Year End Wrap Up and Rules Update

As the year comes to a close, we look back at the progress made in 2021, both in the State House and the new Cannabis Control Board, the work that remains, the rulemaking process, and what to anticipate in 2022.

“We anticipate the rulemaking process will conclude sometime in February 2022, however, the timeframe for the bills that are also needed is less certain. What we do know is that this market formation timeline leaves very little time for businesses to navigate the final rules before April, when applications open up for craft cultivators, integrated licensees, and testing labs.”

Where Is Market Formation and the Rulemaking Process?

The Cannabis Control Board has now filed five rules with the Secretary of State and submitted two reports to the legislature, with a third report expected in early January. In addition to the rules and legislative reports the CCB developed and has yet to complete, there will also be multiple bills in the upcoming legislative session, which convenes on Wednesday, January 5, that must be enacted to arrive at a market.

We anticipate the rulemaking process will conclude sometime in February 2022, however, the timeframe for the bills that are also needed is less certain. What we do know is that this market formation timeline leaves very little time for businesses to navigate the final rules before April, when applications open up for craft cultivators, integrated licensees, and testing labs.

Where did this market formation timeline come from? It was codified into statute by Act 164 (2020) and ACt 62 (2021) and was a central reason we opposed bill S.54 in 2020 and S.25 in 2021, we understood this process that would play out was impractical and inequitable or Vermonters that wish to participate in the emerging adult-use marketplace, and perhaps, equally important, the law would tie the hands of the new regulators to introduce greater fairness and equity. Together, we have watched this scenario play out to a "T" over the past year. Below we take a close look at the proposed rules and legislative reports the CCB developed, to-date. 

The Five Rules

The Cannabis Control Board held its first public meeting on May 27, 2021. Act 164 tasked this new state agency with an insurmountable assignment, to implement and form an adult-use cannabis marketplace in 7 months under an overly restrictive framework that Act 164 and Act 62 created. To begin rulemaking, the CCB hired out-of-state consultants, which we opposed, defined agency guidelines, formed subcommittees, and developed five rules under their responsibility: Rule 1, The Licensing of Cannabis Establishments, Rule 2, The Regulation of Cannabis Establishments, Rule 3, Medical Cannabis, Rule 4, Compliance and Enforcement, and Rule 5, Board Removal.

Rule 1, The Licensing of Cannabis Establishments
This proposed rule is over 20 pages long and defines the licensing structure, application process, renewal process, and other details for each license type. The rule, as currently proposed, falls short of the enabling statute defined in Act 164 to address inequities from cannabis prohibition and successfully transition Vermont's illicit businesses into the legal market. To improve Rule 1 and align it with enabling statute, the language will need to integrate more accessible license types, more sophisticated definitions of cultivation, manufactoring, reduce or remove any criminal background requirements, include direct sales, and more. Read proposed Rule 1 here.

Rule 2, The Regulation of Cannabis Establishments
Rule 2 is another long and essential rule, is over 30 pages long and defines the requirements each license holder must abide by, including safety, security, record-keeping, track and trace, packaging, waste, and much more. Taken as a whole, as currently proposed, Rule 2 will likely be very challenging for most Vermonters to meet and will create a market difficult to participate in, as a business, unless you are wealthy and well-resourced. To reform Rule 2 and create greater equity, the language will need to integrate more exemptions and carveouts for license holders, such as Social Equity and Cultivation licensees. Read proposed Rule 2 here.

Rule 3, Medical Cannabis
The medical cannabis rule exists because Act 164 folds the current medical cannabis program under the management of Department of Public Safety and move it into the CCB, by January 2022. Unlike Rule 1 and 2, Rule 3 is mostly procedural and includes language for patient and caregiver registration, licensing and regulation of dispensaries, and more. Most of the substantial rules for the medical cannabis program, such as plant counts, will come from the legislator, as most of the program is codified into law and will require a bill for reforms. Read proposed Rule 3 here.

Rule 4, Compliance and Enforcement
This is an important proposed rule, as the last thing we want to do is re-criminalize something we just made legal. Rule 4 is about 14 pages long and includes language that defines complaints, investigations, violations, penalties, and more for license holders. Read proposed Rule 4 here.

Rule 5, Board Removal
Similar to Rule 3, Medical Cannabis, Rule 5 is mostly procedural in scope and details how, when, and why a member of the Cannabis Control Board shall be removed. Act 164 articulated an appointment process for the CCB but not a removal process, it is essential to have a platform to remove regulators from the agency, should they need removing. Read proposed Rule 5 here.

Look Ahead to 2022

The New Year will likely be Vermont’s biggest and most active year, to-date, for cannabis, both, in the State House and in the CCB. Yes, this past year was full of cannabis activity, from S.25 and H.414 in the State House, to an entirely new state agency forming and beginning the task to form an adult-use market. We anticipate that work will intensify, this upcoming year, and culminate with the emergence of sales and the early signs of a functioning market.

As the states largest member-based cannabis nonprofit, Vermont Growers Association will continue to advocate in step with the Vermont Cannabis Equity Coalition, and others, to ensure our vision, principals, and recommendations for the emerging marketplace bring viability and wealth to local families and those most harmed by prohibition, position our state for federal legalization, bring reparations, land and home ownership to BIPOC, and work to transition Vermont’s legacy businesses into the legal marketplace.