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Committee amends H.321 to delay transfer of cannabis excise revenue, removes new enforcement position
Summary
Lawmakers reviewed H.321, which changes licensing, fees and regulatory powers for cannabis; debate centered on moving 70% of excise tax into the Cannabis Regulation Fund and a proposed enforcement attorney position. The committee adopted an amendment removing the transfer and the position and directed further review next year.
The Senate Appropriations Committee on May 20 debated changes in H.321 to cannabis licensing, fees and where excise-tax revenue would be deposited, and approved an amendment removing a provision to transfer 70% of cannabis excise tax to the Cannabis Regulation Fund and to create a full‑time enforcement attorney position.
The bill, described section‑by‑section by Kirby Gee, explains new license types (including a “trim and harvest” service license), rulemaking authority for the Cannabis Control Board (CCB), background‑check procedures, packaging and date‑labeling requirements and a pilot for cannabis sales events. Chris Rook of the fiscal office summarized anticipated budget effects and costs.
The amendment adopted by the committee strikes the provision that would, starting fiscal year 2027, direct 70% of the state cannabis excise tax into the Cannabis Regulation Fund rather than the general fund, and removes language creating a full‑time enforcement attorney position for the CCB. The committee members who recorded their votes on the amendment registered “yes” votes for Senators Watson, Burrow, Westman, Brennan and Pirchen; several senators were absent or not recorded on the roll call.
Why it matters: the change affects how excise tax revenue flows through state accounts and how the CCB is funded. Under the version explained in the hearing, the 70% figure was projected to equal about $16.4 million in fiscal 2027; the CCB’s annual budget is roughly $6.5 million while current fee and license revenues were estimated at about $2.5 million, leaving an approximate $4 million gap that had been filled from the general fund in prior years. Chris Rook told the committee the enforcement attorney position would carry an annualized cost of about $150,000 and that the bill itself did not include an appropriation to fund that position.
What committee members discussed: several senators expressed concern that directing the excise tax first to a regulator‑specific fund would effectively prioritize particular programs before the general appropriation process and limit the Legislature’s control over budget priorities. A senator said this move would “prioritize certain things above everything else in the budget process.” Kirby Gee described the bill’s timing and technical changes, including that one subsection (Section 2a) would take effect next July, and James Pepper, chair of the Cannabis Control Board, explained the practical need for a temporary permit mechanism to allow an authorized party to wind down a cannabis establishment when an operator cannot continue (for example, after a license revocation or sudden incapacity).
Other provisions summarized in the hearing: the bill would (1) allow the CCB to receive FBI‑supported fingerprint criminal‑history records if authorized, with a contingency for third‑party background checks if the FBI access is unavailable; (2) create the trim‑and‑harvest service license (fewer than 10 establishments were projected to apply for that license type); (3) require packaging to include both a harvest date and a package date; (4) permit propagation cultivators and cannabis nurseries to sell seedlings to registered retailers for sale to home growers; and (5) authorize up to five pilot cannabis sales events regulated by the CCB (sales allowed; consumption prohibited).
Committee guidance and next steps: several senators said they preferred to defer structural funding changes to the broader budget process next year and requested broader stakeholder engagement before dedicating excise revenue to particular programs. The adopted amendment removes the FY‑27 transfer language and the unfunded position from this bill; the committee indicated it will revisit funding, the CCB’s budget and any staffing proposals during the next budget cycle.
Background and timing: most of the bill’s sections carry an effective date of July 1 of the current year except the excise‑tax redistribution provision discussed for FY‑27. The bill also includes a provision adding a member appointed by Migrant Justice to the Vermont Land Access Opportunity Board (LAOB) and makes clarifying changes to tobacco and nicotine tax language and to transfer‑of‑business tax administration provisions.
