Virginia’s legal marijuana market has the potential to generate approximately $300 million over the next six years, according to a new fiscal impact statement. The report indicates that the state could earn $7.3 million in revenue during the first year alone if retail marijuana sales are approved.
However, Governor Glenn Youngkin is likely to veto a bill that would permit retail weed shops in Virginia. If he does, the state risks losing tens of millions in revenue in the years to come, as highlighted by the report.
The legislation currently awaiting the governor’s decision would empower the Virginia Cannabis Control Authority to start issuing retail marijuana licenses on September 1, with sales expected to commence in May 2026. The fiscal impact statement released by the Virginia Department of Planning and Budget emphasizes that taxes on sales would be a significant revenue driver.
An 8% marijuana tax would be applied to sales at these retail shops, which would include marijuana, marijuana paraphernalia, and non-retail marijuana products. This tax would be in addition to a 1.125% sales tax on these items and an optional 2.5% tax that local governments could impose.
By fiscal year 2026, the state is projected to collect $7.3 million, with expected revenue increasing significantly in subsequent years:
– $25.66 million in fiscal year 2027 – $42.32 million in fiscal year 2028 – $60.43 million in fiscal year 2029 – $75.67 million in fiscal year 2030 – $87.84 million in fiscal year 2031
In total, this amounts to just under $300 million over the next six years.
The fiscal impact statement utilized the “midrange point” of sales estimates from a 2020 Joint Legislative Audit and Review Commission report to calculate the anticipated revenue from the 8% tax.
It is also important to note that the legislation stipulates that most of the tax revenue will be allocated to the Cannabis Equity Reinvestment Fund. Additional funds will support pre-kindergarten, substance abuse, and public health programs.
To establish a retail marketplace, the state will need to invest in system updates for the Department of Taxation, as well as increase staffing at the Cannabis Control Authority and the Virginia State Police.
Governor Youngkin has until Monday to make a decision on whether to veto or sign the bills, including the one concerning the retail marijuana marketplace.
