Closing License Windows Is Not Equitable or Craft
The adult-use market has been open for such a short time, so why is the CCB already closing the license application window for outdoor and mixed-use cultivators? No one is sure of what this market is or what it will become, but we do know that tier 1-3 outdoor and mixed-use licenses are the most accessible entry-level licenses in the market, and closing their application window will have dire consequences for the cannabis economy.
Seasonally closing the application window for small outdoor and mixed-use cultivators will stymy innovation, the proliferation of locally-developed genetics, small-scale farming practices, and obstruct market access to young entrepreneurs who will be the future of this state’s economy. An action such as this goes directly against the statute mandating that the CCB prioritize craft licensing in transitioning the legacy market into the legal one. How can the CCB openly claim they are focusing on market transition and prioritizing craft licensing by reducing the application window time by 2/3 of the year?
Access
When specifically considering the ramifications of closing the license application window for outdoor and mixed-use cultivators from April 28 through December 2, has the CCB considered that the four months in which the application window remains open is now in the middle of Vermont’s winter? How is a small business person, with all the work required to become compliant for cannabis application, expected to speculate land, leases, and navigate insurance and security when the state is likely to be covered in snow and ice?
Considering the CCB’s current resource and staffing issues resulting in its inability to operationally multitask, such as keeping up with product registration, how does reducing the license application window for outdoor and mixed-use cultivators from 12 months to 4 months increase efficiency and compliance? This condensing of time will cause more strain on the CCB by now processing all outdoor and mixed-use cultivators licenses in a shorter window, it will also severely impact legacy market operators’ ability to join the market by forcing prospective licensees to navigate the time-consuming tribulations of banking, insurance, and construction, all during this newly shortened window. The stress will be felt by everyone, even ancillary businesses that support this industry.
Download our statement (PDF) on the CCB's recent decision to seasonally close the license application window for all tiers of outdoor and mixed-use cultivators.
Vermont is still going through the growing pains of its adult-use market rollout. As more manufacturers open, the state will see more outdoor flower purchased wholesale for cannabis product production. There was a shortage of outdoor cultivators during the market's first growing season in 2022, and the 60% THC solid concentrate cap compounded by the 92% vape tax created a fear that if a concentrate tests above 60% THC, it would be sold as an edible - lowering the perceived value of that outdoor flower for most cultivators. The shortage of manufacturers also created a glut in processing options for cultivators, a fact made evident by the quantity of outdoor flower being made available for pre-rolls. Outdoor and mix-use licenses are attracting legacy operators. That aspect of the market is working. There is no tangible market demand to reduce the license application window and increase the difficulty of accessing outdoor and mixed-use licenses. As this nascent market currently stands, it is operating with a shortage. We need more outdoor and mixed-use cultivators, not less.
Pricing
Currently, in Vermont, there is a shortage of available raw material for processing into cannabis products, concentrates, and edibles, as a result, distillate oil is selling at, on average, four times the wholesale price as other adult-use states, such as California and Colorado. Reducing the outdoor and mixed-use license application window will only serve to further the already high price floors being set by Tier 3 manufacturers, furthermore, the absence of these manufacturing businesses -compounded with the green rush and need for smokable flowers to hit shelves for consumers - has only served to create a shortage of raw material and quality frozen flower for processing by tier 2 manufacturers. This shortage, in turn, is why Vermont has such high prices for edibles that cannot compete with the local legacy market or adult-use markets in any state.
Without small-scale outdoor and mixed-use flower, there is less availability of small-batch, high-quality oil concentrates (i.e. rosin), and with less oil, there are fewer edibles and concentrate products. This in turn causes the prices of edibles for consumers to go up, not just because of low supply, but because the existing large-scale cultivation and manufacturers can also inflate prices from the absence of competition. I am confused as to how eliminating entry-level cultivation licensing, and shorting the market on the availability of edibles and concentrates, serves to benefit the economy in any way.
Quality
Access to outdoor crops from small farmers is essential to the success of small manufacturers. This is intrinsic to Vermont having a "craft" adult-use market, such that, small producers work together to create higher quality goods so they can, in turn, produce a product that is representative of this state’s reputation but also allows them to compete with scaled multistate manufacturers that create more affordable goods but of lower quality and benefit.
Tier 3 manufacturers can turn any flower or cannabis waste into distillate as long as it contains THC - that is why in traditional markets in other states, distillate is considered the bottom-of-the-barrel product. Those manufacturers also pay cultivators for flower by a percentage point of THC - not terpene content, freshness, or handling - the hallmarks of what makes something a craft product. When compared to more craft-made concentrates, such as bubble hash or rosin products, it doesn't matter where the flower came from for distillate production because the process for production homogenizes the raw material – think ‘Bud Light’.
On the other side of the coin, non-solvent craft-made concentrates can be strain-specific concentrate oils that are full spectrum and representative of all the properties that specific strains offer. Think Heady Topper or Hill Farmstead. It is the tier 1 and 2 outdoor and mixed-use cultivators that are experimenting with the genetics, and full spectrum products to create products of this class, and it is their tier 1 and 2 manufacturing counterparts that are spearheading the product development to deliver those craft qualities in the products they make. Do we want Lake Champlain Chocolates or Hershey’s sold at our local adult-use retail stores?
Allowing small cultivators the ability to grow plants outside every summer is a leading driver of the local adult-use market economy, it is incomprehensible that the CCB would limit these licenses after one season.
Impact
The seasonal closure of the outdoor and mixed-use cultivation tiers means that the production of cannabis products will concentrate into fewer hands while reducing the number of available products for consumers, which becomes important when thinking about competing with other state markets. These are just some of the larger picture issues that the seasonal closure of outdoor and mixed-use cultivators will cause. To close licensing windows at this early juncture is just as short-sighted as a $10,000 revenue cap on a tier 1 manufacturer or a 500-square-foot tier 1 cultivation license. A market that is designed in a manner that prevents easy access for cultivators, manufacturers, and sales is the antithesis of a real craft market.
Conclusion
This state and its producers need guidance and support as they transition from traditional or legacy markets to meet the onerous requirements set forth by Act 164. Closing Vermonters’ ability to join the market while simultaneously artificially inflating prices of wholesale and retail products is counter to the sentiment that craft licenses should be prioritized. Has anyone considered the impact that reducing access to outdoor cultivation licenses would also have on the price and availability of commercial space in Vermont? Commercial space is already expensive and hard to attain, something that has served as a massive hurdle for legacy operators to cross in becoming licensed. How about the ecological impact of creating a policy that only leads to further building and expansion of facilities, to grow under artificial light, with artificial climate control systems? The home farmer, which the craft regulations aim to support, should not be told he can only join the market during such a short window of time. Tier 1-3 Licenses of all types - whether indoor, outdoor, mixed-use, or manufacturing should be available year-round, on a rolling basis.