Virginia Law

A. The Board shall promulgate reasonable regulations, not inconsistent with this subtitle or the general laws of the Commonwealth, that it deems necessary to carry out the provisions of this subtitle and to prevent the illegal cultivation, processing, transportation, distribution, sale, and testing of marijuana, marijuana products, and regulated hemp products. The Board may amend or repeal such regulations. Except as otherwise provided by law, such regulations shall be promulgated, amended, or repealed in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) and shall have the effect of law.

B. The Board shall also promulgate regulations that:

1. Govern the outdoor cultivation of marijuana by a marijuana cultivation facility licensee, including security requirements to include lighting, physical security, and alarm requirements, provided that such requirements do not prohibit the cultivation of marijuana outdoors or in a greenhouse;

2. Establish requirements for (i) securely transporting marijuana between marijuana establishments and (ii) securely delivering marijuana or marijuana products from retail marijuana stores or microbusinesses only in person to consumers, which shall include requirements of age verification, delivery radius, and recordkeeping;

3. Establish sanitary standards for marijuana product and regulated hemp product preparation;

4. Establish a testing program for marijuana, marijuana products, and regulated hemp products pursuant to Chapter 14 (§ 4.1-1400 et seq.);

5. Establish an application process for licensure as a marijuana establishment pursuant to this subtitle in a way that, when possible, prevents disparate impacts on historically economically disadvantaged communities;

6. Establish requirements for health and safety warning labels to be placed on marijuana and marijuana products to be sold or offered for sale by a licensee to a consumer and on regulated hemp products to be sold or offered for sale by a person in accordance with the provisions of this subtitle;

7. Establish a maximum tetrahydrocannabinol level for marijuana products, which shall not exceed (i) 10 milligrams per serving for edible marijuana products and where practicable an equivalent amount for other marijuana products or (ii) 100 milligrams per package for edible marijuana products and where practicable an equivalent amount for other marijuana products. Such regulations may include other product and dispensing limitations on tetrahydrocannabinol;

8. Establish requirements for the form, content, and retention of all records and accounts by all licensees and by any person selling a regulated hemp product;

9. Provide alternative methods for licensees to maintain and store business records that are subject to Board inspection, including methods for Board-approved electronic and offsite storage;

10. Establish (i) criteria by which to evaluate new licensees based on the density of retail marijuana stores in the community and (ii) metrics that have similarly shown an association with negative community-level health outcomes or health disparities. In promulgating such regulations, the Board shall coordinate with the Cannabis Public Health Advisory Council established pursuant to § 4.1-603;

11. Require retail licensees to file an appeal from any hearing decision rendered by a hearing officer within 30 days of the date the notice of the decision is sent. The notice shall be sent to the licensee at the address on record with the Board by certified mail, return receipt requested, and by regular mail;

12. Prescribe the schedule of proration for refunded license fees to licensees who qualify pursuant to subsection C of § 4.1-1003;

13. Establish a process by which to identify impact license applicants, which shall be an applicant that has at least 51 percent ownership and direct control by a person or persons who (i) have resided (a) between the years 1999 and 2025 in a jurisdiction that, after utilizing census tract data made available by the Unites States Census Bureau, is determined to have been disproportionately policed for marijuana crimes or (b) for at least three of the past five years in a historically economically disadvantaged community and (ii) meet one or more of the following six criteria: (1) have been convicted of or adjudicated delinquent for any violation of § 18.2-248.1, former § 18.2-250.1, or subsection A of § 18.2-265.3 as it relates to marijuana or any substantially similar offense under the laws of another jurisdiction; (2) are the parent, child, sibling, or spouse of a person who has been convicted of or adjudicated delinquent for any violation of § 18.2-248.1, former § 18.2-250.1, or subsection A of § 18.2-265.3 as it relates to marijuana or any substantially similar offense under the laws of another jurisdiction; (3) have attended for at least five years a public elementary or secondary school located in a historically economically disadvantaged community; (4) have received a Federal Pell Grant or attended for at least two years a college or university at which at least 30 percent of the students, on average, are eligible for a Federal Pell Grant; (5) are veterans of the Armed Forces of the United States; or (6) have qualified for financial assistance or relief from the U.S. Department of Agriculture as a distressed farmer in the last five years;

14. For impact license applicants, establish standards and requirements for (i) a preference in the licensing process; (ii) what percentage of application or license fees are waived to promote participation by impact licensees with an inability to pay standard application fees; (iii) grant or low-interest business loan programs; (iv) a waiver of any requirements to show proof of funds or current possession and control of the proposed licensed premises at the time of application; and (v) to the extent practicable, the proportional distribution of licenses among the applicants set forth in clauses (i) through (vii) of subdivision 13. If at any time the Board determines that an impact license was obtained on the basis of a fraudulent financial transaction or predatory operating agreement or if a prohibited assignment, sale, or transfer of an impact license occurs in violation of subsection C of § 4.1-702, the Board shall immediately begin revocation proceedings pursuant to § 4.1-903 and require the original impact licensee and any other true parties of interest to repay to the Commonwealth the full value of any and all application or licensing fees that were waived;

15. Establish guidelines, in addition to requirements set forth in this subtitle, for the personal cultivation of marijuana that promote personal and public safety, including child protection, and discourage personal cultivation practices that create a nuisance, including a nuisance caused by odor;

16. Establish reasonable restrictions on outdoor advertising of marijuana, marijuana products, or regulated hemp products, not inconsistent with the provisions of this chapter, so that such advertising displaces the illicit market and notifies the public of the location of marijuana or hemp establishments. Such regulations shall be promulgated in accordance with § 4.1-1402;

17. Establish restrictions on the number of licenses that a person may be granted to operate a marijuana establishment in single locality or region;

18. Allow impact licensees and microbusinesses to (i) enter into cooperative agreements; (ii) lease space and equipment and cultivate, process, and sell marijuana and marijuana products on the premises of another licensee; and (iii) process marijuana and marijuana products out of a shared processing space, provided that no more than one license authorizing outdoor cultivation may be exercised on any given parcel of land, nor on parcels that are contiguous and under common ownership or control to said parcel;

19. Establish approval process for the Board to approve or deny ownership, financing, management, and brand-licensing agreements to ensure compliances with § 4.1-807 and establish an investigation process for determining whether a financial arrangement between a licensee and another party is commercially reasonable or constitutes undue influence, including the consideration of factors such as price-setting authority, shelf-space control, financing dependency, or shared personnel. Such regulations shall presume the permissibility of (i) passive investments resulting in less than a 10 percent equity interest in a licensee, unless the Board determines such investment otherwise results in undue influence, and (ii) management services agreements or brand licensing agreements that do not result in actual or contractual rights to control the management or operations of a licensee. Such regulations shall stipulate that any such investments or agreements described in clauses (i) and (ii) do not constitute undue influence or independently render any individual a principal of a licensee;

20. Establish procedures governing ownership disclosure and prior written approval of the Board for the assignment, sale, or transfer of any license or any change in ownership or control and background investigations of transferees. Such regulations shall (i) require that ownership interests be traced through all intermediary entities to the ultimate beneficial owners and (ii) include provisions specifying that a change of control occurs upon the (a) acquisition of 25 percent or more of equity or voting power, (b) execution of any instrument conferring appointment or removal rights over managers, or (c) cumulative transfers totaling 25 percent or more within any 24-month period;

21. Require that licensees, their employees, and their agents require all individuals to present bona fide evidence of legal age, as described in subsection B of § 4.1-1104, to make a purchase in a retail marijuana store, with escalating civil penalties for repeated instances of noncompliance by licensees, their employees, or their agents; and

22. Establish penalties for any violations by licensees, their employees, or their agents of § 4.1-1104, relating to the sale, transfer, or distribution of marijuana or marijuana products to a person (i) younger than 21 years of age or (ii) intoxicated. The Board shall provide for escalating civil penalties, leading up to and including the revocation of any license issued by the Authority, for repeated violations of § 4.1-1104 by licensees, their employees, or their agents.

C. The Board may promulgate regulations that:

1. Set the number of licenses issued by type or class to operate a marijuana establishment in order to ensure that there is a significant supply of marijuana to meet demand, provide market stability, avoid market dominance, ensure a competitive market that considers small business opportunities and concerns, and limit the sale of unregulated marijuana; however, only five Tier V marijuana cultivation facilities licenses shall be issued before January 1, 2027.

Beginning January 1, 2028, the Board shall determine the number of tier V marijuana cultivation facility licenses that the Authority will issue consistent with the goals identified in this subsection. If the Board makes an additional number of tier V marijuana cultivation facility licenses available, the number of licenses available to impact licensee applicants shall be equal to or greater than the number of licenses available to all other applicants.

The Board shall not issue more than 350 retail marijuana store licenses.

The Board may issue as many licenses as it deems necessary for any other license type not specified in this subdivision. If the Board does limit the number of licenses available for any other license type not specified in this subdivision, the number of licenses available to impact licensee applicants shall be equal to or greater than the number of licenses available to other applicants.

2. Prescribe any requirements deemed appropriate for the administration of taxes under § 4.1-1004, including method of filing a return, information required on a return, and form of payment.

3. Limit the allowable square footage of a retail marijuana store, which shall not exceed 2,500 square feet of retail floor space.

4. Ensure that marijuana establishment licenses are, as possible and practicable, issued evenly among all areas of the Commonwealth and accounting for the population density of such areas; and

5. Establish additional market-concentration thresholds, including regional or statewide market-share and Herfindahl-Hirschman Index (HHI) benchmarks and policies and procedures for denying or conditioning the issuance of licenses or approval of transfers of licenses that would create undue market concentration.

D. Board regulations shall be uniform in their application, except those relating to hours of sale for licensees.

E. Courts shall take judicial notice of Board regulations.

F. The Board shall consult with the Cannabis Public Health Advisory Council in promulgating any regulations relating to public health, including regulations promulgated pursuant to subdivision B 3, 4, 6, 7, 10, or 15, and except as otherwise provided in § 4.1-603, shall not promulgate any such regulation that has not been approved by a majority of the members of the Cannabis Public Health Advisory Council.

G. The Board's power to regulate shall be broadly construed.

2021, Sp. Sess. I, cc. 550, 551; 2026, Sp. Sess. I, c. 1.