Earlier this month, the initial draft of Virginia’s adult-use marijuana regulations was published. Once finalized following review by the Virginia Cannabis Public Health Advisory Council (which is expected to be completed by January 2027), the regulations will govern the looming adult-use license application submittal process, the license lotteries (for certain license types), the mechanics of provisional license approval, and, ultimately, the award of licenses to entities approved by the Virginia Cannabis Control Authority (“Authority”). Although the draft regulations shed additional light on the forthcoming license application round required by the Virginia Cannabis Control Act (“CCA”) and the expected launch of adult-use marijuana sales on July 1, 2027, there are still many variables and a number of unanswered questions.

Below we highlight some key provisions in the draft regulations, as well as some critical gaps that have yet to be filled by the Authority:

Application and License Fees

Cannabis Dispensing Facility

• Application fee: $4,000
• Initial permit: $40,000
• Annual renewal: $30,000

Pharmaceutical Processor Facility

• Application fee: $10,000
• Initial permit: $120,000
• Annual renewal: $100,000

Cultivation Facility – Tier I

• Application fee: $3,000
• Initial authorization: $20,000
• Annual renewal: $15,000

Cultivation Facility – Tier II

• Application fee: $3,000
• Initial authorization: $25,000
• Annual renewal: $20,000

Cultivation Facility – Tier III

• Application fee: $5,500
• Initial authorization: $30,000
• Annual renewal: $25,000

Cultivation Facility – Tier IV

• Application fee: $7,500
• Initial authorization: $35,000
• Annual renewal: $30,000

Cultivation Facility – Tier V

• Application fee: $7,500
• Initial authorization: $50,000
• Annual renewal: $45,000

Marijuana Processing Facility

• Application fee: $5,000
• Initial authorization: $30,000
• Annual renewal: $25,000

Retail Marijuana Store

• Application fee: $4,000
• Initial authorization: $20,000
• Annual renewal: $15,000

Microbusiness

• Application fee: $1,000
• Initial authorization: $2,500
• Annual renewal: $6,000

Marijuana Transporter

• Application fee: $500
• Initial authorization: $2,500
• Annual renewal: $5,000

Marijuana Delivery Operator

• Application fee: $500
• Initial authorization: $2,500
• Annual renewal: $5,000

Marijuana Testing Facility

• Application fee: $1,000
• Initial authorization: $2,000
• Annual renewal: $2,000

Statewide License Caps

The draft regulations propose to cap the number of licenses issued for certain license types. Retail marijuana store licenses will be capped at 350 statewide, and Tier V cultivation licenses will be capped at 5 statewide. Based on the draft regulations, we expect the Authority to also set overall license caps for Tier I-IV cultivation facility licenses and marijuana processing facility licenses. But the draft regulations do not establish caps for those license types.

License Application Limitations 

An “applicant” (a term which is not directly defined in the CCA or draft regulations) can submit only one application for a license type in response to any notice of open applications issued by the Authority. Although not reproduced in the draft regulations, we note the prohibition in the CCA on holding multiple license types, which makes clear that:

• No person shall be granted or hold interest¹ in more than five total licenses, not including marijuana transporter licenses or more than one tier V marijuana cultivation facility license.
• No person that has been granted or holds interest in a marijuana cultivation facility license, marijuana processing facility license, marijuana transporter license, marijuana delivery operator license, retail marijuana store license, or microbusiness license shall be issued or hold interest in a marijuana testing facility license.
• No person that has been granted or holds interest in a microbusiness license shall be issued or hold interest in any other marijuana establishment.
• No person that has been granted or holds interest in a pharmaceutical processor permit shall be issued or hold interest in any other marijuana establishment license, except for the cannabis dispensing facility permits.

Limitations on Changes in Ownership

Pursuant to the draft regulations, “[n]o permit or license shall be assigned, sold, or transferred, nor shall ownership or control of a license be changed, unless the licensee has received prior written approval by the board. Any such change made without approval of the board is void and shall constitute grounds for immediate suspension or revocation of all affected licenses.” If a new owner’s proposed equity interest in the business/license is 5% or more, the individual must complete fingerprinting and be subject to a background check.

For “impact licensees” (as defined in § 4.1-606.B.13 of the CCA), no impact licensee, nor any person holding a direct or indirect beneficial interest therein, shall sell, assign, or transfer a controlling interest of more than 49 percent of the license to any person or entity for a period of five years from the date the license is issued unless the transfer is made as part of an estate plan to a family member or into a trust for the benefit of the licensee's immediate family.

Outline of Application Process

• The Authority publishes a notice of open applications, which includes information on how to obtain and complete an application, the required fees, the criteria for issuance of a permit or license, and the deadline for receipt of applications.
•  Applicants submit the required application fee and all requested application materials in a manner prescribed by the Authority. An applicant may only submit one application per license type in response to any notice of open applications.
• Following the deadline for receipt of applications, the Authority evaluates each complete and timely submitted application to identify qualified applicants based on compliance with the requirements set forth in the notice of open applications.
• If there are more qualified applicants than available licenses, the Authority may hold a lottery, or similar process, to select applicants for preliminary approval.
• Once an applicant receives preliminary approval, the applicant has 18 months to complete all remaining requirements for license issuance, including securing a physical location, obtaining local zoning approval, hiring key personnel, completing facility buildout, and passing criminal background checks of material owners.
• After all requirements have been met—including a satisfactory facility inspection, designation of key personnel, implementation of an electronic tracking system, and compliance with security and location requirements—the Authority may issue the permit or license.

The Authority may deny an application for a permit, license, or registration if the applicant:

• Submits an incomplete, false, inaccurate, or misleading application;
• Fails to pay all applicable fees;
• Fails to disclose any violations, enforcement actions, or compliance issues related to a previous regulated hemp product retail registration under the Virginia Department of Agriculture and Consumer Services; or
• Fails to comply with all requirements for a marijuana establishment or regulated hemp product retail facility.

If the Authority denies an application, it must provide the applicant with notice of the grounds for denial and also the applicant’s right to request a hearing.
Timing for Applications

We expect the Authority to publicize additional instructions and guidance materials over the next several months to further explain the application process within the context of the CCA and regulations. Indeed, pursuant to 3VAC10-30-100, the Authority is required to publish a notice of open applications, which must include information on how to obtain and complete an application, the required fees, the criteria for issuance of a permit or license, and the deadline for receipt of applications.

Any comprehensive license application strategy would, of course, need to take these forthcoming materials into consideration because they will inform the Authority’s on-the-merits review of application materials and, ultimately, the award of licenses to qualified applicants. 

Our nationally recognized cannabis license application team is closely monitoring all developments in Virginia and will report on material developments over the coming months. Please reach out to our team with any questions or if a consultation would be beneficial.


¹Defined as “a direct or indirect equity ownership interest, a partial equity ownership interest, or any other financial or economic interest representing at least 10 percent or more of the ownership, voting power, or economic value of an entity, including being an investor, partner, member, officer, or director or serving in any other management position.”