With Virginia Gov. Glenn Youngkin (R) widely expected to veto a lawmaker-passed plan to legalize retail marijuana sales in the commonwealth, a new fiscal impact statement makes clear that rejecting the proposal would mean missing out on tens of millions of dollars in annual state revenue—including for pre-kindergarten programs, community reinvestment and substance use treatment.
Annual government revenue would begin at an estimated $7.3 million in fiscal year 2026, according to the Department of Taxation, rising steadily as the regulated system got off the ground. By fiscal year 2031, the figure is projected to climb to an annual $87.84 million.
All told, by the end of fiscal 2031, retail cannabis is expected to bring Virginia nearly $300 million in total revenue.
The income would come from an 8 percent excise tax on marijuana sales and a 1.125 percent sales tax imposed under the legislation, from Sen. Aaron Rouse (D) and Rep. Paul Krizek (D).
The numbers were published on Friday in a report from the state Department of Planning and Budget.
The top-level revenue projection does not include separate, local taxes of up to 2.5 percent. Depending on how broadly municipalities implement those taxes, they could bring in up to $2 million statewide in fiscal 2026, rising to an estimated $24.09 million by fiscal 2031.
The bulk of the state money would go to community reinvestment. The Cannabis Equity Reinvestment Fund would receive an estimated $1.92 million in fiscal 2026, which would rise to $46.26 million in fiscal 2031.
Money would also go to preventing and treating substance use disorders. That would be about $1.92 million in fiscal 2026, rising to $19.27 in fiscal 2031.
Revenue would also fund pre-kindergarten programs (beginning at $2.56 million initially and rising to $7.72 million annually in fiscal 2031), public health programs ($320,000 initially and rising to $3.85 million in fiscal 2031) and other initiatives.
In terms of how the revenue is divided, that would change over time. Until fiscal 2027, 40 percent would fund pre-K, 30 percent would go to the reinvestment fund, 25 percent would go toward substance use disorders and 5 percent would fund public health programs. After that, 10 percent would go to pre-K, 60 percent to community reinvestment, 25 percent to substance use disorders and 5 percent to public health.
As for costs, preparing for and administering a regulated retail sales program would cost several million dollars per year—about $9.37 million total in fiscal 2026 and an estimated $9.26 annually after that.
Licensing fees for marijuana businesses would pay the bulk of administrative costs at the Cannabis Control Authority (CCA), which would regulate the adult-use retail system. During its first year, however, some funds would also need to come from the state general fund.
New expenses at CCA would include 73 more staff members as well as technology and equipment, vehicles and travel.
The Department of Taxation, meanwhile, would incur estimated costs of $468,950 during the first fiscal year of operation in order to update forms and internal systems.
State Police, meanwhile, would incur just over $200,000 annually to hire two additional staff members to conduct fingerprinting and background checks.
Despite the fiscal impact report indicating that legalizing retail sales could bring Virginia hundreds of millions of dollars in tax revenue over the next several years, the state’s governor is widely expected to veto the lawmaker-passed bills.
Youngkin vetoed a nearly identical proposal last legislative session, and his office has said he’s inclined to do the same this year.
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