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Business Community Q&A About S.54

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Kathryn Blume 18 Oct 2019

Heady Vermont recently convened a phone session with some business leaders where they could ask questions about S.54 – the bill which would establish a regulated commercial cannabis market in Vermont. Here were some of their most pressing questions. Thanks to attorney Dave Silberman for providing many of the answers.

Q: How likely is S.54 to pass?

A: We’ve built support within the caucus, and would have 90-100 yes votes on floor. We haven’t seen anything not resolvable through the conference committee process.

Q: Is S.54 similar to legislation in other states?

A: It’s similar to pieces of legislation from other states. Has cannabis control commission like MA. Follows basic model of different types of licenses (grow, sell, wholesale, manufacturer, testing lab).

Many are using messaging around the fact that cannabis is legal, and needs to be regulated. Other folks are talking about social justice and rural economic development – though there aren’t as many folks harnessing that messaging as we might like.

Q: Has there been any involvement/conflict with division of liquor control?

Dave: There were some early thoughts to combine liquor and cannabis, but the idea went nowhere, and nowhere fast. Washington has the same regulatory apparatus for both liquor and cannabis, and the same enforcement. It’s sensible but where sense and political reality collide…

Q: Which legislators are working on behalf of the bill?

A: Sara Copeland Hanzas, Chair of House Committee on Government Operations; John Gannon, Vice Chair of House Committee on Government Operations; Sam Young, House Committee on Ways and Means (he was a prime sponsor last session); Jill Krowinski, who is helping in the background.

The Joint Fiscal Office predicted 1.2% boost in state GDP, meaning about $8-$12 million/year. The RAND report estimated $25 million-$75 million/year, though the upper end seems too high.

Q: What are their talking points?

A: Many are using messaging around the fact that cannabis is legal, and needs to be regulated. Other folks are talking about social justice and rural economic development – though there aren’t as many folks harnessing that messaging as we might like.

Q: Is there any sense of the financial impact of a commercial market?

A: The Joint Fiscal Office predicted 1.2% boost in state GDP, meaning about $8-$12 million/year. The RAND report estimated $25 million-$75 million/year, though the upper end seems too high. Colorado is on pace for bringing in $300 million this year, and they’ve already passed the $1 billion mark since they’ve legalized. Of course, Colorado is 11x our size. However our use rates are in line with Colorado. So we ought to be in the 20s.

The JFO also estimated approximately $350 million in annual direct and indirect economic impact from a regulated market. This would include ancillary businesses like 420-friendly B&Bs, canna/agro/tourism, etc.

All studies indicate that there aren’t any states where legalization has led to an increase in teen use.

Q: What about the environmental impact of a tax/regulate system scaled to industry levels?

A: The Control Board is mandated to issue a report on water quality/energy use/land use requirements. It’s a bit of a punt to regulators, but it’s standard for legislation like this.

Q: Is there any funding for preventing youth from using cannabis? 

A: All studies indicate that there aren’t any states where legalization has led to an increase in teen use.

Q: 30% of tax revenue would be committed to a substance misuse prevention fund. What about the remaining 70%?

A: It would go into the general fund. Licensing fees would fund the regulatory apparatus.

There’s a new bill from Chris Pearson that would provide automatic expungement for cannabis crimes. We hope it has legs.

Q: Would any money be allocated to recovery support?

A: No. Both House and Senate versions of the bill would allocate up to $6million/year from sales into the new substance misuse prevention fund, but not actual treatment.

Q: What about pre-employment drug screening? 

A: 2016 industry lobbyists tried to get more flexibility on pre-employment drug screening and it died. There’s not much appetite in the House or Senate for opening that up. Vermont law already says you can fire people for any reason, including showing up inebriated.

Q: How can pro-legalization voices from the business community help?

A: They can speak to a regulated market promoting broader economic development in Vermont. It’s not just about growers and sellers, but folks who make products, as well as the ancillary fields like testing labs, lawyers, doctors, security, banking, insurance.

There’s also language in the bill stating that the Cannabis Control Board can’t deny licenses based on criminal history unless the history suggests that someone is a current threat to public safety. That was a huge victory.

Q: What about large scale consolidation that we’re seeing in other states?

A: The bill doesn’t allow for consolidation by setting limits on license ownership.

Q: Is there any language around social justice and helping individuals along road to expungement in order to be able to access licensing?

A: There was an expungement reform bill which is now a new law, expanding expungement access for a range of convictions. There’s a new bill from Chris Pearson that would provide automatic expungement for cannabis crimes. We hope it has legs.

There’s also language in the bill stating that the Cannabis Control Board can’t deny licenses based on criminal history unless the history suggests that someone is a current threat to public safety. That was a huge victory.

Q: Will there be any problems for beverage producers who want to work with CBD/THC?

A: CBD from hemp is outside S.54, so they can keep using hemp CBD in beverages. But there are serious public health concerns about the combination of THC and alcohol, and bill would ban that.

Q: What about dual licensure? Would an individual corporation be able to hold cannabis license and a liquor license?

A: Yes. The ownership limits are about cannabis licenses.

 

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