Hello @Blessing Akiri ,
Thank you for posting your query on Microsoft QnA.
We do not officially support Azure Policy on Azure Stack Hub. Though only ARM specific policy (mostly specified in the link below) definitions/assignments still work , but most portion of policy involves resource provider policies and brownfield scenarios which does not work today in Azure Stack Hub, hence it is not supported.
Link https://learn.microsoft.com/en-us/azure/azure-resource-manager/management/tag-policies
Hope this information helps.
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