Everything Virginia Entrepreneurs Need to Know
April 1, 2026
After many fits and starts, we’re starting to see Virginia’s adult-use market kick into high gear. Now we are still waiting on some key details from regulators, but we do have some valuable insight into some crucial aspects for entrepreneurs interested in pursuing cannabis licensure.
Ownership Limits
There are strict and clear ownership requirements in Virginia’s emerging adult-use cannabis marketplace. These include:
Pursing at most five cannabis licenses per person or entity (excluding the transporter license)
Restrictions on microbusiness licenses on holding any other license type
Restrictions on holding a testing license alongside other operational license types
Restrictions on medical operators and their adult-use expansion
Ownership itself is defined broadly. Ideally, we’re looking at ownership for individuals and entities that are over 10% or a meaningful control over a business.
And when it comes to Virginia’s impact or social equity licensing, individuals meeting impact licensee qualifications must own a majority (51%) ownership of a business entity. And transfers more than 49% of these specific qualifying licenses cannot be made within five years.
Disclosures and Changes of Ownership Control
The Virginia Cannabis Control Authority (CCA) requires full ownership disclosure for all cannabis license applicants. This is almost exactly the same as every other adult-use marketplace in the country. Be mindful of changes in control and ownership structure.
Disclosure and approval is required when:
Acquiring 25% or more ownership or voting power
Gaining management control rights
Transfers which total more than 25% within a 24-month period
This is important to note for investors so that individuals and businesses can assess all exit strategy and M&A options.
Financing & Brand Agreements
The CCA will be reviewing financial agreements, management deals, and any cannabis brand licensing arrangements for “undue influence.”
In identifying what “undue influence” means, some key risk factors include:
Control over pricing or operations
Financial dependency
Shared personnel
Again, while passive investment, which is under 10%, is generally allowed and not as scrutinized, any agreement shifts that change ownership control is worth disclosing and seeking approval of from the CCA to avoid having your license revoked.
Tax Benefits and 280E
Of course, we cannot talk about cannabis operations without at least touching on taxes. There are, at least, some favorable structures here as it relates to taxes. Namely, Virginia has a relatively low 6% retail cannabis tax, plus standard sales taxes. There is also a municipal sales and use tax which can vary from 1-3.5%. And there is particle relief for 280E.
The Commonwealth will allow cannabis businesses to deduct ordinary business expenses at a state level, though there are still federal limitations. This can have significant financial implications and benefits for cannabis business owners and operators.
Conclusion
As you look at structuring your cannabis business, don’t hesitate to reach out to Square Deal and see what structure makes the most sense for your business.