[co-author: Antonella Velaoras]

On June 10, 2024, H.612, An Act Relating to Miscellaneous Cannabis Amendments (the “Act”) became law, making a variety of changes to Vermont’s cannabis laws that will have significant implications for the state’s medical and adult-use cannabis industry. These changes will mainly impact licensed retailers, licensed cultivators, medical patients, and social equity businesses. Read on for a high-level overview of Vermont’s cannabis market, the Act’s key provisions, a new cultivator licensing opportunity, and the impact on the state’s cannabis industry.

Overview of Vermont’s Legal Cannabis Market

In May 2004, Vermont’s State Legislature approved medical cannabis legalization. Fourteen years later, in July 2018, a law legalizing the possession, private consumption and limited cultivation of cannabis by adults 21 years of age and older went into effect. However, the law creating a regulated adult-use cannabis market did not go into effect until October 2020. Sales of adult-use cannabis finally commenced in May 2022.

The Vermont Cannabis Control Board (“CCB”) is the agency responsible for regulating the state’s medical and adult-use cannabis programs. According to data published by the CCB, there are 567 active adult-use cannabis licenses as of June 2024, including 404 cultivators, 74 manufacturers, and 76 retailers. The adult-use cannabis sales projection for 2024 is $115 million. There are also four registered medical cannabis dispensaries serving approximately 2800 medical patients.

Key Statutory Changes in the Act

The Act makes several significant changes that will impact Vermont’s adult-use and medical cannabis regulatory programs, especially for licensed retailers and cultivators, registered medical cannabis patients, and the market for intoxicating hemp-derived products.

Changes Affecting Vermont Cannabis Retailers

Advertisements may now include statements and illustrations that offer prizes and awards for purchasing cannabis, in addition to price discounts. Unlike in the Commonwealth of Massachusetts, which continues to prohibit licensed marijuana retailers from advertising gifts, giveaways and discounts, licensed retailers in Vermont will likely enhance their marketing programs now that it is permissible to include information about prizes, awards, and price discounts in their advertising materials.

Once the CCB adopts rules, a retailer will be able to apply for a “medical endorsement” from the CCB that allows the retailer to:

• Sell tax-free cannabis products to registered patients that are not available for purchase by nonmedical customers
• Deliver cannabis products directly to registered patients
• Sell cannabis products to patients without requiring the patients to leave their vehicles

Application, renewal, and licensing fees for retailers have been substantially reduced:

• The initial application fee for retailers is reduced from $2,500 to $1,000
• The $20,000 registration fee for the first year of operation has been eliminated
• The annual renewal fee is reduced from $25,000 to $5,000

The annual licensing fee for retailers that have obtained a medical endorsement will be $10,250.

Vermont Cannabis Cultivation Changes

Outdoor cultivators can now use existing farm buildings for basic drying and storage without ensuring that the buildings fully comply with commercial building codes.

Municipalities are permitted to adopt a zoning bylaw identifying districts where outdoor cannabis cultivation is preferred.

The Act also establishes minimum setback distances from highways for licensed cultivation facilities.

Vermont Medical Cannabis Program Updates

Registration cards for medical cannabis patients with chronic pain are now valid for three years and no longer need to be renewed annually.

Ulcerative colitis (UC) is now a qualifying medical condition for patient registration.

An individual under 21 must provide documentation to the CCB verifying a bona fide treatment or consulting relationship with a healthcare professional for at least three months before being approved as a registered patient. This three-month relationship requirement can be waived in certain limited circumstances.

Assistance for Vermont Cannabis Social Equity Applicants

The Act requires $500,000 to be transferred from the Cannabis Regulation Fund to the Cannabis Business Development Fund, and then to the Agency of Commerce and Community Development to fund technical assistance and provide low-interest loans and grants to social equity applicants seeking to operate licensed cannabis businesses.

The CCB must also collaborate with various governmental boards and community organizations to develop recommendations to the state Legislature for appropriating a percentage of cannabis excise tax money to the Cannabis Business Development Fund to provide technical and financial assistance to social equity applicants.

Intoxicating Hemp-Derived Products

As we have seen in other jurisdictions, the Vermont State Legislature also took formal action to clarify restrictions and prohibitions on certain types of products containing intoxicating hemp-derived cannabinoids.

The Act clarifies that the definition of “hemp products” or “hemp-infused products” does not include any substance or product that: (1) is prohibited or deemed a regulated cannabis product under the rules promulgated by the CCB, or (2) contains more than 0.3% total tetrahydrocannabinol (THC) on a dry-weight basis.

This amended language refers to the CCB’s Emergency Rules that took effect in April 2023. These rules strictly prohibit certain hemp-derived intoxicating cannabinoids and synthetic cannabinoids, including Delta-8 and Delta-10 THC. The rules also presumptively prohibit certain consumable, non-cannabis products that:

• Contain total THC in a concentration exceeding 0.3% on a dry-weight basis
• Contain more than 1.5 mg THC per single serving
• Contain more than 10 mg total THC per package, unless the ratio of cannabidiol (CBD) to THC is at least 20:1
• Have the dominant market appeal of mimicking the intoxicating effects of THC

New Vermont Cannabis Propagation Cultivator License

On June 14, 2023, H. 270, An Act Relating to Miscellaneous Amendments to the Adult-Use and Medical Cannabis Programs, went into effect. Among other changes to Vermont’s adult-use and medical cannabis programs, this law included the establishment of a new Cannabis Propagation Cultivator license type.

Once licensed by the CCB, a Cannabis Propagation Cultivator licensee is authorized to:

• Cultivate up to 3,500 square feet of cannabis clones, immature cannabis plants, or mature cannabis plants
• Test, transport, and sell cannabis clones and immature cannabis plants to licensed cultivators
• Test, transport, and sell cannabis seeds that meet the federal definition of hemp to a licensed cultivator, retailer, or the public

However, a Propagation Cultivator licensee is not permitted to cultivate mature cannabis plants for the purpose of producing, harvesting, transferring, or selling cannabis flower for or to any person.

As required by state law, the CCB began accepting applications for Propagation Cultivator licenses on July 1, 2024. Additional information about this new license type and how to apply is available here.

What’s Next For Vermont’s Cannabis Industry?

The Vicente LLP team is monitoring how these statutory amendments will manifest into new regulations from the CCB and, ultimately, how the existing adult-use and medical cannabis industry in Vermont will be impacted. We expect to see increased marketing and profitability for retailers, an expansion of outdoor cultivation, more stringent control over intoxicating hemp-derived cannabinoids, increased funding and business expansion for social equity applicants, as well as increased access and convenience for registered patients purchasing medical cannabis.