Cannabis sales in Vermont have been a long time coming.
Two years ago, the state became the first in the nation to legalize by legislature, instead of by ballot box, but only for possession and home grows. In December, Vermont Attorney General T.J. Donovan said that this put the state “probably in the worst position we can possibly be in, where we’ve legalized possession of cannabis, but we’ve remained absolutely silent on how Vermonters obtain it.”
Now, state lawmakers appear ready to legalize sales, but disagreements over the details could mean more delays.
Before the coronavirus pandemic put the United States on pause, the Vermont Senate and House chambers had both passed legislation that would tax and regulate cannabis sales. On Wednesday, a committee of six lawmakers convened for the first time, on Zoom, to try to reconcile the differences between their versions of the legislation. Once they are able to do so, and the chambers approve the reconciled version, the bill will head to Gov. Phil Scott’s desk.
Michele Childs, legislative counsel, led Wednesday’s meeting by providing a side-by-side summary of the two versions. Several areas are early flash points of disagreement: taxes and where the revenue will go; local control; advertising; and a seatbelt provision that some lawmakers fear could increase the number of traffic stops, particularly affecting people of color.
After about two hours of debate, the panel of lawmakers went into separate Senate and House breakout rooms to discuss some of the thornier policy areas. The panel decided to meet two more times, scheduled for August 24 and August 31.
Both proposals have sales being regulated by a new body with three members and two staffers, but the difference is in how those members are selected. The Senate, for example, had the chair appointed by the governor. The House chose to go the route of a nominating committee, who would then vet candidates for board positions and send names to the governor, who would then select based on the list.
The Senate proposal has this board regulating both the medical and adult use programs, while the House has the board only regulating the adult use program, while the Department of Public Safety would continue to regulate the medical program.
There are some specific differences between the types of rules that the regulatory board would need to create related to applicants. For example, the Senate version would require submission of an operating plan and a fingerprint background check. The House version would require rules to be created around the type of business, the controlling owners, the sources of capital, identities of investors, and a requirement to file an amendment to an operating plan if there’s a “significant change in organization, operation, or financing.”
The Senate version requires the development of tiers for cultivation, while the House has the same, but the House is asking the board to do the same for retailers.
The Senate proposal suggests that “Vermont residents have priority in obtaining licenses,” while the House instead suggests that the Agency of Commerce and Community Development work with the Agency of Agriculture, Food and Markets to provide Vermont residents services like technical assistance.
On local control, the Senate version has an opt-out system, meaning that a jurisdiction would have to vote to ban specific types of activity, like banning retail. In other words, a qualified applicant could operate in any jurisdiction “unless a town affirmatively voted to exclude and ban that type of licensee,” said Childs, the legislative counsel.
The House version has proposed an opt-in process for retail, but not other license types. “If a town wants a retailer, they would have to opt in,” Childs said.
Sen. Dick Sears flagged potential problems that could arise based on which approach to local control Vermont takes, and pointed to Massachusetts, where companies paid jurisdictions an “impact fee,” in some cases six figures, in order to secure the greenlight for a cannabis business to open up in that locality.
“It’s, you know, for lack of a better term, kind of a bribe payment to the town. You know, we’ll give you $200,000 if you let us open our retail store,” Sears said. “In reality, when you have an opt-in and you have a store that wants to open, they would then put all kinds of political pressure on to get a positive vote.”
Rep. Rob LaClair responded that, in the House discussions, “a lot of the motivation and concern behind it was that by leaving it where you have to opt out, that it puts a significant amount of burden on any community to have to go through and have a public vote and address the issue somewhat preemptively.”
Sears responded, “Can I suggest that the Senate side has significant concerns about this provision? And it’s something that we need to work through if we’re going to be successful in the conference?”
The Senate proposal would allow advertising if companies could show that 70% of the audience is over the age of 21, and other requirements, like banning any advertising that promotes overconsumption or shows a minor using cannabis. The House version outright bans cannabis-related advertising.
Sears said that the biggest concern during discussions in the Senate Judiciary Committee was that to “not allow advertising could be something that would be unconstitutional,” adding that the committee fielded similar comments from the public. “I don’t think it would throw the whole bill out, but it might cloud the situation if we didn’t allow some form of advertising.”
On social equity, the Senate and House largely agreed on broad areas, like whether a social equity applicant would “foster social justice and equity in the cannabis industry by being a minority or women-owned business,” or whether the businesses would have to hire or “implement a development ladder” for minority employees, or those who have been disproportionately affected by the enforcement of cannabis laws. One difference is that the House version proposes the creation of a Director of Racial Equity.
On cannabis products, the House side is notably more restrictive. For example, the Senate version bans cannabis products that contain alcohol, nicotine, or are appealing to kids. And no packaged cannabis product meant for oral consumption can contain more than 100 mg of THC. The House version would not allow cannabis flower with more than 30% THC; solid concentrate with more than 60% THC; and no products containing more than 50 mg THC, unless it was a topical. While states with legal adult use cannabis limit THC levels in edibles and concentrates, and other processed products, no such state has capped the percentage of THC allowed in flower products.
“These are all consumer protection things. We’re very concerned in the House about highly concentrated THC in various products, in flower or, you know, shatter and wax, that can be up to 90 percent THC. And so this is actually a really important position for the House,” Rep. John Gannon said.
On taxes, in the Senate plan, a 16 percent cannabis excise tax would be created, which would apply to the retail sale of cannabis and cannabis products, with revenue headed to the general fund. The House plan involves a 14 percent excise tax, with 30 percent allocated for substance abuse treatment.
Sen. Jeannette White voiced concern about the fixed percentage of tax revenue headed toward prevention.
“I do believe that money should go into prevention and education. I think determining a particular percentage doesn’t make any sense because we don’t have any idea of what that might be,” White said. “Revenues should go into the general fund and then it should be distributed the way it is needed at that particular time. So I do have a real, real issue with this.”
Gannon pushed back. “Unfortunately, we don’t have funds for substance abuse right now. And I think the importance here is that, as I think we all know, with and tax regulate, there’s likely to be larger usage. And I think it’s important that there be dedicated money to ensure that there isn’t abuse of cannabis or other drugs and that we need to do more in that area.”
Sears responded by indicating yet another area that will need to be ironed out before cannabis sales can advance. “Well, then I guess that’s a general disagreement. We’ll see what we can do to work it out.”
While discussing highway safety and detection of cannabis impairment, saliva testing emerged as an area of disagreement, as the House version proposes saliva testing, while the Senate version does not. Childs, the legislative counsel, highlighted that the House is proposing the enforcement of seat belt laws for people over the age of 18, which some panel members found irrelevant to the cannabis sales legislation.
Sears asked for an explanation about how that provision made it into the House version.
“As you know, the Senate, the governor, long opposed that. This is like a deal killer. So I find it very troubling. This was added to the bill by the other body,” Sears said.
Sen. Joe Benning said that he was the only person practicing criminal law in the meeting, and cautioned the panel on the potentially dire consequences of the seatbelt provision.
“A police officer does not need another reason to pull over a car in the middle of Black Lives Matter conversations. This does exactly the opposite of what we would hope a bill like this would be doing, to bring some kind of racial justice into this picture,” Benning said. “I’m very concerned that if this is placed here, you’re going to increase the number of times that the car is stopped. Not because they’re exhibiting any signs of impairment, but simply because they haven’t put their seatbelt on,” he added, calling this policy area “absolutely a deal breaker” for him.
White emphasized that “this is a cannabis regulation and taxation bill,” and that’s what it should be focused on, whereas the seatbelt provision “has nothing to do with cannabis taxation and regulation.”
“I find it just a little unsettling,” White said. “We could start putting all kinds of wish-list things in here that deal with public safety, that will have nothing to do with the core of the bill.”
Gannon responded, “I’m sorry you feel that way. This is a critical position for the House.”
Sears said that he didn’t want to “waste everybody’s time” continuing a discussion that appeared to have reached an impasse.
“We can talk about all the other differences and everything else, but this is a deal breaker for us. So if the House is going to insist on this provision, then we might as well walk away today,” Sears said.
Wednesday’s meeting adjourned without resolution on the seatbelt amendment, though compromise could happen between now and the next two scheduled meetings.
“Once you open this door, you are going to radically increase the number of stops because people aren’t wearing their seatbelts,” Benning said. “That’s going to have an impact, especially on people of color who are coming here from out of state that may not have their seatbelt on when they do. And I don’t think we want to go there in a bill that deals with taxing and regulating marijuana usage.”