Commentary: New Hemp Industry Regulations Will Hurt Vermont Hemp Businesses
Thank you for providing the ability to testify before the Vermont Cannabis Control Board regarding the newly imposed regulations on the Vermont hemp industry introduced in the November bulletin. I am a small business owner based in Vermont participating in our state’s hemp industry.
As we look to find level-headed, sensible regulations and norms for the legal cannabis industry in Vermont, the Cannabis Control Board’s latest industry-wide bulletin is doing the opposite for hemp products– at the expense of homegrown, local businesses.
The regulations suddenly being imposed on the Vermont hemp industry will negatively impact existing hemp businesses in our state.
In 2013, the state of Vermont opened the ability to lawfully and responsibly grow hemp up to its citizens for a $25 fee. Lately, it’s become difficult to fully understand the significant financial impact being brought on so quickly by the increase in fees and newly adopted regulations that small farmers and business owners are currently, and will continue to face, if the CCB maintains its recently introduced hemp regulations outlined in their November hemp bulletin.
The regulations suddenly being imposed on the Vermont hemp industry will negatively impact existing hemp businesses in our state. I am sincerely afraid these regulations will put our local hemp businesses at a competitive disadvantage to out-of-state retailers, who maintain the ability to capitalize on selling comparable products without the barriers and limitations set forth by these heavy-handed regulations.
Grandfathering of existing industry operators and shielding them from newly imposed fees would save early actors from unforeseen expenses, and allow them to continue operating as they initially expected.
As a local business owner in the hemp industry myself, I am currently monitoring Vermont’s hemp regulations– and have now been forced to go as far as considering relocating my business to a different state entirely.
As a female-owned, Vermont-located hemp business participating in the national market, I respectfully ask you to consider the following revisions to the proposed bulletin, as well as consider sharing these comments with the public in order to gather a more comprehensive knowledge of the general public’s opinion:
Grandfather in existing manufacturers, growers, retailers, and products:
- Hemp has been federally legal since 2018, and many hemp cultivators, retailers, and manufactures in Vermont have since largely built their businesses through sales to a national market. Many businesses took a deep financial risk; some breaking the bank and spending what amounts to hundreds of thousands of dollars to develop products and personal brands that can, and would, compete with existing national brands. Grandfathering of existing industry operators and shielding them from newly imposed fees would save early actors from unforeseen expenses, and allow them to continue operating as they had initially expected when first entering the market, while rewarding them for taking an early chance on an emerging market.
Waive fees for existing businesses:
- Those of us who entered into the hemp business did so without the significant monetary fees in place now. These newly imposed fees are not built into existing business models, and are causing unforeseen expenses that cannot always be easily covered by new or smaller operators. Imposing such fees hinders existing mom-and-pop retailers from competing in a national market.
Reduce fees for hemp businesses:
- Cannabis sales are six times higher than hemp sales, so the costs placed upon cultivators, product manufacturers, and retailers should be reduced to reasonably reflect their share of the market.
Allow a realistic time for businesses to pivot:
- The CCB has already begun removing products that were not in compliance with their bulletin. Being that the regulations were imposed only this November, this is not a reasonable timeline in which a small business can make such a large and comprehensive overhaul to their product catalogue. Conservatively, it takes a responsible retailer an estimated six months to research, develop, and test a new product. Inserting a clause which allows for a reasonable timeline in which existing retailers are able to change their product line would aid in minimizing damage.
- Retailers are also currently subject to the multi-year leases they have already contractually agreed to, and are therefore liable for. A majority took on debt in order to obtain such leases. Business property lease agreements regularly have language prohibiting products that are not federally legal (relevant here; cannabis), which would restrict leasees from the ability to pivot into becoming a legal cannabis dispensary.
- If products that allowed us to compete previously are now lawfully considered cannabis formulations, a dispensary license would be needed in order for their sale to continue. Many landlords may not be open to allowing an existing business to continue at their property as a legal cannabis dispensary– and even if they were, many existing retailers are not located in areas zoned for cannabis sales.
The industry and consumers have overwhelmingly opposed the THC caps on cannabis, as they are based in fear, not fact. We should carefully consider this as we look to make Vermont hemp products weaker than those in other states.
Increase the Δ9 THC cap in hemp products to align with Federal regulations and standards:
- The industry and consumers have overwhelmingly opposed the THC caps on cannabis, as they are based in fear, not fact. We should carefully consider this as we look to make Vermont hemp products weaker than those in other states, and consider the reality that consumers will simply purchase products they are already accustomed to from out-of-state retailers, either online or in person. Reputable hemp companies such as Joy Organics, and CBDMD are currently offering 5-10 mg per serving of Δ9 hemp-based gummies through online purchase.
- We in Vermont need to be able to offer similarly and comparably priced products in order to compete with these online retailers. Increasing our cost of business while lowering unscientific THC caps does not allow us to be competitive, and forces businesses and tax dollars to other states. If the concern is safety, an evaluation to quantify the amount of harm that the public has endured since these companies rolled out these products should be conducted by the CCB. If the concern is revenue loss to cannabis retailers, an evaluation to quantify the loss in other states should be conducted by the CCB.
Include an equation in the Δ9 THC caps for THC:CBD blended products:
- The Board already rightfully acknowledges the counter-effects that CBD may have on THC, in terms of psychoactive effect on a consumer. This is evidenced in training guides used by authorized vendors and reviewed by the Board, which instructs those who feel they have consumed an uncomfortable level of THC to consume CBD as a counter-balance, and for good reason. A National Institute of Health reviewed study found that “CBD behaves as a non-competitive negative allosteric modulator of CB1 receptor, and it reduces the efficacy and potency of THC and AEA” (Laprairie et al., 2015).
In my personal business, our full spectrum and blended CBD:THC products contain 1.2mg to 2 mg of THC per serving. I communicate regularly with our customers, and not once have they ever reported feeling intoxicated after ingestion. This is most likely due to our full spectrum formulas and CBD dosage of 30-80 mgs per serving.
Reputable national brands such as Charlotte’s Web, Joy Organics, CBDMD, and Medterra have been safely selling and delivering hemp products with CBD and THC across the nation. Annually, the revenue for these four company is nearly $200 million. This is a significant amount of CBD:THC blended products being safely sold and consumed outside of cannabis establshments.
Below are some examples of products with 1mg THC or greater per serving, along with their CBD:THC available from leading national brands. If the concern is safety, an evaluation to quantify the amount of harm that the public has endured since these companies rolled out products with 1mg of THC per serving or higher should be conducted by the CCB. If the concern is protecting the cannabis market, an evaluation of revenue loss for states that have not restricted hemp with these caps should be conducted. This would be an effective way to mitigate many of the restraints formed by these caps.
- Joy Organics Tincture: 80mg CBD:2.7mg THC
- Joy Organics Tincture 63.4mg CBD: 1.5mg THC
- Joy Organics: 38.3mg CBD: 1.1mg THC
- Medterra Tincture: 101.8mg CBD: 2.2mg THC
- Medterra Tincture: 48.8mg CBD:1.4mg THC
- Medterra Tincture: 53mg CBD:2.2mgTHC
- Medterra Tincture: 50mg CBD: 2.4 mg THC
- Medterra Capsule: 42.8mgCBD: 1.8mg THC
- Medterra Gummy: 24.8mg CBD: 1.75mg THC
- CBDMD Supplement: 100mg CBD: 2mgTHC
- CBDMD Gummies: 200mg CBD: 4mg THC
- CBDMD Gummies: 50mg CBD :2mg THC
- CBDMD Tincture: 200mg CBD: 2mg THC
- CBDMD Tincture: 50mg CBD : 2mg THC
- CBDMD Softgel: 200mg CBD:3mg THC
- CBDMD 50mg CBD: 2mg THC
- Charlotte’s Web Softgels: 30mg CBD:1mg THC
- Charlotte’s Web Tincture: 70mg CBD:1.1mg THC
Develop a way to report online retailers selling into VT:
- If Vermont is to prohibit certain hemp products to be sold outside of licensed establishments, it is imperative that an online system be developed to report online sales of hemp-based products that do not fit into local regulations. Being that there is so much out there and retailers themselves should not be forced to carry the entire burden of policing illegal retail activity online, how could the CCB possibly prohibit all online hemp retailers from selling products with 1 mg of THC or higher without being a lawful dispensary? This is a monumental task, entirely avoidable by maintaining regulatory structures that may be competitive with the rest of the nation.
Evaluate the individual security needs of hemp compared to cannabis:
- Requiring hemp cultivators, manufacturers, and retailers to have the same security as a dispensary is not only unnecessary, but frivolous. Hemp businesses across Vermont have not been targets of high crime. In fact, a 2019 study by the Regional Science and Urban Economics Institute found that in regards to the addition of legal cannabis dispensaries to communities, “our results suggest that dispensaries cause an overall reduction in crime in neighborhoods, with no evidence of spillovers to surrounding neighborhoods.”
- Any regulations citing a need for additional security in response to an increase in crime should come from scientific evaluation of any potential crime caused by the introduction of the hemp industry. Arguably, security requirements for these products should not exceed government security requirements required for alcohol or tobacco products. To do otherwise would be nothing more than reefer madness. The societal impacts of dispensaries in communities simply does not support increased security protocols.
Offer a tax credit for non-plastic packaging:
- To offset the cost of goods by requiring non-plastic packaging the state should offer a tax credit to help businesses compete with out of state retailers for both hemp and cannabis businesses. Such tax credits for reducing environmental damages are not uncommon or unheard of, and exist elsewhere.
Do not prohibit, or limit, interstate commerce:
- Hemp and cannabis are not the same and should be treated as such. Hemp is federally legal and businesses have been freely working together across the country, sourcing products, packaging, contract manufacturing, and testing from cultivators around the U.S.
- Due to the federally legal status of hemp, these products should not be subject to the same restrictions as cannabis, nor should the state government prohibit businesses from continuing to work with growers and manufacturers outside of the state.
In conclusion, I am confident that if the Vermont Cannabis Control Board adopts any number of these revisions, we can continue to keep our residents safe, while allowing them to purchase the products that have for so long provided them with the safe, non-pharmaceutical and non-narcotic relief they desperately need. It will also allow hemp businesses to continue to grow, while providing employment to good, hardworking Vermonters, and facilitating the success and breadth of a local industry.
Thank you for your time and consideration.