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Committee weighs aligning Vermont's hemp law with pending federal rule, members warn of effect on small processors
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Summary
Legislative counsel told the committee that a pending federal change shifting the hemp test to a 0.4 milligram total-THC-per-product limit could reclassify many current hemp products as cannabis, raising concerns about fees, retail access and banking for small Vermont processors; members discussed using board rulemaking or a policy to protect small businesses.
A legislative committee on agriculture reviewed draft language for Senate Bill 323 that would align Vermont's statutory definition of hemp with a pending federal definition, prompting lawmakers to seek fixes to protect small processors and CBD sellers.
Bradley Showman of the Office Legislative Council told the panel the federal test currently uses a delta-9 THC percentage (0.3 percent by weight) but a pending federal rule would instead set a fixed total-THC limit of 0.4 milligrams per finished product. "If a product has more than 0.4 milligrams," Showman said, "then that product is cannabis and it is unlawful in interstate commerce." He cautioned that shift could exclude many products now sold as hemp.
The change, Showman said, could force products that small, in-state processors now sell at farmers markets or retail stores into the cannabis regulatory system, which limits sales to licensed dispensaries and creates practical barriers in banking and payment processing. "You could be at a farmer's market and say, 'well, I can take cash and cash only,'" a committee member commented, noting the financial and stigma hurdles that would follow a reclassification.
Beyond reclassification, SB 323 would also add new fees: Showman said the bill proposes a $500 processor fee and a $75 fee to register each hemp product, meaning a single producer with many SKUs could face sizable new costs. The draft amendment the committee reviewed would give the Cannabis Control Board discretionary rulemaking authority to define a class of "craft processors" and to waive or reduce licensing fees or exempt certain product categories from registration requirements.
Members probed how narrowly to define a craft processor and whether to require the board to issue exemptions or simply permit it to do so. Representative O'Brien asked whether the bill should explicitly compare craft processors to other processor classes to clarify who would be covered. Showman said the amendment as drafted leaves the specific definition to the board, noting the committee could add more statutory guidance if it wished.
Several lawmakers raised contingency options tied to the federal outcome. Representative Burt asked whether the legislature could make its state definition contingent on whether the federal 0.4 milligram limit actually takes effect, or instead codify the prior 0.3 percent delta-9 threshold to preserve the existing market. Showman said states can maintain a divergent definition, but that conflict between federal and state classifications creates regulatory and market uncertainty for businesses handling the same product.
The committee paused discussion on fees to return after floor business and invited further talks with the Cannabis Control Board. No formal vote was taken on the amendment during this session; members said they would continue drafting language to try to protect small Vermont processors while conforming to federal law if necessary.
The committee plans to reconvene after the floor session to consider revised amendment language and whether to require the Cannabis Control Board to adopt policies or rules that would ease the transition for small businesses.
