Vermont legalized adult-use cannabis last year and allowed its residents to grow marijuana in their homes as of July 1, 2018, but the state is still trying to figure out the best way to create a taxed and regulated market with commercial sales.
Fifteen of the state’s senators have sponsored S. 54, legislation that would create a system of regulated cannabis production and sales. The bill levies a 10-percent tax on retail sales and allows municipalities to establish a 1-percent local option tax on retailers within their borders.
S. 54 passed the Senate Feb. 28 with a veto-proof majority of 23-5 and now heads to the House of Representatives for consideration.
“The House has, in the past, not passed bills like this, and there has not been nearly as much time on them in committee,” Matt Simon, legislative analyst and New England political director for the Marijuana Policy Project, told Cannabis Business Times. “We know the House is going to want to work through their process first. The question will be whether or not Gov. [Phil] Scott evolves and finds a way to support it, or whether we need to get a two-thirds majority in the House.”
Lawmakers in the House have also introduced similar legislation, H. 196, to establish a commercial cannabis market in the state. The House version would allow the state’s existing medical marijuana dispensaries to pay a fee and start offering retail sales earlier than 2021, which is when a taxed and regulated system would go into effect under both the House and Senate bills.
“The Senate bill does not include that [provision], and from my perspective, it’s a bit short-sighted, only because we need case studies,” said Daniel Giangreco, executive director for the Vermont Cannabis Association. “We need proof of concept to see how this new framework is going to shake out. The reality is the dispensaries currently are the folks that are best positioned to go through this process and kick the tires on the new rules and regs. I think that’s what missing in the Senate bill that is in the House bill.”
Many other questions remain about a taxed and regulated system, Giangreco added. “What is the state going to require from cultivators and producers? Who gets to do the testing? Right now, there aren’t state labs set up for testing. Especially with the [number] of cultivators that we’re anticipating will be popping up, they just won’t have that capacity. And there are a number of dispensaries and independent testing labs in the state that do have that capacity, but they are all operating with different equipment, and there’s still an issue of best practices in terms of the methodology around testing, so there’s a lot to be sorted out in that respect, as well.”
Vermont’s Cannabis Debate
Although initially founded to advocate for a taxed and regulated system for legal marijuana, the Vermont Cannabis Association shifted its efforts to legalization alone when it became clear that commercial sales were not moving forward last year, Giangreco said. And when a veto on legalization seemed imminent last year, the Vermont Cannabis Association, along with other groups in the state, were able to help push the legislation through—an effort that will likely need to be repeated this year to achieve passage of a tax and regulate bill, Giangreco said.
“It did take a grassroots push that was led by our organization and other groups in the state to really put pressure on Democratic lawmakers to move forward with it,” he said. “I think that’s something that we’ll need again this time around.”
Although Scott signed the bill legalizing possession and home cultivation last year, he is not entirely supportive of commercial sales.
“He said Vermont isn’t ready, basically, for a taxed and regulated market,” Simon said. “But there is a sense that he might evolve and do it. He’s been very hung up on impaired driving. He’s said he wants some sort of roadside test before he would support a commercial market, and the legislature is not eager to pass any bills that would create bad policy on DUI just to appease the governor. We’ve tried to keep those as two separate conversations and, so far, have been successful.”
House Speaker Mitzi Johnson has come out in agreement with Scott about the necessity of a roadside saliva test for marijuana impairment, but there is currently no test capable of making that determination.
“My hope is that Gov. Scott, instead of vetoing, can work with the legislature and really look at the areas that are reasonable to address,” Giangreco said. “Unfortunately, the roadside testing piece—that technology does not exist. By that logic, it’s like if we don’t have that test … for 10 years, then we wouldn’t have legalization for 10 years, and I think that would be a policy failure on his part.”
And roadside testing is just one of many concerns that lawmakers have about a taxed and regulated market. “There are so many different considerations, and it’s really tough to tell which are the larger drivers, but I think it is just that combination of so many different perspectives,” Giangreco said. “Even if there is a decision [that] they want tax and regulate, what that should look like and who should get first crack at the market [are divisive concerns].”
Finding a Way Forward
As the debate rages on, Giangreco cites concerns over consumer safety due to the lack of regulated commercial cannabis sales.
“We think that, in terms of the consumer protection side of things, any effort to delay setting up a regulatory environment for an industry that has long existed in the state in the black and gray markets … is really an abdication of [lawmakers’] responsibility to protect consumers and provide that safe access to what many are treating as a medical product,” Giangreco said.
Historically, garnering enough support in the House for commercial cannabis sales has been more difficult than finding support in the Senate, although Simon said there is a chance to get the two-thirds majority backing in the House, depending on the details of the bill.
Also promising is Attorney General TJ Donovan’s support of a taxed and regulated market, which he expressed at a Senate Judiciary Committee meeting in early February.
“Really big was getting the attorney general to come out,” Simon said. “He testified in the Senate Judiciary Committee and said that it’s just crazy not to have a regulated market as cannabis is legal and we have all these gray market … businesses.”
With the building support, it seems that lawmakers may finally be coming to terms with the inevitability of a taxed and regulated market.
“After years of actually trying to get them to do it and consider it, we have their full attention now, or will, as soon as this bill starts getting heard in the House committees,” Simon said. “It doesn’t seem very controversial anymore.”
More people are getting involved in the conversation, he added, which is also a promising sign. “A lot of our opponents, people who didn’t want legalization, are now at the table and want some degree of regulation because they see the obvious public health and safety benefits of having that.”
But even if the legislature can agree on a tax and regulate bill this year, Scott remains a question mark.
“I have a strong hunch that [lawmakers] will pass something, and it’ll be curious to see what the governor chooses to do at that point,” Giangreco said. “He has talked a lot about trying to address the opiate crisis and launch roadside safety testing. There are other ways to make the roads safer with regards to cannabis use, and similarly, I think cannabis is just one more tool in the toolkit when it comes to trying to address the opiate crisis and reduce use and dependency on dangerous legal and illegal prescription medications."