Cannabis board seeks new lab lease, flags revenue gap after excise-tax sunset

The Senate Appropriations Committee on Feb. 21 heard the Cannabis Control Board’s FY26 budget presentation, including plans to open a state-run quality-control laboratory, add an enforcement-focused lab director and absorb higher vehicle and lease costs.

The board told the committee it now has 25 staff and three board members and has just signed a 10-year lease for lab space in Colchester. Olga Fitch, executive director of the board, said the lab lease will cost “roughly between, you know, $90,000 to a hundred thousand a year.”

The lab is central to the board’s FY26 request, Fitch said, because existing private labs cannot absorb the frequency and timing of tests the agency expects to need. “We just can't rely on the two private labs to do that, because we need to kind of always skip to the head of the line when we have an initiative or an inspection,” Fitch said. The board budgeted about $100,000 in private lab services in previous years and added roughly $25,000 this year to cover transitional needs while the state lab comes online.

Nut graf: The request highlights both one-time startup costs for the lab and a structural revenue change: a July 1 sunset of the cannabis excise-tax provision that previously helped fund board operations will reduce recurring revenues, leaving fees and fines to cover a substantially smaller share of operating costs.

Committee members were shown line items that drive year‑over‑year increases in personal services and operating expenses. The budget includes an added lab director position coded within personal services; Fitch said that addition accounts for a shifting of costs into that category. The board also described a planned enforcement attorney position that is not included in the FY26 request; the board said that authorization for that attorney is currently being pursued through other legislative channels.

Vehicle leases and property rental were called out as other significant cost drivers. The board said it runs a field enforcement team of agents who require assigned vehicles; the budget anticipates leasing seven vehicles and projects about $91,000 in vehicle lease costs for the coming year. Fitch told the committee fleet leases are handled through the state’s central fleet manager but paid from the board’s operating budget.

On revenue, the board explained that a portion of its historic funding came from the cannabis excise tax. That provision sunsets July 1, after which the cannabis regulation fund will contain only fee and fine revenue. The presenter said fee and fine revenue is projected to cover “a little over a third” of the board’s anticipated $6.5 million in FY26 operating costs, and the board plans to rely on year‑end balances from FY25 to cover the gap.

The presentation also addressed enforcement partnerships and operational practices. The board reported a small memorandum of understanding (about $10,000) with an enforcement partner identified in the presentation as DLL that can provide undercover checks and other tactical assistance. Fitch said the board currently refers some lab work to two private, licensed labs; the state lab is intended to expand capacity, reduce conflict-of-interest concerns (since private labs are also licensees), and improve the agency's ability to pursue enforcement more quickly.

Committee members pressed on market structure and retail site density. Board staff described a moratorium on new retail licenses and noted clustering in some towns because local opt‑in rules produced pockets of retail density. The board said towns can create local cannabis commissions and use zoning and local ordinances to limit retail locations; the board said it is monitoring cultivator capacity and is under contract to update its economic model for supply and demand.

The presentation closed with fiscal projections from JFO that showed taxable sales and fee revenue history and forecasts; the board said those numbers suggest fees alone are unlikely to fully fund operations without a continuing allocation from excise revenue or transfers from the general fund.

Looking ahead, board staff said they will continue the transitional use of private labs while building staff and laboratory capacity in Colchester, pursue separate authorization for an enforcement attorney, and monitor retail licensing and supply dynamics as part of rulemaking and market regulation.

(Ending) The committee did not take a formal vote on the board’s request during the session; members asked follow-up questions and indicated they would contact the presenters for additional detail.