Citizen Portal
Sign In

Senate panel advances comprehensive cannabis marketplace substitute directing CCA-ABC merger, 17% tax rate and $15 million conversion fee

Senate of Virginia - Committee · February 13, 2026

Get AI-powered insights, summaries, and transcripts

Subscribe
AI-Generated Content: All content on this page was generated by AI to highlight key points from the meeting. For complete details and context, we recommend watching the full video. so we can fix them.

Summary

A Senate committee approved a substitute for SB 542 that consolidates cannabis regulatory functions, sets a 17% tax, a $15 million conversion fee, and requires a plan to merge the Cannabis Control Authority into the Alcoholic Beverage Control Authority by Jan. 1, 2028; the committee also incorporated SB 826 into the measure.

A Senate committee on the floor in Richmond approved a substitute for SB 542 that would reshape Virginia’s cannabis marketplace regulation, set a 17% tax rate and require a $15 million conversion fee to fund transition costs.

The sponsor moved to adopt the committee substitute, which staff said tightens application and background-check language, aligns medical and retail labeling and packaging, and adds subsections addressing banking and a general prohibition on certain internet sales. Katie, a committee staffer, explained an enactment clause directing that no later than Jan. 1, 2028, the Cannabis Control Authority (CCA) become a division of the Alcoholic Beverage Control (ABC) Authority to form a combined Alcoholic Beverage Cannabis Control Authority. The substitute preserves the CCA’s policy-board role while ABC is assigned primary enforcement duties during and after the transition, and requires a joint implementation plan to the Joint Cannabis Commission by Nov. 1, 2026.

The substitute retains revenue allocations outlined in related proposals: 40% of marijuana tax and fee revenue for early childhood education and 30% to a Cannabis Equity Reinvestment Fund. Committee staff attributed the 17% tax rate and the $15 million conversion fee to provisions originating in Senator Lucas’s introduced bill. The sponsor also moved to incorporate SB 826 into SB 542; the committee approved the incorporation and then voted to recommend the substitute for reporting out of the committee.

The committee’s action was procedural approval to advance the substitute; it did not, in this hearing, set final statutory text beyond the substitute or finalize implementation details. The substitute specifies roles during the interim period: CCA handles licensing and regulation, ABC serves as the primary enforcement agency, and both agencies must coordinate enforcement functions. The panel approved the measure by voice vote.

Next steps: the reported substitute will proceed through the legislative process, where additional floor action, amendments, or fiscal analysis could change tax, fee, or structural provisions before final enactment.