Control Board Tackles Accessibility for Small Cultivators, Peer to Peer Networking

MONTPELIER — On Tuesday, January 18, following a holiday weekend, the Vermont Cannabis Control Board convened to resume its work wrapping up Rules 1 and 2 and looking ahead to the coming months. 

After covering lighter agenda items on peer to peer networking events, a new meeting schedule and plans for additional license fee types, the Board delved into a rigorous breakdown of the rules through the lens of accessibility for small cultivators. 

Control Board Commissioner James Pepper kicked off the meeting by noting that the Board would be scheduling its regular meetings for Mondays at 11 a.m. this year. A vote to adopt a regular meeting schedule is on the agenda for the CCB meeting on Monday, January 24.

P2P Networking

Peer-to-peer networking sessions are officially launching on Thursday, January 27. The goal of the networking sessions, Hulburd said, is to facilitate peer-to-peer networking among social equity applicants and economic empowerment applicants with a regular speaker series on important topics.

The networking sessions are scheduled to happen every other week from January 27 through March, assuming that the series sees participation and the Board can keep up with speakers. 

The first two sessions will cover building relationships with local government and navigating the permitting process, and key elements to a successful business plan on February 3.

“I’m hoping as we move forward with this, the topics that people want to hear about will sort of rise to the surface or be recommended or suggested by participants,” Hulburd said.

Licensing Fee Proposals

Next was continued discussion on fee proposals, including on-site consumption lounges, delivery licenses, special event licenses and other license types yet to be decided by the Legislature.

“I think it’s really tough for us to just pick a number on those without knowing what the kind of regulatory compliance is gonna look like,” Pepper said. “Obviously the fee is always just one piece of what these licensees are gonna have to deal with with respect to startup costs.”

“We also don’t want to get too far ahead of the legislature on this issue until they specifically authorize these,” he said. “We might not want to go down any one road too far because really it’s dependent on them to kind of approve of these concepts.”

That being said, the Board set a placeholder number of $750 for cottage tier 3 manufacturer license. Pepper noted that this lower and more accessible number worked if regulatory compliance was less costly, for example if inspections happened every two years instead of every year.

Pepper also proposed a formula for calculating cultivation tiers that figured out to around $6 of yearly licensing fees per plant. 

Using this formula, for example, a tier two mixed tier cultivator license would be $2,250, and tier three mixed tier cultivator license would be $5,000.

“We decided that outdoor tier one would be a thousand feet or 125 plants, so if you look at the cost, the fee per plant works out to about six dollars per plant. also is that that is consistent with our tier one, our mixed tier one. 

Essentially when you subtract the cost of the thousand square feet indoor I think it’s eighteen hundred dollars for the tier one mixed here so that you subtract the 1500 for indoor and then you divide the remainder by the 50 plants and it works out to six dollars a plant.”

The board loosely agreed that this would be their “placeholder” for now.

Rules 1 & 2

Moving into the meeting’s key agenda item, Pepper first congratulated the Board on its work drafting the first of the rules. “I am very proud of the work we all did to get these rules drafted and submitted, considering the time crunch that we were under,” he said.

The rapid pace of rulemaking, while “somewhat artificially created by the legislature,” was necessary to ensure an early start for outdoor cultivators in the first year of the legal market.

“That May 1 date is not totally arbitrary,” Pepper said. “It’s really the date that we need to start issuing outdoor cultivation licenses if those folks are going to have any chance of participating in year one.”

Pepper said the board had reviewed Rules 1 and 2 again over the weekend and acknowledged the Board had some further refinement to do, and broke that up into two phases. 

“First we need to review [the rules] specifically with small cultivators in mind. A lot of our regulations, at least from my perspective, were designed to ensure that larger entities don’t intentionally or unintentionally undermine our consumer safety and public safety mandates. But the risk from small cultivators on those fronts is much less and we should reflect in our regulations the kind of lower risk.”

“The second phase really is to kind of look at all the public comments we received and look at our rules more globally and make adjustments so i think today my vision is to start with that kind of small cultivator review and then you next week and thereafter move to the kind of more global review of the rules and fine-tuned based upon public comments.”

The Monday, January 24 meeting includes a review  of public comments on Rules 1 and 2.

Small Cultivators and Proposed Exemptions

The Board highlighted small cultivator mandates from 904a:

• It is the intent of the general assembly to move the illegal cannabis market into the regulated market for the purposes of consumer protection and public safety.
• Small cultivators, as defined by statute, shall be prioritized over larger cultivators during the initial application period.

• The board shall consider the different needs and risks of small cultivators and make exceptions or accommodations for these cultivators when appropriate.

In order to assess rule exceptions for small cultivators, the Board pulled out all sections where they thought regulations applicable to cultivators could be adjusted, and went through them line by line in a rigorous review session. 

Highlights of proposed section waivers for small cultivators, their section including YouTube timestamp links from the meeting video. 

Rule One

• 1.4.2 Background Checks 20:03
  • Waive (g) and (h) for Tier One Cultivators 
• 1.4.4 Compliance and Management Plans  25:58
• 1.4.5 Insurance, Taxation and Banking Requirements 35:37
• 1.4.9 Plans Related to Positive Impact Criteria 38:16
  • May possibly waive (b)  through (d) – need more information first
• 1.5.2 Waste and Wastewater Requirements 40:33
  • Waive (a) and (b) for Tier One home occupancy cultivators growing at home
• 1.15.2 Change of Control Requires a License Renewal Application  44:11
  • Add language explicit to small cultivators

Rule Two

• 2.2.1 Business Records 50:55
  • Waive for Tier One cultivators
  • (n) Standard operating procedures manuals. CCB noted that attorneys around the state are more than welcome to create a standard SOP that small cultivators can submit.
• 2.2.2 Insurance 55:39
  • Drop insurance to 250 000 and 10 000 in escrow as an alternative to the insurance for Tiers One and Two generally, whether in-home or not.
• 2.2.4 Health, Safety and Sanitation 1:04:18
  • Waive (a) through (c) for Tier One Cultivators
• 2.2.5 Employment and Training 1:05:25
  • Waive (b) i, ii, vi, vii and viii
• 2.2.6 Tracking of Cannabis and Cannabis Products
  and 2.2.15 Inversion and Diversion from the Legal Market is Prohibited 1:10:10
  • No real decisions by the board, but discussion around potential changes to 2.2.6 (a) and (e). Snippet from discussion on bringing in legacy genetics below:

The problem in year one of people wanting to bring their genetics into the legal market – this section probably prohibits it, as well as section 2.2.15.  CCB discussed having a potential grace period for small cultivators in year one. This largely depends on the capabilities of seed-to-sale tracking software which as yet is undecided by the Board. Members discussed having consultants come in to discuss tracking and how to do it for small cultivators in a cost-effective way.

“What we really need to think about, at the start of this market, is how do we move in all the plants that people have spent years kind of growing and developing the genetics on and whether we care about whether it’s been tracked from seed to cultivation. I’ve heard a lot about anxiety around this specific issue and I’ve looked at how other jurisdictions have done it. My thought is even outside the small cultivator world allowing any potential license holder for a certain one or two week grace period to get their existing genetics into the system in year one their first time applying.“

•  2.2.8 Waste Disposal 1:25:25
  • (b) allow onsite burning for Tier One cultivators
  • Must still abide by municipal fire ordinances
• 2.2.9 Packaging 1:30:14
  • Make a distinction between packaging for a product that’s going to a consumer versus just going into the supply chain
  • Will develop language around this
• 2.2.11 Social Media 1:34:56
  • Leave for now, but revisit during public comment periods
• 2.2.13  Visitors  1:41:01
  • No changes right now but will make allowances for home-based license holders
• 2.3.2 Visitors to Cultivation Sites 1:44:08
  • Waive (f) for Tier One cultivators
• 2.3.5 Cultivator Packaging 1:48:51
  • Differentiation between packaging requirements for retail sale versus packaging requirements for kind of interest supply chain sales
  • Leave this one, but address in 2.2.9
• 2.3.8 Cultivation and Operations Information   1:55:17
  • Possibly look at (g) but need to discuss with Department of Agriculture first
• 2.5.3 Energy Standards for Buildings 2:03:47
  • Waive for home cultivators only
  • Acknowledgement that people are concerned about CBES (Commercial Building Energy Standards) in general. “I empathize but at the same time I’m not ready to exempt CBES from anything other than home occupation.”
• 2.5.4 and 2.5.5 Energy Standards for Lighting and Dehumidification  2:11:40
  • Possible give Tier One cultivators a year to come into compliance
  • No changes right now, will talk to more experts
• 2.5.6 Energy Usage Reporting and Reduction Efforts 2:16:54
  • Waive (b) and (c) for Tier One Cultivators

View the meeting video, outline and meeting documents in our January 18 Vermont Cannabis Control Board Video post.

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