House committee reviews S.278 to expand municipal control and pilot cannabis event and delivery permits

The House Government Operations & Military Affairs committee on April 28 reviewed S.278, a Senate-passed bill that would change multiple aspects of Vermont's regulated cannabis market, including two-year pilot permits for commercial events and delivery, adjustments to transaction and packaging limits, and new procedures for municipal oversight.

Sen. Keesha Ron Hinsdale, Senate Economic Development reporter for S.278, told the committee the bill aims to create "market coherence" for Vermont retailers and protect local craft cannabis producers as federal and regional markets evolve. "S 2 78 represents the first economic development bill for cannabis," she said, arguing the changes would help Vermont businesses capture more of the market and give municipalities tools to regulate time, place and manner of sales.

Legislative counsel Tucker Anderson walked the committee section-by-section. He said S.278 does not change THC concentration caps (30% for flower; 60% for manufactured concentrates) but does increase transaction and possession limits: package THC limits rise from 100 mg to 200 mg, and the per-transaction and possession limits are increased from 1 ounce to 2 ounces (with hashish possession increasing from 5 grams to 10 grams). "This amendment on its own does not impact transaction or possession limits," Anderson said when describing packaging-language changes, and later explained the bill increases the transaction and possession maximums to avoid civil infractions for purchasers.

The bill would authorize two pilot permit types administered by the Cannabis Control Board (CCB): event permits and delivery permits. Anderson said an event permit would allow licensed cannabis establishments to oversee commercial events where adults may consume cannabis on-site, subject to locally approved security and product plans and event-specific conditions. The statute would cap permits at 10 public event permits and 10 private event permits annually and limit each permitted event to a single location not exceeding 24 hours. Permittees must submit security plans to prevent diversion and ensure intoxicated persons do not access the site.

Delivery permits would be limited to up to 15 annually for tier 1 and tier 2 cultivators and manufacturers that do not hold retail licenses. Deliveries would be limited to Vermont physical addresses between 9 a.m. and 5 p.m., carried out only by the permit holder or trained employees/agents, and must be for personal use (no resale). Anderson noted the delivery provisos mirror existing language for second-class alcoholic beverage retailers.

The bill adds event and delivery permit holders to cannabis excise tax and recordkeeping requirements so they follow the same returns and reporting obligations as retailers. It also creates a timeline for CCB review: the board must begin rulemaking on the pilots by July 1, 2027, and submit a written report by Nov. 15, 2027, assessing benefits, challenges and administrative viability and recommending whether the pilot statutes should be repealed or continued (the pilot repeal dates are set for July 1, 2028, unless the legislature takes different action).

S.278 clarifies municipal authority over local permits. The bill allows voters to force an opt-in vote (petition threshold 5% of voters) and preserves the municipality's ability to place conditions on local permits for public-safety concerns, traffic management and nuisance mitigation. Counsel emphasized the statute continues to prohibit ordinances or bylaws that have the practical effect of entirely excluding cannabis establishments from a municipality (so-called exclusionary zoning), while allowing reasonable time/place/manner and signage regulations.

Other provisions: the bill would cut outdoor cultivator fees by 50% (and repeal tier 6), permit prorated multi-year product registrations for low-risk shelf-stable products, create a statutory route for cannabis cultivator cooperatives under Title 7, and amend tax-code sections to allow certain cannabis business deductions for state property tax credit calculations retroactive to Jan. 1, 2025 where specified.

S.278 also includes a contingent framework for interstate "commercial cannabis compacts." The governor could enter agreements with other regulated states only after specified federal conditions occur (e.g., changes in federal law allowing interstate commercial cannabis exchange, DOJ guidance, or the attorney general's written legal assessment); any compact must require parity on testing, labeling, tracking, tax collection, recall and enforcement, and protections for communities disproportionately impacted by cannabis criminalization.

The committee posed numerous operational questions to counsel about security requirements, which license categories may hold event permits, how municipalities' conditions will be enforced, and the tax implications. Anderson repeatedly noted procedures adopted by the CCB (rather than full rulemaking) would be given the force of law for the pilots to allow an expedited timeline and administrative enforcement.

Next steps: the committee recessed for a five-minute break and planned to continue a section-by-section review of the language. No final committee vote on S.278 was recorded during this session.