Vermont retailers, regulators and growers spar over density, product rules in H.321 hearing

Lawmakers heard more than two hours of testimony Thursday on H.321, the miscellaneous cannabis bill, as retailers, cultivators and the Cannabis Control Board debated how to handle what many witnesses described as an oversaturated market and other implementation issues.

Retailers from border towns and statewide trade groups urged legislators to adopt section 16 of the draft bill, which would pause issuance of new retail dispensary licenses for two years. "We have 7 times the national average of retailer concentration," said Dave Silverman, owner of Flora Cannabis in Middlebury and director of the Vermont Cannabis Action Fund, citing state tax data. He told the Government Operations & Military Affairs Committee that a recent 38% jump in licensed stores has occurred while statewide sales grew about 6% annually, squeezing prices and wholesale margins.

Why it matters: Witnesses said the combination of high state taxes, advertising restrictions and cross‑border competition from larger Massachusetts operators has reduced retail revenues, pressured prices paid to small cultivators and threatened quality and compliance gains. Small producers and retailers said a temporary moratorium would give the market breathing room while regulators finalize siting rules.

Support for a moratorium and rule changes

Colleen, who identified herself as owner of Juniper Lane dispensary and cultivation in Bennington, said cross‑border shoppers and Massachusetts advertising have undercut Vermont retailers near the border. "People go 10 minutes over the border into Massachusetts and buy ounces of cannabis for $60 to $80," she said, adding that Vermont's higher taxes and advertising limits make competing difficult.

Scott Sparks, who described multiple Vermont businesses including Vermont Bug Barn and indoor cultivation in Brattleboro, and Noah Fishman, who runs Zen Barn and related operations in Waterbury, also urged a pause. "Opening more stores is not going to find more consumers," Sparks said, adding that retailers already run frequent promotions and loyalty discounts to stay viable.

Regulatory alternatives and CCB rulemaking

Gabe Gilman, general counsel for the Cannabis Control Board (CCB), urged the committee to leave density decisions to the board's rulemaking. Gilman told the committee the CCB has new authority and contracted market analysts to develop a more nuanced siting rule. "The minute the board had authority to close the acceptance window … it closed the acceptance window," Gilman said, noting that an administrative rulemaking process and the long tail of pending applications mean retail entry has already paused in practice. He warned a statutory freeze could produce perverse outcomes, including incumbents relocating into newly opted‑in towns ahead of local entrepreneurs.

Product registration, event licenses and trimmers

Sam Bellovance, an outdoor cultivator in South Hero and operator of Lake Effect retail, urged extending product-registration periods from one year to two. He said laboratory testing, label design and board review can make bringing or renewing a product a multi‑month process. "You're really looking at a process where it's taking 2 to 3 months, but sometimes up to 4 to 6 months to get a product to the market," Bellovance said, and supported language in section 10 of the draft to move to a biannual cycle.

Bellovance and other witnesses also asked the committee to add event licenses that would allow regulated onsite consumption at controlled events (similar to beer festival tents), and to prioritize those changes over a proposed trimmer/harvest license. The CCB and some committee members signaled support for a lightweight credential for seasonal harvest workers to address labor and biosecurity concerns; Gilman said the board favors a low‑fee credential that also ensures labor protections and insurance.

Advertising lawsuit and federal tax hurdle

Dave Silverman confirmed ongoing litigation over Vermont's advertising restrictions. He said a Flora Cannabis–backed lawsuit argues the rules violate Article 13 of the Vermont Constitution and that settlement talks with the board are possible, though a trial would not conclude before the legislative session ends.

Witnesses also raised nonstate limits on business viability. Scott Sparks noted Internal Revenue Code Section 280E, which bars typical business deductions for federally illegal drug proceeds, as a federal factor that inflates effective tax burdens on cannabis retailers.

Areas of disagreement and next steps

Committee members and witnesses were split on remedy. Several retailers urged an immediate, statutory two‑year moratorium on new retail licenses; CCB counsel argued the board's pending rulemaking—already informed by public comment hearings—will produce a more flexible, refined approach and may effectively pause new retail applications for 12–18 months.

Committee members said the bill will continue to be refined in the coming days to meet crossover deadlines. No formal votes or motions were recorded during the hearing.

Ending: Lawmakers said they will take additional testimony and refine H.321 ahead of committee action; witnesses asked the committee to consider event licensing, a biannual product-registration schedule and measures to protect small Vermont cultivators as the bill moves forward.