On Wednesday, Gov. Phil Scott decided to let a bill establishing a marijuana marketplace become law, making Vermont the 11th state in the nation to legalize recreational marijuana sales.
Over the next few years, state officials will stand up a regulated statewide market for marijuana and issue licenses to marijuana cultivators, product manufacturers, testing labs and dispensaries.
Recreational marijuana dispensaries could open as soon as October 2022.
And the state’s existing medical dispensaries can receive licenses to sell their products to the public starting in May 2022.
Here's what the rollout of the new cannabis marketplace will look like.
Forming the Cannabis Control Board
The Cannabis Control Board is the new three-member body that will regulate Vermont's cannabis industry.
The governor will appoint the board in consultation with a Cannabis Control Board Nominating Committee composed of members of the governor's administration, three members of the Vermont House and two Vermont state senators.
The board is expected to be in place by January 2021. But Scott said Wednesday he thinks the law's timeline for setting up the panel is “too aggressive and may need to be extended.”
Once appointed, the control board will have authority over licensing, regulation and enforcement of Vermont's nascent cannabis industry. In April, it will also make recommendations to the Vermont Legislature about additional policy changes and resources the state needs to have in place before the market opens up.
These will include recommended policies around cannabis-related advertising, land use and efficiency requirements for cannabis businesses.
In his letter on Wednesday, the governor asked lawmakers to make several changes before dispensaries start setting up shop in Vermont.
Scott wants the Legislature to pass policies to improve racial equity in the marijuana industry. He wants legislators to ban the sale of marijuana vaping products, which currently would be allowed. And he wants them to prohibit businesses from advertising marijuana products in a way that would appeal to children.
In June 2021, the board will begin the rulemaking process — writing the regulations that will govern cannabis establishments.
Medical marijuana dispensaries get a 'head start'
Vermont has five medical marijuana dispensaries, and the new law gives these companies a head start. They can apply for licenses and sell products to the public about five months earlier than the new retail sales companies.
Medical dispensaries could start selling marijuana to people without prescriptions as soon as May 2022.
Scott criticized the marijuana legislation for giving medical dispensaries “an unfair head start on market access.” He said this gives the existing dispensaries an unfair advantage over women-owned and minority-owned business applicants and other small growers and entrepreneurs trying to break into the industry.
Rep. John Gannon, D-Wilmington, who helped craft the legislation in the House, said medical dispensaries will be limited to one retail location each.
Allowing the dispensaries to open earlier will give small, local marijuana growers a leg up.
"At the same time that the medical dispensaries are getting a head start, so are small cultivators who can sell to the medical dispensaries to meet the increased demand," Gannon said.
The control board can begin issuing licenses to marijuana cultivators as soon as July 2022.
Retail stores can open as soon as October 2022
The Cannabis Control Board can begin issuing licenses to marijuana product manufacturers and wholesalers in August 2022.
The next month, retail stores will be able to receive licenses and open as well.
However, the operations are subject to town approval. Some towns, including Clarendon, have already voted to ban both medical and recreational dispensaries. Newport and Thetford approved bans on dispensaries last year. However, Thetford overturned its marijuana ordinance in February.
Sen. Joe Benning, R-Caledonia, the minority leader in the Senate, said the fact that towns must "opt-in" before dispensaries can open means it could take up to three years before cannabis retailers operate in the state.
Benning opposed the “opt-in” provision during legislative negotiations.
"Until we get towns that are actually opting in — and that process will take time — I don't see anything happening in the immediate future. I think it's going to be a lot of hurdles between now and the date you see the first door open someplace," Benning said.
When dispensaries open, marijuana will be taxed at a combined 20% tax rate — a 14% excise tax and a 6% sales tax.
According to the latest estimates from Vermont’s Joint Fiscal Office, the new marijuana marketplace is expected to bring in nearly $20 million in state revenue per year, three years after it takes hold.
The state would direct 30% of excise tax revenue from pot sales toward drug use prevention and education initiatives, and use part of the sales tax revenue to fund a universal after-school program Scott pitched earlier this year.
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