And the second to do so through the legislature.
Vermont Business Magazine Advocates for legalizing the retail sale of cannabis, including Heady Vermont, are weighing in after Governor Phil Scott allowed a bill to tax and regulate cannabis to pass into law without his signature. He also signed off on automatically expunging records for cannabis possession. Included in the bill is changing the word "marijuana" to "cannabis" in all Vermont statutes.
Vermont will now become the 11th state to tax and regulate cannabis, and the second to approve it via state legislature. Gov. Scott detailed his critiques and comments around the bill in a press release addressed to the Senate which was published Wednesday evening.
In September, the Vermont Senate cast a final vote (23-6) for S. 54, in favor of the taxation and regulation of cannabis. In a separate vote on the same day, Senators approved S. 234 — which facilitates the automatic expungement of many past, low-level cannabis possession convictions — by a voice vote.
S. 54 sets up a system for the legalized retail sale of cannabis and requires municipalities to opt-in to allow retail cannabis stores to operate. It imposes a 14 percent excise tax and a six percent sales tax on cannabis transactions.
The bill also contains some social equity provisions such as prioritizing cannabis business licenses for minorities, women and people disproportionately impacted by the war on drugs. An independent regulatory commission would additionally be tasked with promoting small business participation in the market.
“I encourage the Legislature to look to the State of Illinois as a benchmark in how to create a cannabis market that is equitable and moves toward economic justice,” Gov. Scott said in his statement. He encouraged the Legislature to consider additional supports such as creating a social equity applicant category for cannabis establishment licenses, a 50 percent licensing fee waiver for these applicants, and additional technical and financial help for equity applicants. “…Justice should be foundational to our work, not an add-on to be figured out secondary to commercial or other interests,” he added.
Vermont legalized possession of up to one ounce of cannabis and cultivation of two plants in 2018, but there are currently no regulations in place that allow for retail sales.
“S. 54 creates a licensing priority for businesses that recruit, hire and put minorities on a management ladder and for minority owned cannabis businesses,” Vermont Coalition to Regulate Marijuana Director Laura Subin told Heady Vermont in a press release they issued Thursday. “It provides for small grower licenses which lowers the barriers to entry, creating opportunities, particularly for BIPOC people who have historically had less access to capital to start businesses. It also prioritizes small growers over large growers during the initial applications period.”
While the bill does contain some social equity provisions, detractors against the bill have said it’s not enough, lamenting the lack of a mandatory funding stream for said equity measures.
Looking ahead, Subin noted the importance of pushing the future Cannabis Control Board to make recommendations that bolster equity.
“The proposal the Cannabis Control Board is required to make regarding the development of programs that will provide economic opportunities to individuals who historically have been disproportionately impacted by cannabis prohibition must have real teeth to it,” she said.
Subin added, “That recommendation should include an assessment of resources necessary to implementing such a program and achieving other equity goals and it should identify the revenue sources that would meet those needs.”
The other landmark cannabis bill, which Scott signed into law, is S. 234, a bill that provides for automatic expungements of past low-level cannabis convictions, and allows people to possess and grow more cannabis without the threat of jail time than is currently allowed.
Under current law, those seeking misdemeanor cannabis expungements have to apply to state courts, which then have to verify that the applicant was found guilty of possessing only an ounce or less of cannabis — and not between one and two ounces.
“This legislation is a critical component of a movement towards racial justice in cannabis policy that recognizes and aims to repair the horrific legacy of racism in the enforcement of cannabis prohibition laws,” said Subin in a committee testimony earlier this year. “It is also fair, common sense legislation that will create economic opportunities and help break cycles of poverty and criminality.”
While the state legalized limited possession and cultivation in 2018, possession of a second ounce or third plant is currently considered a misdemeanor. This changes with the enactment of S. 234.
The Criminal Division of the Superior Court is now required to order the expungement of all criminal justice records — including arrest, custody, and disposition — for possession or cultivation of modest amounts of cannabis prior to January 1, 2021. The automatic expungement process must be completed by January 1, 2022. Learn more about the expungement bill HERE.
Here is a summary provided Wednesday night by the Washington, DC-based Marijuana Policy Project of provisions that are included in the final version of S. 54. Details on the companion bill (S. 234) that will automatically expunge low-level cannabis convictions and to decriminalize modestly exceeding the legal possession and cultivation limit are available here.
Changing “Marijuana” to “Cannabis”
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S. 54 would change “marijuana” to “cannabis” throughout the Vermont statutes.
Promoting Small Businesses, Social Equity, and Vermont Control
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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 must also promote a fair geographic distribution.
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Technical and business assistance would be provided for some priority applicants.
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The board must consider policies to promote small-scale cultivators — those growing not more than 1,000 square feet of canopy — including prioritizing their licensure. Although cannabis cultivation would not be defined as “agriculture,” farmers with small-scale cultivation licenses (up to 1,000 sq. ft.) would be allowed to grow cannabis on land designated as “current use” farmland.
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Secure, outdoor cultivation would be allowed.
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Each applicant could only hold one of each type of license, at one location.
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Regulators will craft rules for circumstances under which a person may be denied direct involvement the cannabis industry, which will be based on “whether the applicant presently poses a risk to public safety or the proper functioning of a regulated market.” Non-violent drug offenses cannot be automatic grounds for a denial.
State Regulation and Licensing of Cannabis Businesses
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Cannabis Control Board. An independent commission within the executive branch — the Cannabis Control Board — would regulate and license adult-use cannabis businesses and medical cannabis dispensaries. The governor would submit a list of names to a nominating committee — composed of members appointed by the Senate, House, and governor. The committee would determine which candidates are well qualified, and the governor would then appoint a chair and two additional members from that list. All members would require confirmation by the Senate.
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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.
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Advisory body. A 12-member appointed advisory committee would be composed of members with expertise in public health; 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, along with the designees from the departments of Agriculture and Natural Resources.
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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.
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There will be no more than five integrated licenses, one per dispensary. (However, any licensee could have one of each category of license.)
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Rules. The board would develop comprehensive rules, including governing financier disclosure and eligibility, security, oversight, lab testing, health and safety, pesticide use, labeling, additives, employee and licensee training, banking, tracking, storage, and transportation; mandating child-safe packaging; and banning products and packaging designed to appeal to minors.
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The board will develop a symbol to be used on cannabis products.
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Cannabis products could not include nicotine or alcoholic beverages.
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The board would determine qualifications for licensees.
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Other than registered patients, cannabis establishments cannot allow anyone under 21 to enter premises where cannabis is.
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Appeals process. An appeals process would be established for persons aggrieved by a decision of the Board.
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Potency limits for adult-use sales. Flower could not exceed 30% THC. Solid concentrates could not exceed 60%. Oils — apart from cartridges for vape pens — would not be allowed.
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A single package could not exceed 50 milligrams of THC, other than non-consumable products, such as topical salves, and medical cannabis.
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These restrictions would not apply to medical cannabis or home cultivation.
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Servings are limited to five milligrams of THC. The number of servings must be listed.
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Independent lab testing. Cannabis would have to be tested for purity and potency by an independent lab before it could be sold.
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Flavored vapes banned. Vape cartridges and cannabis flower that contain flavors that are not naturally occurring in cannabis could not be sold.
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Advertising restrictions would be studied further.The Cannabis Control Board would make recommendations to the legislature by April 2021, after consulting with the Attorney General and Department of Health. The proposal will reflect these priorities: not promoting cannabis use, limiting exposure to those under 21, and ensuring consumer protection and safety. It will also take into consideration constitutional considerations.
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Environmental standards. 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.
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Warnings. Retailers must display flyers developed by the health department that include warnings, including about possible risks of cannabis and driving under the influence. Packaging will also include all warning labels mandated by the board.
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Further study. The board will report to the legislature:
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whether it should consider expanding the types of licenses, including delivery, craft cooperative, and special events;
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whether a minimum amount of CBD should be required in cannabis products;
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regarding other jurisdictions’ experience with online orders and delivery; and
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recommendations on cannabis paraphernalia sold by entities other than licensed cannabis businesses.
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Medical Cannabis
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Medical cannabis sales from dispensaries are tax-free to patients and caregivers.
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Small cultivators may sell to licensed dispensaries as soon as they are licensed.
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Oversight of the medical cannabis program would move from the Department of Public Safety to the Cannabis Control Board on March 1, 2022.
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Adult-use potency limits do not apply to medical cannabis.
Local Control
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Localities must opt in to having cannabis retailers or integrated licenses, via an annual or special meeting. Localities may also refer the question to voters.
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Municipalities could not choose to prohibit other types of cannabis businesses.
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Localities may also develop regulations and municipal licensing requirements.
Detecting Impaired Drivers
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All law enforcement must receive at least 16 hours of Advanced Roadside Impaired Driving Enforcement training by December 31, 2021. By March 1, 2021, 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.
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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.
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If a threshold level of cannabis is identified that establishes impairment and a roadside test has been shown capable of identifying that amount roadside, DPS will report to legislative committee and make a proposal for implementing the device in Vermont.
Report on Equal Protection in Traffic Stops and Searches
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By January 15 in 2022, 2023, and 2024, the Criminal Justice Training Council will report to legislative committees on the demographics of Vermonters subjected to traffic stops, along with the reason for the stop, the type of search conducted, the evidence located, and the outcome of the traffic stop.
Taxation and Distributing the Revenue
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Retail sales would be subject to a 20% tax (a 14% cannabis excise tax, plus Vermont’s 6% sales tax) with no local option tax.
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The sales tax portion of the revenue would be allocated to a grant program to start or expand after-school and summer learning programs, with a focus on underserved areas.
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Up to 30% of the cannabis tax revenue (up to $10 million per year) would be allocated to substance misuse prevention programming.
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The state would assess local licensing fees and distribute the proceeds to municipalities.
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Medical cannabis would not be taxed.
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The board would provide recommendations to the General Assembly on:
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resources, including personnel, the board needs in the next two fiscal years; and
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tiered fees it recommends for cannabis establishments.
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$650,000 is appropriated in fiscal year 2021 to the Cannabis Control Board, in anticipation of revenue being generated.
Timeline
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Cannabis Control Board members’ terms begin on January 19, 2021.
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By January 15, 2022, the board will report to the legislature on a number of matters, including whether the legislature should consider additional license types, including delivery, craft cooperative, and special events.
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By March 1, 2022, final rules will be adopted for adult-use cannabis establishments.
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By May 1, 2022, licenses will begin being issued for small cultivators, integrated licensees, and testing labs.
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By May 1, 2022, integrated licensees may begin selling to adult consumers.
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By June 1, 2022, the board will begin issuing all cultivator licenses.
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By August 1, 2022, licenses will begin being issued for product manufacturers and wholesalers.
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By October 1, 2022, licenses will begin being issued for retailers.
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More details on the timelines are available here.
Heady Vermont’s mission is to be a leading producer and marketer of information, opportunities and products for consumers who love Vermont cannabis. We believe that building a legal, ethical, and celebratory cannabis industry – one that’s infused with an ethos of social, environmental, and economic justice – can have a positive and meaningful impact on communities. Follow Heady Vermont to get the latest developments in cannabis and hemp.
Sources: MONTPELIER, Vermont — Heady Vermont 10.8.2020. Marijuana Policy Project 10.7.2020