Cannabis and Hemp Products To Be Exempted From 92% Wholesale Vape Tax

MONTPELIER — For four years, cannabis and hemp vape products sold in Vermont have been subject to a controversial 92% wholesale vape tax originally meant to deter youth tobacco use. Vermont’s Budget Adjustment Act, which became law this week without Governor Phil Scott’s signature, included language making cannabis and hemp products exempt from the tax.

Changes take effect on July 1, 2023. The wholesale tax will still be applied to THC vaping devices, including the empty cartridge, batteries and flower vapes.

In July of 2019, Vermont placed the 92% wholesale tax on all E-Cigarette devices and products, intending it as a measure to deter youth access to tobacco vaping products. The language in the bill, however, grouped other vaporizers in with nicotine products.

For the past four years, Vermont store owners have struggled to sell vaporizer devices and CBD cartridges, with the steep 92% tax driving up retail prices. And for the first six months of the recreational marketplace, THC vape cartridges have been both expensive and hard to find in Vermont.

Longtime Bern Gallery owner Tito Bern, who recently launched a dispensary at his Burlington location, has been a prominent and vocal critic of the tax since its implementation. He pointed out that the tax still applies to devices, which means it will still drive up prices and make it harder for Vermont retailers to compete with online sellers.

“It hardly feels like a win to me,” Bern said, “but we’ll take it.”

Local advocacy organization VT NORML gave this example when it broke the news on Instagram:

For instance, if “Manufacturer A” buys empty THC vape cartridges for $1, they would then sell the filled cartridge to “Retailer A” for $1.92 as a result of the 92% tax applicable to empty cartridges. This would be the final wholesale tax paid by either the Wholesaler or Retailer on the vape cartridge and its contents. This change will take effect on July 1st, 2023.

The language in the final bill reads:

The tax established in this section [Tobacco Products Tax] shall not be imposed on:
(1) cannabis-related supplies sold by a dispensary registered under 7 V.S.A. chapter 37 to registered patients and registered
caregivers, as those terms are defined in 7 V.S.A. § 972;
(2) cannabis products, as defined in 7 V.S. A. § 831, that do not contain
tobacco: or
(3) hemp or hemp products, as defined in 6 V.S. A. § 562, that do not
contain tobacco.

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