Senate committee advances broad cannabis bill with event and delivery permits, tax parity and cooperative structure

The Senate Economic Development, Housing & General Affairs Committee on March 13 advanced S.278 (draft 3.2), a wide-ranging cannabis bill that changes possession and transaction limits, creates event and delivery permits for small cannabis businesses and adds tax and corporate-structure provisions for the industry.

The committee's chair opened the session by asking staff to walk members through a strike-all draft circulated overnight. Committee counsel and staff summarized edits that clarified the 5-to-10 gram increase applies to hashish possession and that the bill does not address edibles.

The bill sets a capped pilot for event permits and delivery permits. "Annually the board shall issue not more than 10 permits for public events and 10 permits for private events," counsel read from the draft, which the committee confirmed would be phrased to read as 20 permits per year. The bill also bars an event permit where alcoholic beverages are sold or furnished for on‑premises consumption at the same location, a restriction that prompted debate about contiguous, adjacent or collocated spaces.

James Pepper, chair of the Cannabis Control Board, advised the committee that the draft aims to "honor the spirit" of the state's anti‑franchising law and that a retailer that moves sales outside the licensed retail location may need to suspend storefront sales while an outside event is operating. When members pressed about businesses that operate a permitted event immediately adjacent to their store, the committee added an exception allowing sales from a permitted event location that is contiguous with the licensed retail location.

The panel also agreed to a pilot delivery permit program for small producers. Counsel and CCB members described the delivery permit as a discretionary pilot capped at no more than 15 permits annually, intended for "tier one" craft cultivators and tier‑one manufacturers; the CCB emphasized a gradual rollout to allow time for training and procedural safeguards.

Members debated the event‑permit fee that appeared in early drafts. A remote participant, Jeffrey, said a $1,000 fee would "exceed the price of a license for some small cultivators," prompting the committee to agree to a $500 fee for now and to refer fee-setting questions to Senate Finance.

The bill contains a set of tax and business provisions intended to improve parity and business flexibility for the legal cannabis market. Counsel described an amendment to Title 32 that would allow certain federal deductions for licensed cannabis activity to be included when calculating modified adjusted gross income for state tax purposes. The draft also creates a new statutory form, a "cannabis cultivator cooperative corporation," to let licensed cultivators form cooperatives and share assets and expenses under 11B SA, mirroring arrangements available to other agricultural producers.

One of the most contested items was an appropriation to the Vermont Land Access and Opportunity Board (LOB). Ted of the Joint Fiscal Office said the governor's recommended base funding in the governor's budget is $1.68 million while the LOB's requested FY27 program budget is roughly $3.2 million, leaving an approximately $1.5 million gap. Jean Hamilton, representing the LOB, said the 1.68 million in base funding covers staffing, overhead and board expenses but that the board sought additional one‑time funds to stand up its loan, grant and assistance programs. "These programs are not just equity or justice programs. These are programs that are actually making other investments, other government investments more effective," Hamilton told the committee, and described staff salary ranges and the administrative services the LOB receives from VHCB.

Members who voiced fiscal caution said they were willing to report the bill with the governor's base funding in the bill and to advocate for the supplemental one‑time funding in appropriations. The committee adopted language clarifying permit selection procedures must seek equitable distribution across license categories (retailers, growers, manufacturers, wholesalers) and added the contiguous‑location exception for event permits.

After debate and the clerks' roll call, the committee moved S.278 (draft 3.2) favorably out of committee. The chair paused the session for a short recess and said the panel would resume with housing items. The bill will now proceed through the Senate process and to additional committees.

What the committee did not resolve: the transcript shows members asked the Cannabis Control Board to return with more detailed administration plans for product registration and the IT implications of multi‑year registration, and members deferred final fee and budget decisions to Senate Finance and appropriations. The committee did not adopt a numeric vote tally in the transcript excerpt provided; the clerk's roll call recorded affirmative responses and the bill was reported out.

Sources: Committee discussion and counsel summaries during the March 13 hearing; statements by James Pepper (Cannabis Control Board) and Jean Hamilton (Vermont Land Access and Opportunity Board).