the second half of this year,” said Verano CEO George Archos during the company’s March 12 fourth quarter earnings call.
“Our deep experience successfully transitioning markets from medical to adult-use has given us a strong playbook to leverage as we prepare for an anticipated exponential increase in demand. We’ve already taken steps to prepare for the expected large influx of future adult-use customers across our six dispensaries in the Virginia Beach area, a popular vacation destination with more than 14 million annual visitors according to the local Tourism Bureau,” said Archos.
Hybrid operators are only allowed to cultivate indoors and will be permitted to use up to 70,000 square feet of canopy.
New licenses expected by end of the year
According to the legislation, the Cannabis Control Authority must begin approving licenses by Dec. 1, 2026. These include up to 100 microbusiness licenses, 10 cultivation licenses, 10 processing licenses and at least 55 additional licenses of other types that are yet to be determined.
Regulators will then issue up to 350 retail licenses before Jan. 1, 2028. At least 50% of new licenses will be reserved for “impact applicants,” which includes those who have lived in either an area disproportionately impacted by the war on drugs or an economically disadvantaged community.
They also must have at least one more qualifying factor, including having a prior cannabis conviction themselves or an immediate family member, having attended a school in an economically disadvantaged area or obtained a Pell Grant, being a veteran, or qualifying for financial assistance from the USDA as a distressed farmer.
New cultivation licenses will be split between five different tiers that allow between 5,000 and 35,000 square feet of canopy. No Tier V cultivation licenses will be issued until after Jan. 1, 2028.
The state will also issue microbusiness licenses for smaller, vertically integrated businesses that are permitted to grow up to 5,000 square feet of indoor canopy or 10,000 square feet of outdoor canopy.
Vertically integrated companies are permitted, but there is a limit on the total number of licenses they can own. This applies to companies or individuals with subsidiaries that obtain licenses. They will only be allowed to obtain a total of five licenses, excluding transportation licenses, and no individual or entity can own more than one Tier V cultivation license.
Local governments may not prohibit cannabis businesses in their jurisdiction, beyond certain zoning criteria such as the restriction on any business being located within 1,000 feet from a school, hospital or day care.
Some cannabis businesses couldn’t wait for launch
At least two of the medical operators that were counting on an adult-use conversion collapsed before they could see it realized.
Ayr Wellness was awarded a region license in Virginia in 2024, but never became operational before it had to initiate a restructuring due to unpaid debt.
At one time, The Cannabist Co. was operating in two regions of Virginia but has since sold off both licenses.
Verano bought into the Commonwealth in mid-2024 when it agreed to purchase Cannabist Co. assets held in one of the latter company’s two regions.
At the end of 2025, Curaleaf also considered buying into Virginia, but ultimately backed out of its proposed deal to buy up Cannabist’s remaining assets.
Ultimately, Millstreet Credit Fund bought the remaining Cannabist Co. assets.
