The Senate Committee on Economic Development, Housing and General Affairs received an extended briefing from James Pepper, chair of the Cannabis Control Board, on Jan. 9 covering licensing, market trends, compliance, tax allocation and federal developments.

"We're an independent executive branch agency, and our job at a very high level is to safely, equitably, and effectively implement the laws that administer cannabis," Pepper told the committee. He said the board closed the retail and cultivation application windows in 2025 and that the board registers products before market entry; Pepper reported more than 5,000 unique registered products and described a large diversity of product categories including flower, cartridges, concentrates and edibles.

On enforcement, Pepper summarized 2025 compliance work: the board received 442 complaints and investigated 162 of them. He described the board’s education‑first approach — letters of warning for unintentional violations — while noting the board uses administrative penalties and notices of violation for repeat or serious offenses.

Pepper detailed the state’s tax structure for cannabis: a 14% excise tax (30% of which is dedicated to a prevention special fund typically administered by the Department of Health’s advisory council; the other 70% goes to the general fund), a 6% sales tax dedicated to after‑school programs via the Agency of Education, and a 1% local option tax retained by towns that opt in for retail sales. Pepper said licensing fees, administrative penalties and licensing revenue historically fund board operations, though he noted changes to administrative funding were discussed recently.

The board addressed cross‑border competition and advertising. Pepper said retail clustering is driven by a statutory town opt‑in rule: towns that affirmatively opt in become hubs for retail, producing concentrated retail clusters in cities such as Burlington and Rutland. He noted an advertising lawsuit was settled, and he described ongoing coordination with regulators in neighboring states on reciprocity and advertising standards.

Pepper also discussed the illicit market and a pending internal study of market capture. "I think more closer to 50/50" was cited during committee discussion as an estimate of the regulated market’s share versus illicit sales, but Pepper and staff said measurement is difficult and a formal study will present more precise findings later this month.

On federal developments, Pepper reviewed an executive order directing work on rescheduling cannabis. He said a move to Schedule III would likely allow businesses to deduct ordinary business expenses on federal returns and open research opportunities, but it would not resolve federal banking restrictions nor immediately create interstate commerce; the timeline for any federal rulemaking is unclear.

Committee members asked for detail on the Cannabis Business Development Fund (low‑interest loans, grants and technical assistance administered by ACCD). Staff said the fund is nearly spent and that one‑time appropriations prior to market maturation make long‑term planning difficult; members asked agencies to return with options for program sustainability and further market support.