On May 2, 2019, the Vermont House Government Operations Committee approved S. 54 in 10-1 vote. The bill, which already passed the Senate in a 23-5 vote, would regulate cannabis businesses and tax cannabis sales at 16%, plus a 2% local option tax. S. 54 would also change “marijuana” to “cannabis” throughout the Vermont statutes.
Here is a summary of the bill’s key provisions:
State Regulation and Licensing of Cannabis Businesses
- Cannabis Control Board. An independent commission within the executive branch — the Cannabis Control Board — would regulate and license adult-use cannabis businesses. It would be composed of five full-time members. The governor would appoint the chair. The Senate Committee of Committees, the speaker of the House, the treasurer, and the attorney general would each appoint one member.
- The board would appoint a full-time executive director — an attorney with experience in legislative or regulatory matters — and hire a full-time administrative assistant. The director would hire additional staff.
- Advisory body. An appointed advisory committee would be composed of members with expertise in public health; agriculture, horticulture, or plant science; laboratory science or toxicology; systemic social justice and equity issues; women and minority-owned business ownership; substance misuse prevention; the cannabis industry; business management or regulatory compliance; municipal issues; public safety; and criminal justice reform.
- License types. The board would license retailers, cultivators, product manufacturers, wholesalers, labs, and integrated licenses. Retailers and cultivator licenses must be tiered, and other licenses may be as well. Employees must also register.
- There will be no more than five integrated licenses, one per dispensary. Because dispensaries are vertically integrated, these licenses would be as well.
- Rules. The board would develop comprehensive rules, including governing financier disclosure and eligibility, security, oversight, lab testing, health and safety, labeling, employee training, banking, tracking, storage, and transportation; mandating child-safe packaging; and banning products and packaging designed to appeal to minors. The board will develop a symbol to be used on cannabis products. Cannabis products could not include nicotine or alcoholic beverages. The board would determine qualifications for licensees.
- Potency limits for sales. Flower could not exceed 30% THC. Solid concentrates could not exceed 60%. Oils — apart from cartridges for vape pens — would not be allowed. These restrictions would not apply to medical cannabis or home cultivation.
- Advertising restrictions. Ads must be approved by the board and must include warnings. Advertising could not be deceptive, promote overconsumption, offer free samples, or be appealing to minors. Advertising would only be allowed where the licensee can reasonably expect no more than 15% of viewers will be under 21.
- Environmental standards. By January 15, 2020, the board will recommend to the legislature requirements for cannabis establishments’ energy or efficiency and environmental requirements, including related to water quality requirements, solid waste and hazardous waste, energy audits, and energy efficiency measures.
- Warning flyer. Retailers must display flyers developed by the board that include warnings, including about possible risks of cannabis and driving under the influence.
- Further study. By November 15, 2020, the board will report to the legislature:
- a plan to foster economic opportunities for those harmed by cannabis prohibition;
- regarding other jurisdictions’ experience with online orders and delivery; and
- whether it should consider expanding the types of licenses, including delivery, craft cooperative, and special events.
Promoting Small Businesses and Vermont Control
- The board must establish a system of prioritization, including for applicants, that: are medical cannabis dispensaries; have environmentally sustainable plans; are owned by minorities or women; have plans to recruit and promote minorities, women, and those disproportionately impacted by cannabis prohibition; or have plans to pay living wages and offer benefits. It will also promote a fair geographic distribution.
- Technical and business assistance would be provided for some priority applicants.
- The board must consider policies to promote small cultivators — those growing not more than 500 square feet of canopy — including prioritizing their licensure.
- Secure, outdoor cultivation would be allowed.
- Each applicant could only hold one license of any type, at one location.
- Localities must opt in to having cannabis retailers, via an annual or special meeting.
- Localities may also develop regulations and municipal licensing requirements.
Taxation and Distributing the Revenue
- Adult-use cannabis sales would be subject to a 16% excise tax on retail sales.
- Municipalities could impose a 2% local option tax if they host a retailer.
- Medical cannabis would not be taxed, and standard sales taxes would not apply.
- Up to 30% of the cannabis tax revenue (up to $6 million per year) would be allocated to the Substance Misuse Prevention Fund.
- The board would provide recommendations to the General Assembly on:
- resources, including personnel, the board needs in the next two fiscal years; and
- tiered fees it recommends for cannabis establishments.
- $810,000 is appropriated in fiscal year 2020 from the Cannabis Regulation Fund to the Cannabis Control Board, in anticipation of revenue being generated.
Detecting Impaired Drivers
- All law enforcement must receive at least 16 hours of Advanced Roadside Impaired Driving Enforcement training by December 31, 2020. By January 15, 2020, the Department of Public Safety (DPS) will report on how to achieve geographic equity on the availability of Drug Recognition Experts and whether to expand the program.
- If an officer has reasonable grounds to believe a person is under the influence, the person is deemed to have consented to a saliva test. Officers may then apply for a search warrant.
- If the National Traffic Highway Safety Association identifies a threshold level of cannabis to establish impairment and approves a roadside test that can identify it, DPS will report to legislative committees on implementing the device in Vermont.
- The board would start accepting applications for integrated licenses, labs, and cultivators (prioritizing small ones) by January 15, 2021. They would be licensed by February 15, 2021.
- Applications for labs, product manufacturers, and wholesalers would be accepted beginning April 1, 2021. They would be licensed by May 15, 2021.
- Retail applications could be filed by June 1, 2021, with licensing by July 15, 2021.
- The board can re-open the application process at any time.
- Medical cannabis sales from dispensaries are tax-free to patients and caregivers.
- Existing possession and plant limits for dispensaries end on September 1, 2020.
- Small cultivators may sell to licensed dispensaries as soon as they are licensed.