Can Vt. cultivators grow enough pot for when legal sales start? The Cannabis Control Board thinks so
Vermont’s cannabis retail market is set to go into place in just nine months, and a number of other states are closely watching the Vermont experience — because the state’s Cannabis Control Board has developed some policies unique to the state.
VPR’s Mitch Wertlieb spoke with senior political correspondent Bob Kinzel about what the board is laying out that makes Vermont's marijuana marketplace unique, and how the state’s regulations could be altered by the Legislature in the new legislative session. Their conversation has been edited and condensed for clarity.
Mitch Wertlieb: Let's start with some of the things that Vermont is trying to do with its cannabis policies that have not been tried in other states. These are states that have already legalized cannabis for recreational use. What is Vermont doing that’s different?
Bob Kinzel: I think the biggest thing that the board is doing is placing a huge priority on small cannabis growers. The goal of Cannabis Control Board chair James Pepper is to try to convince those people who are currently growing cannabis for the illegal market to sign up for a state license in 2022.
Pepper says Vermont clearly has a lot of excellent cannabis growers right now, and that the state's retail system would really benefit from having these growers come on board in a formal way.
“To shift as much of the people that are currently out there in Vermont, growing cannabis, and selling it in an untested, unregulated way … trying to create a regulatory environment that invites them into a, you know, a regulated space," Pepper said. "That allows them to kind of shift their illegal grow into a legal one.”
Mitch, the recent experience of the legal retail system in California shows how important it is to target existing small growers. In California, many of the existing growers did not join the state's program. As a result, the illegal market has flourished there, and that's something that Vermont wants to try to avoid happening here.
What is the board, though, trying to do to make sure that big growers — kind of what's known as the “corporate weed industry,” if you will — what are they doing to make sure that they don't take over the cultivation of cannabis in Vermont?
They've created cultivation licenses that are based on the size of the growing space.
These areas range anywhere from 1,000 square feet, all the way up to 25,000 square feet. Pepper told me that the board hopes that the state's entire cannabis demand can be met with small growers, with operations in size, let's say, from 1,000 square feet to 5,000 square feet.
And just to put this in perspective, 5,000 square feet — which would be the biggest initial license —i s roughly the size of a basketball court.
“We created a very small-tier cultivator structure, much smaller than any of our neighbors," Pepper said. "And we said, as a board, 'Let's only open up the small ones first.' And if we can achieve that, based solely on cultivators that are growing 1,000 square feet of cannabis canopy, 2,500 square feet, or 5,000, then we are not going to open up some of our larger tiers, the 10,000 to 15,000 to 25,000 square feet.”
Now, the big question is if this strategy will actually work. Will there be enough small growers to meet the state's entire demand for cannabis?
We should have a much better idea when the first cultivating licenses are issued around May 1.
Another thing that's unique to this Cannabis Control Board plan, as I understand it, is a commitment to some social equity provisions. What is that all about? And why is the board doing that?
This is a provision that many lawmakers felt very, very strongly about. Here's what it does: it provides a range of financial benefits “for people of color, or anyone who can demonstrate that they are from a community that has historically been disproportionately impacted by cannabis prohibition, and that this person has personally been arrested, convicted or incarcerated for a cannabis-related offense, or has had this happen to a family member.”
I asked Chairman Pepper why this is a top priority for the board.
“Essentially, we have sufficient data and reports to show that there were — and there continue to be — disparate arrest rates and disparate incarceration rates of people of color, as it relates to drug crimes," Pepper said. "And therefore, a major motivating factor for a lot of legislators — who agreed to this bill, when they otherwise wouldn't — was that they felt the need to end prohibition, and the war on drugs, and start to mitigate some of the harms that have been perpetuated over the last 80 years.”
These financial incentives would include the elimination of many of the cannabis licensing fees. There are also special loans and grants that would be available using some of the state's new cannabis tax revenue. And because this deals with the allocation of state tax dollars, the social equity provision will require legislative approval.
In addition to reviewing these social equity provisions, lawmakers are also this winter going to be considering some other important policy questions.
One, whether or not the state should provide financial incentives for towns to locate a retail cannabis store in their community — because, as I understand it, individual towns can opt out of this. Even though there is a statewide recreational marijuana bill that's been signed, towns don't have to have them, is that right?
That's exactly right. In order for a town to have a retail cannabis store, the town must opt in to have this happen. That means having an affirmative local vote.
So far, about two dozen towns have taken this step. Pepper is hoping that many more towns will join this group. And he says it's important that these towns be spread out around the state, and not be clustered in just one part of Vermont.
“Just to have a properly functioning market, these growers need a place to retail that," Pepper said. "I think people are getting a little bit more comfortable with it, and I do expect that, at our next Town Meeting Day, and before, we're going to see quite a few more towns opt in to having retail establishments within their borders.”
The board would like to take a small part of the new state cannabis excise tax — which is likely to be around 14% — and then give some grant money to towns that choose to have a retail store. It would help them cover any unexpected expenses associated with the store.
But, because this also uses state tax revenue, it will also have to be approved by lawmakers. There are fees, there are taxes, there’s the licensing process.
If lawmakers generally approve of the approach that the board is taking, then the entire plan will probably stay on track to have retail stores open Oct. 1, 2022.
But, if key legislative committees decide they want to debate some of these issues again, or they want to call in new witnesses to testify, then it's going to be very difficult for the board to meet that Oct. 1 retail deadline.