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Cannabis Control Board briefs committee on licensing, revenue and hemp-derived-product challenges
Summary
Representatives of the Cannabis Control Board described the agency’s licensing rollout, market size and regulatory challenges including intoxicating hemp products and local odor/nuisance concerns; they recommended expanding business-support funding for small cultivators.
James Pepper, a member of the Cannabis Control Board, and board colleagues briefed the committee on Jan. 24 about the shape of Vermont’s licensed cannabis market, licensing counts, tax revenues and regulatory challenges.
"We have 601 licensees, amongst the 7 license types," Pepper said, describing a licensing ecosystem weighted toward cultivators and small-scale operators. He said roughly three-quarters of cultivators are "tier 1" small growers.
The nut graf: the board said the legal market has grown faster than some projections, producing material excise and sales-tax receipts, but the market faces long-term questions from competition (border states and tourism flows), an unregulated intoxicating hemp product market, and structural disadvantages for cannabis businesses because of federal prohibitions on banking, tax treatment and certain federal supports.
Pepper summarized revenue numbers drawn from JFO and board figures: taxable sales rose from roughly $4.79 million in the first partial year to nearly $125 million in FY 2024, and the excise tax revenue increased accordingly. The board noted 14 percent excise taxes (30 percent of which is dedicated to prevention programs) and regular sales-tax receipts; JFO projects continued growth for FY 2025 and FY 2026.
The board described two persistent regulatory threats: (1) intoxicating hemp-derived products that can enter the market outside the state cannabis licensing framework and (2) online sales and interstate commerce that regulators find difficult to control. Pepper said the board had adopted rules to limit certain synthetic cannabinoids and to treat hemp-derived intoxicating products like regulated cannabis when THC thresholds are met.
On business support, the board has recommended expanding an existing cannabis business development fund. Board materials and stakeholder engagement led the board to propose a recurring $1 million annual fund to provide grants and a coordinator/adviser network aimed at small outdoor cultivators, social-equity applicants and other small operators to help with business planning, technical assistance and capacity building.
The board also reported on an outdoor-siting inquiry and a round of municipal outreach; it noted municipal concerns about siting, setbacks and local control, and a small number of cultivators potentially affected by newly established siting setbacks. The board discussed odor and nuisance complaints in one case where a constituent reported outdoor-cultivation odors reaching a home more than 200 feet away; the board noted that odor assessment and nuisance law raise complex enforcement questions and are not resolved by simple buffer rules.
Pepper and board members invited further committee coordination on legislative changes and on deployment of the business-support fund, and they offered to share two written reports the committee had requested: the business-support report and the outdoor-siting report.
No votes or legislative actions were taken during the briefing; the board sought committee feedback on priorities for supporting small cultivators and addressing intoxicating hemp products.
