Richmond Could See Windfall in Tax Revenue if Marijuana is Legalized
If Virginia legalizes recreational marijuana sales during the 2026 General Assembly session, the state and local governments could see a significant influx of tax revenue. According to estimates from the Department of Taxation, a recreational market could generate $15 million in tax revenue in the first year, growing to $74 million by 2031.
Locally, Richmond would also benefit from the legalization, with purchases subject to a 1% local sales tax, in addition to the state sales tax. The city could also opt to add an additional 2.5% tax, and if the marijuana is sold as “edibles,” it could also be subject to Richmond’s 7.5% meals tax.
Governor-elect Abigail Spanberger, a Democrat, has expressed support for legalization, stating that the state needs a clear strategy to transition into a legal market. Richmond Mayor Danny Avula also supports legalization, citing the need to reduce unnecessary criminalization and the risks associated with unregulated marijuana sales.
The city’s zoning code would need to be updated to accommodate a legal marijuana market, but that would depend on legislation being passed to dictate local authority on the matter.
Meanwhile, Virginia’s medical marijuana market is already thriving, with nearly $30 million in sales in July and August alone. The Virginia Cannabis Control Authority is working to establish a foundation for a potential recreational market, but it is not yet funded or staffed for retail sales.
The momentum for legalization in Virginia comes as the federal government has banned hemp-derived THC products nationwide. If Virginia’s legislation is passed, recreational marijuana sales could begin as early as May 1, 2027.
The tax revenue generated from legalized marijuana would be distributed statewide, with 10% going towards Pre-K programs, 60% towards the Cannabis Equity Reinvestment Fund, 25% towards Substance Use Disorder programs, and 5% towards Public Health programs. An updated proposal for the 2026 General Assembly session will be discussed at the next meeting of the Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market.
