Senate Finance reconsiders cutting outdoor cannabis fees as regulators flag roughly $100K shortfall

The Senate Finance Committee resumed debate over an amendment to reduce outdoor cannabis cultivation fees after testimony from an outdoor grower and the Cannabis Control Board chair.

Sam Bellance, owner of Sunset Lake Cannabis in South Hero, told the committee the current outdoor fee is a heavy burden for growers who harvest once a year. "For me it's $18,000 a year ... is too high," Bellance said, arguing outdoor operations generally produce far less annual yield than indoor facilities and face greater weather risk because they lack federal crop insurance.

The matter matters to the state budget and to small rural growers. The Cannabis Control Board asked the committee last year to consider fee adjustments to better support small, local cultivators; the board's chair, James Pepper, said the board's fee‑setting work was intended to strike a balance between covering the regulator's costs and not discouraging small operators. "A fee is supposed to cover the cost of the service provided and we've decided ... you can't do that in this industry," Pepper said, describing why other states rely on excise tax revenue in addition to fees.

Lawmakers pressed for specifics about fiscal tradeoffs. Pepper and other members noted that, under current figures discussed in the hearing, the board receives about $2.6 million in fee revenue while its operating expenses are roughly $7.1 million, leaving a structural gap that the board covers through appropriations or other revenues. Members estimated that halving outdoor fees across tiers would reduce fee revenue by roughly $100,000; a fiscal office estimate cited during the hearing put a conservative figure at about $105,000.

Committee members and staff discussed ways to offset that shortfall, including phasing reductions over two years, modestly increasing some indoor or retail fees, or relying on excise tax growth in future years. Pepper noted each option carries tradeoffs, and members cautioned that shifting costs to other license types could provoke political resistance or uneven market effects. One committee member warned that adding supply could put downward pressure on prices and possibly blunt any expected increase in excise tax revenues.

Rather than vote on the amendment immediately, the committee asked proponents to identify offset funding and suggested economic development hold the amendment off the floor so the Senate could consider it at third reading later in the week. No formal vote occurred during the session.