James Pepper, chair of Vermont’s Cannabis Control Board, offered a blunt assessment of the state’s medical cannabis program to a panel of lawmakers earlier this month.
The program “is just in a rapid decline,” Pepper told members of the House Government Operations Committee. “The economies of scale are just getting tougher and tougher for these standalone medical dispensaries every time more patients drop off.”
There is little question why: Officials have known for years that there would be a downturn in medical users after retail cannabis sales came online in 2022. In fact, the state has seen faster-than-expected growth on the recreational side since then, Pepper said, which has also contributed to the decline in the state’s medical program.
This shift has regulators concerned. Pepper said that as more people exit the medical program and start buying from a retailer, they could lose access to medical expertise and, effectively, end up self-medicating. And since Vermont law allows medical dispensaries to sell higher-potency products than retail stores can, some medicinal users may end up turning to the illicit market as their tolerance for cannabis increases.
Meanwhile, medical dispensary operators said they have a loyal — if declining — contingent of patients who want continued access to the program’s benefits, including specialized products, tax-free sales and the option to get their cannabis delivered.
“We feel an obligation to provide that service that our patients depend on,” said Russ Todia, chief operating officer of Ceres Collaborative, in an interview. Ceres operates both a recreational store and two medical dispensaries.
“But,” he added, “you can’t look at the (statewide) program right now and say that it’s a healthy program. It certainly needs help from the state to keep it viable.”
Members of the government operations committee have been weighing a slate of proposed changes to the state’s cannabis policies in recent weeks, many of which are proposals from the control board. The panel appears to have an interest in advancing at least some of those measures aimed at bolstering the medical program.
Proposals in the latest version of H.612 include allowing recreational stores — of which there are about 75 statewide, compared to just five medical dispensaries — to serve medical patients under certain conditions, as well as lowering the fees that the state charges to dispensary operators. The bill would also reduce the frequency with which many patients have to renew their medical marijuana cards and add a new health condition to the list of those that qualify someone for medical-grade products.
Still, Pepper said in an interview Friday that the bill as written likely won’t spur a large influx of medicinal patients that medical dispensary operators need. Barring any significant policy changes, he has said, some medical dispensaries may soon be closing their doors.
“This year is the year for us to decide in the General Assembly what path the medical program is going to take,” said Rep. Mike McCarthy, D-St. Albans, the panel’s chair, at a hearing earlier this month. “If we make the choice to not change anything, it’s very likely that the medical program will be very, very small.”
As of this month, there were about 2,800 people enrolled in the state’s medical cannabis program, according to data from the control board, a figure that has fallen sharply since a 2017 peak of more than 5,000 patients.
At the same time, taxable revenue from the first year of retail cannabis sales came in above what state officials were expecting, Pepper said. From October 2022 to the end of 2023, sales brought in just shy of $120 million in such revenue, he said.
Leaders in Gov. Phil Scott’s administration told reporters last month that, as a result, they dipped into the state’s pot of cannabis tax revenue to avoid proposing certain cuts in the governor’s 2025 fiscal year budget.
It’s not clear yet which proposals, if any, will make it over the finish line in the Legislature this year. But the House panel on Friday did rule out a proposed change that made headlines last month — to eliminate the potency limits on all cannabis products from state law. The measure drew support from cannabis retailers but opposition from some medical leaders, including the Vermont Medical Society.
H.612 now proposes allowing recreational cannabis stores to apply for what would be a new “medical endorsement” to their state operating license, which would permit them to sell medical-grade products to medical program patients, and to do so tax-free.
The license would also allow recreational stores to deliver products to medical patients, a service that has long offered both convenience and confidentiality, said Lee Stowell, owner of the Brandon medical dispensary Grassroots Vermont. Stowell’s delivery driver will, and does, travel across the state to bring people their products, she said.
“As long as we can, we will,” she said. “It’s a big deal — you know, if you’re a cancer patient and you’re nowhere near a dispensary, you can be delivered to.”
Pepper said the control board has heard from at least 10 retail stores that would be interested in serving medical patients, too. He noted that the board would draw up new regulations to make sure retailers were protecting confidential medical information.
The idea, he said, is that having more retailers in the medical program would make it more convenient — and appealing — for people to access medical products.
Retail employees, often known as budtenders, would also need new resources to be able to educate patients about their options, Pepper said. In a report published last month, the control board asked lawmakers to fund the purchase of software, called Cannify.us, that patients could use to find which products might be a good fit.
Lawmakers did not include that funding in the latest draft of H.612.
The bill does propose to reduce the operating fees the state charges medical dispensaries, including reducing an application fee from $2,500 to $1,000, and cutting an annual renewal fee from $25,000 down to $5,000.
Pepper said he hopes this change helps dispensaries’ bottom line, and it would bring the fees in line with those charged to recreational stores. He pointed to Ceres Collaborative, where Todia has said he wants to keep a separate medical operation going as long as possible.
“They shouldn’t have to pay, you know, two and a half times what an adult-use retailer pays, just to serve an ever-dwindling number of patients,” Pepper said.
