Well given the cynical tone of everything else in the kingdom, I could imagine that if they did deal with it, the film would have gone for this and demonstrated with some of the guards offering a "de-virgin-isation" for protection as a scam.
People with far too much time on their hands have surmised that dragons might be susceptible to certain diseases that humans can only contract by sexual relations. Thus, virgins.
Or, in the context of a world with magic, virginity may have some intrinsic power that is released upon death (thus virgin sacrifices) or harnessed upon ingestion by a magical creature (such as a dragon).
Or, it being a PG movie, sexual relations outside of a caring and committed relationship (preferably marriage) were simply not part of the genre.
Watching on Netflix, some Fridge Brilliance struck me:
Some complain that if Galen simply had sex with Valerian, she'd be spared from the Lottery. However, "virgin" in the Middle Age setting context may just mean a woman below a certain age, since if being a virgin was a qualification, it's pretty obvious other girls in the village would have thought of that escape clause far earlier. Besides, Vermithrax is not a god - she is a mother feeding her young and herself. Doubtful she'd care if the food had sex or not.
Jonah Falcon