Senate debate centers on cannabis fee schedule, seeks fairness between indoor and outdoor growers

Lieutenant Governor John Rogers and cultivators pressed the Senate Economic Development, Housing & General Affairs Committee on May 14 for changes to Vermont’s cannabis license fee schedule, saying the current tier structure disadvantages small craft growers and overvalues some large indoor operations.

Rogers, who represents the administration in the hearing, said the point of his proposal is fairness. “My whole hope in this is trying to keep the small craft growers in business,” he told the committee, and he proposed shifting some of the fee burden onto the excise tax if needed to backfill any revenue gap.

The discussion focused on how production potential and product value vary between indoor and outdoor cultivation. Rogers argued that some outdoor tiers have production potential similar to indoor tiers but pay far lower fees, and that indoor-grown flower typically commands higher prices. “Outdoor stuff, you know, we’re up against the elements. So like my personal business, a huge amount of my stuff goes for biomass, which is worth a hundred dollars a pound. Your indoor nice buds, in the store are going for $4,000 a pound,” Rogers said.

James Pepper, chair of the Cannabis Control Board (referred to in committee testimony as the board), and other witnesses said the committee should leave detailed fee calculations to the Joint Fiscal Office and to finance because those offices have the jurisdiction and capacity to analyze revenue impacts and incentive effects. Committee members agreed to send fee work to the finance committee for final drafting; Pepper said finance would “do most of the lifting on that.”

Industry witnesses gave examples intended to show why a tier-based license fee keyed primarily to square footage can be misleading. One grower described the difference between “veneer logs” and “pulp” in agricultural terms, meaning high-value indoor flower versus lower-value outdoor biomass. Industry testimony urged that fees be tied more closely to likely income potential or output rather than raw indoor square footage or plant count.

The Joint Fiscal Office’s prior work was referenced: committee members noted a JFO analysis of earlier fee schedules and discussed staff-run charts showing potential revenue shifts. Rogers acknowledged some of his suggested changes would create a modest budget gap — he identified a figure “about 70,000” in the discussion as the approximate deficit if certain tier changes were made — and proposed using excise tax to cover the difference.

The discussion also touched on ancillary fee issues: registration periods, whether small producers should pay the same registration fee as large vertically integrated operations, and the timing of renewal fees. Rogers urged the committee to understand what each tier actually permits producers to grow and to use that production and income potential as the primary basis for fees.

Committee members directed staff and the finance committee to analyze the proposal’s revenue implications and return with numbers; no formal vote or motion on fees occurred during the hearing.

Rogers and industry witnesses urged further study and recommended the CCB and license holders work in the interim to refine definitions of tier production potential and the administrative steps needed to implement any fee changes next year.