Richmond Could See Tax Bonanza if Marijuana Legalization Passes
The Virginia General Assembly may soon consider legislation to legalize recreational marijuana sales, which could bring in millions of dollars in tax revenue for the state and localities. According to estimates from the Department of Taxation, a recreational market could generate $15 million in the first year of legalization, growing to $74 million by 2031.
In addition to the state tax, localities like Richmond would also collect a 1% local sales tax, and the city could add an additional 2.5% tax. If the marijuana is sold as “edibles,” it would be subject to Richmond’s 7.5% meals tax, providing even more revenue.
Richmond Mayor Danny Avula supports legalization, citing the need to reduce unnecessary criminalization and the risks associated with unregulated marijuana sales. He believes a legal, well-regulated market could help reduce those dangers and allow law enforcement to focus on more serious threats.
While medical marijuana sales are already brisk in Virginia, with nearly $30 million in sales in the first two months of the year, the state’s untaxed medical marketplace is humming along. The Virginia Cannabis Control Authority is working to establish a framework for a potential recreational market, but it is not yet funded or staffed for a retail market.
If the timeline for Virginia’s legislation remains the same, a federal THC ban in November 2026 would be followed by the beginning of recreational marijuana sales in the state on May 1, 2027.
The tax revenues from recreational marijuana sales would be distributed statewide, with 10% going towards Pre-K programs, 60% towards a 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. The bill will include refinements based on public feedback and lessons learned from other states.
