Vermont鈥檚 retail cannabis marketplace has been open for roughly two and a half years, and lawmakers are now considering some important changes.
If these changes are not made, there鈥檚 concern that some retailers and small growers will be forced out of business.
In this week鈥檚 edition of Capitol Recap, senior political reporter Bob Kinzel shares an overview of the proposed changes with host Jenn Jarecki. This interview was produced for the ear. We highly recommend listening to the audio. We鈥檝e also provided a transcript, which has been edited for length and clarity.
Jenn Jarecki: What are some of the key issues that lawmakers are expected to address in the coming weeks in this cannabis bill?
Bob Kinzel: I think the biggest issue is the saturation of stores in some parts of the state. Right now, there are roughly 110 stores in Vermont, and many are clustered in certain communities. For instance, Burlington has around 13 stores, Rutland has seven and Morrisville has five.
David Silberman owns a retail store in Middlebury and is part of the Cannabis Retailers Association of Vermont. He's very concerned about the future because he says Vermont has more retail stores per capita than most states in the country.
David Silberman: There are towns of extreme concentration, but the market is saturated statewide. This is bad. One store for every 5,700 residents 鈥� that's not a business model that works.
Bob Kinzel: Jenn, one approach to this issue was taken in Wilmington on Town Meeting Day. They have two stores there, and voters have now closed the door on any future stores in that community.
Jenn Jarecki: What's the plan to deal with this issue?
Bob Kinzel: Most of the discussion focuses on this question: Should there be a two-year statewide moratorium on all new retail licenses?
Now, the House government operations committee is the lead committee in the House considering changes to the cannabis law. Vergennes Rep. Matt Birong is the chair of the committee.
Matt Birong: And now the question we're asking ourselves is like, do we need something more clearly defined for a halt, for an interim period of time, to let the market sort of settle with the amount of operators that are going up at the retail space? And not see the mistakes of other states transpire here, where we saw a lot of clustering and then a lot of people go out of business.
Bob Kinzel: The committee will vote on this bill next week, and it's possible that their proposal will include a two-year statewide moratorium.
Jenn Jarecki: What does the state's regulatory agency, the Cannabis Control Board, think about that two-year moratorium?
Bob Kinzel: They don't support it, and they're backing a different approach. Essentially, they're developing rules that would allow the board to reject a new license in a community that already has some stores.
So, it's not a statewide moratorium, it's reviewing licenses on a town-by-town basis, and this is authority that the board does not have right now. James Pepper is the chairman of the board.
James Pepper: We have rules that have been drafted based upon municipal populations and some consideration of regional populations. We'd like to fine-tune those and see how they work before we kind of, put a true, long-lasting moratorium on new retail licenses.
Bob Kinzel: Pepper says he's also very concerned that once a moratorium is put into place, it will be very difficult to get rid of it.
Jenn Jarecki: Some of the smaller growers say they're having serious problems getting their products into stores because there's too much supply at this time and there's no shelf space left for them. Bob, what changes are they calling for?
Bob Kinzel: Ultimately, they want to be able to sell their state-regulated products directly to consumers.
The concept might be started by allowing some growers to sell their products in a setting like a farmers market under the auspices of a licensed retailer. Ben Wilcox is a small grower in Sutton.
Ben Wilcox: You know, I grow 125 plants, and if I could sell a plant here and there to local people, it would help buffer against the price collapse that we're hearing about.
Bob Kinzel: James Pepper at the Cannabis Control Board thinks this is an issue worth exploring, perhaps with a small pilot program. Now, this approach might also need the support of the Vermont agriculture agency, but this step could be further than Gov. Phil Scott wants to go at this time, so we'll be watching this issue very closely.
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Jenn Jarecki: Bob, are there any other proposals that people think should be taken to encourage consumers to buy cannabis products through the state's regulated system?
Bob Kinzel: Jenn, one idea that has some support is an effort to reduce the state's overall cannabis tax rate.
Right now, all products are subject to a combined tax rate of 20%. That includes the 6% sales tax and a 14% excise tax.
However, this approach does face some serious challenges, and that's because the sales tax revenue provides roughly $8 million for after-school programs, and part of the excise tax is dedicated to youth prevention drug programs. So, in a tough budget year 鈥� and that's what we have this year 鈥� it might be hard to pass this tax cut.
Jenn Jarecki: So what happens next?
Bob Kinzel: The House government operations committee is scheduled to vote on this bill next week. It will then be reviewed by several other House committees, and it's expected to be on the floor for a vote in just a few weeks.
Now, if it passes, it then goes to the Senate for its consideration. And in the past, Jenn, the Senate has looked at some of these cannabis-related issues quite differently from the House, so there could be some key changes.
Now, backers of the bill really want it to pass this year, so look for the House and Senate to try to negotiate a final compromise, and that compromise would then be reviewed by the governor.
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