As summer quickly approaches and the growing season gets underway, the State House has adjourned with two major pieces of legislation impacting the emerging adult-use marketplace, bill H.701, the license fee bill, and S.188, an agriculture bill that transformed into a clean-up bill, including a compromise on the THC caps, the Cannabis Control Board is approaching 20-approved licenses to operate and has begun approving license applications for non-Social Equity and Economic Empowerment applicants, and with the outdoor growing season here many are wondering what this first year of the market will look like.

The Vermont State House adjourned on Thursday, May 12, this year, ending a very busy legislative session for adult-use cannabis policy. Several key pieces of legislation were deliberated, which we overview in an earlier post, and issue-specific battles escalated and got heated at times, notably around the THC caps and agricultural designation. Lawmakers left for the year with Governor Scott signing into law H.701, the license fee bill, which became Act 86 (2022), and S.188, an agriculture bill that transformed into a clean-up bill, which became Act 158 (2022). With these two bills as law, there are now a total of three laws that the State House enacted to amend Act 164 (2020), the original taxation and regulation law, they are Act 15 (2021), Act 86 (2022), and Act 158 (2022).

H.701, The License Fee Bill

On Friday, March 25, 2022, Governor Scott signed into law H.701, the license fee bill, a critical piece of legislation needed to stand up the adult-use marketplace, becoming Act 86 (2022). Vermont would not have an adult-use market without license fees. We overview the details of Act 86 (2022) in an earlier post.

S.188, an agriculture bill

On the morning of Tuesday, May 31, 2022, Governor Scott signed into law bill S.188, an agriculture bill that transformed into a clean-up bill, and includes numerous changes to the adult-use market, becoming Act 158 (2022). The language in the bill as first introduced at the start of the session was rather simple and addressed three cultivation-related issues and one wholesaler-related matter: regulate the activities of a licensed small cannabis cultivator as farming; amend the criteria regarding the area for cultivating cannabis commercially and for personal cultivation; allow licensed cultivators to purchase and sell seeds and immature plants to one another; and allow licensed wholesalers to buy and sell seeds and immature plants to licensed cultivators.

VGA and the Vermont Cannabis Equity Coalition drafted extensive recommendations for bill S.188 and proceeded to hold meetings with key lawmakers, members of the Cannabis Control Board, other state agencies, such as the Joint Fiscal Office, and testify before committees in the House and Senate to push this bill to be as impactful as it can be to move the adult-use market to be more fair and equitable. Even though we agreed with some of the principles behind some of the policies in bill S.188, such as agriculture designation, it is our job to educate and move lawmakers to be even more equitable, fair, and inclusive with their legislation, and that is what we did.

Throughout the session, we worked on bill S.188 to allow licensed cultivators to sell seeds and living plants to other licensed cultivators and directly to the public. Cannabis growers should be able to sell the seeds and living plants they produce to the general public, no different than hemp or market farmers. Small producers need direct access to customers to form relationships for viability purposes. Allowing licensed cultivators to sell their seeds and living plants will open up these relationships and provide supplemental revenue to small farms and businesses. We also fought to define outdoor cultivation as an agriculture activity not limited to current use or adult-use license tier size. Many local family farms are interested in entering the market at a canopy size larger than tier-1, and many do not yet have land, therefore limiting agriculture designation to farms with tier-1 licenses and in current use is exclusionary. In a moment when BIPOC in Vermont represent less than 1% of total farm ownership, requiring current use is not good policy. The other issues we fought for this year, on S.188 include:

• A limited online retail supplemental license, providing a supplemental licensing option to licensed cultivators and manufacturers to sell their own products, only, through an online storefront with delivery;

• A nursery license, providing a standalone license allowing for the purchase of seeds and living plants from licensed cultivators, and the ability to sell seeds and living plants directly to the public;

• Increased Allowance for Home Cultivation to 6 mature and 12 immature plants;

• Not allow wholesalers and retailers to purchase and sell seeds and living plants, an overreach of allowances which would undermine the inherit and intended value of licensed cultivators and nurseries.

S.188 Transforms, & The THC Cap Compromise

Around mid-May, we arrived at an impasse with lawmakers on bill H.548 surrounding the issue of the THC caps, the CCB’s original clean-up bill where the THC cap reforms began at the start of the legislative session. It is important to note we moved the CCB, the Senate, and some members in the House to accept THC cap reforms, but not Rep. John Gannon, Wilmington-6, or Sarah Copeland Hanzas, Orange-2, two powerful House members. Through a public-facing and closed-door campaign, we brought unprecedented scrutiny onto these few lawmakers in the House responsible for the first-in-the-nation THC caps for an adult-use market, and together we nearly removed them.

Bill H.548 saw an extended back-and-forth between the House and the Senate over the CCB’s recommended THC cap reforms. After we brought heightened scrutiny to Rep. Gannon’s efforts to obstruct the THC cap reforms, we succeeded in pushing lawmakers to convene a Committee of Conference for bill H.548. Once the Conference Committee members were named, the House members sought to abandon the bill to avoid further negotiations over the THC caps. At that time, Senators and the CCB, with input from VGA, worked on a compromise with the obstructionists in the House to amend bill S.188 with language from H.548, effectively using S.188 as a vehicle and letting H.548 die in committee.

The outcome of this tense legislative process surrounding bill S.188 includes three points of compromise on the THC caps:

• Solid concentrates that test over 60% THC may be produced and sold by licensed manufactures to other licensees but licensed retailers may not sell solid concentrates that test over 60% THC to the public;

• Liquid concentrates that test over 60% THC may be packaged and sold to the public;

• The CCB is to submit a report to the General Assembly by December 2022 on the market impact of the THC caps, and the status of the illicit market for those products in other states.

As unfortunate as this outcome is, a compromise was struck and there is a plan to re-approach this issue next year with lawmakers. The rest of bill S.188 brings the following changes to the adult-use market:

• Licensed cultivators may purchase from and sell seeds and living plants to other licensees;

• Wholesalers may purchase and sell seeds and living plants to other licensees;

• Licensed tier-1 cultivators who grow outside and are in current use will be eligible to receive some of the benefits of agriculture designation;

• Medical dispensaries may no longer use butane or hexane to manufacture products;

• Online ordering is no longer prohibited for licensed retailers;

• Licensed retailers may now package cannabis and cannabis-related products;

• The creation of employment identification cards, allowing someone to apply for an identification card prior to obtaining employment with a licensee, authorize the person to work for any licensee;

• Allow the CCB to use a third-party for criminal background checks;

• Allow for flower to be sold to the public in child-deterrent packaging;

• The hemp program is moving out of VAAFM and into the CCB, starting with testing and the CCB is to submit a report to the certain committees by January 2023 with recommendations on how the it would regulate hemp, hemp-related products, hemp processors, and hemp product manufacturers;

• The CCB is to establish a testing and quality control program for hemp and hemp-related products.

Looking Ahead

Vermont’s adult-use market rollout is slow and clunky and will continue to be, and this comes as no surprise to us, this is how Act 164 was designed to function. Though the CCB has some discretion when it comes to the prioritization of licensing, the law includes a staggered licensing rollout that is not outdoor-friendly, nor is it small producer-friendly in general. As a community we must recognize that Act 164’s formation process tells us plants were not intended to be in the ground on May 1, 2022, as some local groups may have conveyed through misinformed rhetoric, instead it gave Vermont a status quo cannabis law that prioritizes large out-of-state businesses over Vermonters, and we are watching this process unfold before our eyes.

VGA and the Vermont Cannabis Equity Coalition will continue to work throughout the year with the CCB and lawmakers to bend our marketplace to be what we need it to be: a just, equitable, craft-centric, and uniquely-Vermont adult-use marketplace that well-positions us for federal legalization. We have extremely talented cannabis growers and manufacturers in our state, our cannabis market must reflect our collective interests, and it will.