De-activating a VM-series firewall requires an API key to be configured on the firewall - Panorama

• When Deactivating the VM from Panorama, the following message is seen. 
• De-activating a VM-series firewall requires an API key to be configured on the firewall and the "Verify update Server Identity" check to he enabled. Please enable these configurations and try again.
• Even after configuring the API key on the firewall the same error is seen again.

• Panorama managed VM Firewalls
• Supported PAN-OS
• Deactivating the VM

Since deactivation is being attempted from Panorama, the key needs to be configured on the Panorama.

1. Configure the API key on the Panorama
2. Ensure  "Verify update Server Identity" is enabled under Setup > Services.
3. This should resolve the issue.

Install API Key on the Panorama.