What’s In Bill H.612?
As lawmakers in the State House take their annual Town Meeting Day recess and crossover approaches, a procedural deadline for bills to move from one legislative chamber to the other to be passed into law, Bill H.612 has emerged as the leading cannabis-related legislation and most likely to reach the Governor's desk this year. We take this moment to break down each section of the bill and offer analysis as we prepare to continue advocacy in the Senate after recess.
A page from Bill H.612 (2024), An act relating to miscellaneous cannabis amendments.
“Our intention with this breakdown and analysis of the bill and what’s happening in Montpelier is to help ground and inform ourselves and one another and to help maintain and build awareness and unity for effective grassroots organizing.”
The Vermont 2024 legislative session began in early January with numerous pieces of cannabis-related legislation, some introduced this year and some pre-existing from the last year. Over the last few months, some of those bills have fallen by the wayside, and some have had language lifted from them and included in what has emerged as the leading cannabis-related bill this legislative session, Bill H.612, an act relating to miscellaneous cannabis amendments, the Cannabis Control Boards (CCB) bill, and the bill that is most likely to advance toward enactment this year.
Historically, in Vermont, cannabis-related grassroots voices are heard and acted upon substantially more in the Senate than in the House, a dynamic we hope to change. For example, in past legislative sessions, Senators have amended bills with VGA’s priorities that committees in the House did not even care to take up for discussion, and the Senate has reversed regressive language that the House included in bills. Although we found time in committees in the House this year, albeit not as much as we requested, our voices were not heard, and at the end of the day, our expressed concerns and ideas are not reflected in Bill H.612 as it prepares to leave the House for the Senate. It also means that we plan to make more of an impact in the Senate and, by the end of the session, arrive at a bill that better reflects our shared interests, the 2024 Policy Agenda, and the Vermont Cannabis Equity Coalitions 2024 Priorities.
Bill H.612 Breakdown and Analysis
We want to take this time now to break down all seventeen (17) sections of Bill H.612 and offer analysis so that everyone is well-informed on this important piece of legislation as it leaves the House and moves into the Senate chamber where we plan to engage the bill in committee with licensees and mobilize through action alerts. The current text of Bill H.612 is a little challenging to find on the Vermont Legislature website, so we include it here for your reference (link) and encourage you to read the bill alongside the breakdown and analysis.
Section 1
This section brings hemp-derived products and hemp products under the jurisdiction of CCB by redefining them as cannabis products, which then allows the CCB to prohibit them using its already enacted 2.17 rule (link).
Analysis: We support this section. Synthetic cannabinoids, including delta-8 and delta-10 tetrahydrocannabinol, should be prohibited in Vermont. While the state cannot interfere with interstate commerce, we should do what we can to prohibit out-of-state hemp from being converted or concentrated and allowed to enter the adult-use supply chain. We are also working to move Rule 2.17 directly into statute, preventing future Boards from reversing this vital policy.
Section 2
This section amounts to a minor technical change that redefines the definition of “Controls,” “is controlled by,” and “under common control” for a licensed business for the purposes of obtaining FBI National Crime Information Center (NCIC) federal background checks. The FBI had previously rejected Vermont’s request to use the NCIC for adult-use-related background checks. This legislative change is an attempt to fix that.
Analysis: We support this section. Third-party contractors have demonstrated to be cost-prohibitive, and the FBI background check would cost a licensee around $50 and reduce turnaround times for initial licensing and license renewals.
Section 3
This section is an amendment to prohibited products that would allow newly proposed medical-use-endorsed (MUE) retailer licensees to buy, possess, and sell cannabis and cannabis products otherwise prohibited under the THC caps. Only state-registered patients and caregivers would be allowed to purchase these products from MUE retailers. More on the new proposed medical-use-endorsed retailer in a later section.
Analysis: This section was introduced with language that lifted the ban on cannabis that tests over 30% THC and solid concentrates that test over 60% THC, which was changed to only narrowly exempt MUEs from the THC caps. We support and advocate for lifting the ban on cannabis that tests over 30% THC and solid concentrates that test over 60% THC. We will work in the Senate to replace this section with its original language that strikes the THC caps from the law.
Section 4
This section includes three (3) different policies, proposing adding new criteria to the Rules for Cultivators that would allow the CCB to use performance to determine if a grower is eligible to increase their tier size or decrease in size, adding new criteria to the Rules for Retailers that would allow the CCB to use geographical distribution, population, and market needs to determine initial retailer licensure and criteria for MUE retailers for serving to those under 21.
Analysis: The language in this section is the result of a discussion in the House Committee on Government Operations and Military Affairs, led by CCB Chair Pepper in response to moratorium language proposed by Rep. Matt Birong, which we oppose, that seeks to better manage market production by allowing the agency to rollback growers that use a fraction of their allotted canopy, and begin to provide metrics for determining if an individual cultivator should be eligible to increase its canopy size. We generally support this concept, such that fairly demonstrating the ability to grow and generate demand is a form of at-scale regulation.
We oppose limiting retailer licensing three (3) years into this nascent market. There is an effort by a small number of retailers to further concentrate market leverage by limiting retailer licensure, and we see that as unjust and a threat to market viability. Additionally, this policy would only serve to inflame the bottleneck issue by further limiting the flow of products through the supply chain and into the hands of the public. Rather than limit retailer licensing, it would be better for the health of the market to expand and decentralize the points of access for the general public by replacing retail opt-in with opt-out and implementing direct sales for small producers.
Laslty, we support tasking the CCB to develop rules for this new MUE retailer idea for serving those under the age of 21.
Section 5
This section represents a significant new policy that proposes a new “medical-use endorsement” retailer license type that recreates the benefits medical dispensaries have for adult-use retailers, such as delivery, tax-free sales, greater possession and quantity limits, the allowance to sell products affected by the THC caps, curbside pickup, and more.
Analysis: We support decentralizing points of access for state-registered medical cannabis patients and caregivers, and this proposed concept would begin that transition away from medical dispensaries, though it is not without its shortcomings. We will seek to work to refine this concept with Coalition partners, Green Mountain Patients Alliance, to improve the language in the Senate.
Section 6
This is a technical section and where the language resides that proposes creating a new annual licensing fee of $10,250 for the newly proposed MUE retailer license type – that's $250 added onto the $10,000 annual license fee for retailers.
Analysis: We support a nominal fee for this newly proposed license as it affords retailers a broader customer base.
Section 7
This small section seeks to include ulcerative colitis as an eligible medical condition for the medical cannabis program.
Analysis: While we generally support expanding medical and therapeutic access to cannabis, the principle behind narrowly including ulcerative colitis but not other GI-related conditions is too exclusive and inappropriate. Further, we also believe lawmakers in the State House generally don't wish to act as medical professionals by recommending individual conditions for cannabis use. A better way to approach medical program eligibility is what the Green Mountain Patients Alliance recommends to move from a conditions-based to a symptom-based approach.
Section 8
Another medical cannabis program-related section, this short passage seeks to increase card renewals for all patients to three (3) years.
Analysis: Though some patients, such as those with life-long conditions, should not need to renew their cards, we support this section.
Section 9
This section proposes to reduce the license fee for medical dispensaries from $25,000 to $5,000 and their one-time application fee from $2,500 to $1,000.
Analysis: We oppose this section. Medical dispensaries are vertically integrated businesses that can grow, manufacture, distribute, and sell products to state-registered medical cannabis patients and caregivers – their fee structure should be more considerate of the cost to vertically integrate within the adult-use licensing structure and no less than $10,000, the license fee of an adult-use retail license.
Section 10
This is a very short section that proposes striking the CCB’s fee for reviewing advertising.
Analysis: In general, we believe the CCB should not tasked with reviewing and approving advertising, and to that end, we support this small change.
Section 11
This is another short section, and it proposes replacing the Department of Public Safety (DPS) with the CCB for determining the weight methods of cannabis products.
Analysis: We support any change that moves regulation and administration of the adult-use and medical cannabis program away from law enforcement.
Section 12
This section proposes to exempt farm buildings used by licensed outdoor cannabis cultivators and the outdoor portion of mixed-use cultivators from the definition of “public building” subject to fire safety requirements.
Analysis: We support this section. Vermont is one of the few states with any form of agricultural acknowledgment for cannabis. As one of the architects of Vermont’s cannabis-related agricultural law, alongside Rural Vermont and NOFA-VT, and comrade and former state senator John Rodgers, which we first earned in 2022 with Act 158, we have since returned each year seeking to expand the regulatory benefits of farming for outdoor cultivation, and this is section would bring substantial progress in that effort.
Section 13
This is a more technical section and where the language resides that exempts the newly proposed MUE retailers from paying the cannabis excise tax and mandates those businesses record those transactions and report them to the Department of Taxes.
Analysis: We support the state exempting retailers from paying the cannabis excise tax on transactions for state-registered medical cannabis patients and caregivers.
Section 14
This is another technical section and where the language resides that exempts the newly proposed MUE retailers from paying the state sales tax and mandates those businesses record those transactions and report them to the Department of Taxes.
Analysis: We support the state exempting retailers from paying the state sales tax on transactions for state-registered medical cannabis patients and caregivers.
Section 15
This section proposes a one-time $500,000 appropriation for the Cannabis Business Development Fund to be managed by the Agency of Commerce and Community Development.
Analysis: Equity and community reinvestment funding is an uncompromising foundational component of a just regulated cannabis market, and where we have seen no progress in Vermont. By comparison, New York state devotes 40% of its cannabis excise tax to equity and community reinvestment in perpetuity in statute. In Vermont, we seek 20% of tax revenue to reinvestment in communities disproportionately harmed in a community reinvestment fund, and 10% devoted to the Cannabis Business Development Fund, and reposition the grant program to a Community Investment Development Fund Administration that consists of individuals from communities impacted. We will work in the Senate to move this section closer to our policy position.
Section 16 and 17
This section proposes restricting outdoor siting by local select boards by enabling local municipalities to create "preferred districts" for outdoor cultivation. The legislation then establishes maximum and minimum setback requirements and limitations based on whether or not the cultivation occurs within the "preferred" district. The setback is a maximum of 100 ft if outside the district, 25 ft if within the district, and 10 ft minimum if there is no zoning.
Analysis: We oppose this section. As currently written, it is far too overreaching by threatening the over 200 actively licensed outdoor and mixed-use cultivators and introducing significant risk and uncertainty to the entire marketplace.
The siting of cannabis cultivation in densely populated areas of Vermont is an important conversation to have, but it is important to thoroughly assess the impacts of any proposed restrictions on the siting of outdoor cultivation in dense areas in towns and cities before enacting into law, and that assessment has not occurred with this proposed policy change.
Conclusion and A Look Ahead
Moving forward, we recognize that Bill H.612 is the CCB's bill this year in the State House and is on a path toward enactment. While we oppose the bill in its current form, at this moment in the legislative session, it is better to try to work with lawmakers to change the bill and make it better represent our interests to help obtain needed reforms and improve the market this year. To that end, not only do we plan to strike the regressive sections that we note we oppose in the breakdown above from the bill, such as the outdoor siting section, but we also plan to hold committee conversations around and work to include new policies such as equity and community reinvestment funding, public consumption, product registration reform, direct-sales allowances, farmers market-style events, and more.
There is a lot of buzz inside and outside of the industry surrounding Bill H.612. We see some valuable engagement and discussions occurring within the industry and with lawmakers and encourage that activity, and we also see some misinformation floating around. Our intention with this breakdown and analysis of the bill and what's happening in Montpelier is to help ground and inform ourselves and one another and to help maintain and build awareness and unity for effective grassroots organizing. Stay frosty. We anticipate a busy second half of the legislative session. Cannabis legislation usually stays around till the final days of the session for deliberation, and we plan to dispatch action alerts and ways to engage elected officials in effective and community-oriented ways to help bring meaningful and system change. Ever forward.