Lieutenant governor and industry witnesses urge market fixes in H.321 hearing as retailers, growers clash over fees and direct sales

The Senate Economic Development, Housing & General Affairs Committee heard extensive testimony on H.321 on April 23, a bill addressing multiple cannabis-market issues. Witnesses described a market strained by rapid license growth, uneven fee structures and limited sales channels for small producers.

Lieutenant Governor John Rogers told the committee that current license fees and tier rules favor large, indoor operations and disfavor lower-cost outdoor growers. "Out of that $4.20, once I take out the label, the glass, the paper, that might grow, what it cost me for fertilizer, my genetics, plant it, the tractor, the fuel. I make about a dollar. The retailer makes $4.20. The state makes a dollar and 68¢," Rogers said, describing how tax and retail margins currently flow.

Rogers proposed recalibrating license fees to better reflect on-the-ground income potential and urged the legislature to consider a path for direct-to-consumer sales and special-event retail endorsements that would allow cultivators limited direct sales on their own property or at temporary events.

Grower testimony echoed the Lieutenant Governor's concerns. Jeffrey Sottag, executive director of the Vermont Growers Association, told the committee that the market is only three years old but already showing signs of instability: "We are really at a moment where we are on the verge, and I don't mean to be rhetorical here, of collapse for a lot of those small producers." He called for striking proposed retail-siting language that would effectively pause new retail licenses until further market analysis is complete, and for modest changes to the employee identification card so workers can legally serve multiple licensees without creating a separate new "trim-and-harvest" license.

Retail interests and organized retailers raised separate concerns about oversupply and price declines. David Silverman, director of the Cannabis Action Fund, told the committee the market is "saturated statewide" and noted rapid retailer growth: "We have 114 licensed retailers. Not all of them are quite open yet. The market has had to absorb a 40% increase in a number of licensed retailers over a period of less than six months." Retail representatives supported the Cannabis Control Board (CCB) pausing new retail licensing while the board evaluates market data.

Witnesses also asked the committee to consider:

- Adjusting licensing tiers and moratoria consistently across retail and cultivation, including considering a moratorium on new cultivation tiers as well as retail if the legislature moves to pause licenses. - Allowing controlled direct-to-consumer options such as cultivator-hosted special-event sales or limited on-site retail days, with strict point-of-sale, security and tax collection requirements. - Revisiting employee ID and background-check rules for short-term outdoor harvest labor and for carrier/transport arrangements so small producers can move product legally without creating new full-time distributors. - Reassessing potency and package-size rules for edibles (current 5 mg per serving cap) as a cost and competitiveness issue compared with neighboring states.

No formal committee votes occurred during the hearing. Committee members asked stakeholders to work together on detailed regulatory language for any pilot events or direct-sales approaches that would not create an undue enforcement burden for the CCB.

Why it matters: Witnesses described a market structure that favors larger, capital-intensive operations and leaves small craft growers with narrow sales channels and low wholesale prices. The committee signaled interest in policy pilots and CCB rulemaking over broad statutory changes that would immediately expand retail or cultivation access.