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Vermont Legalization Update 2020
Recent legislative decision provides a cannabis license opportunity in the state of Vermont.
October 7, 2020, became a historical day for cannabis, as Vermont became the 11th state in the nation to legalize adult-use cannabis sales. This achievement will establish a thriving cannabis industry after previous legalization efforts failed to do so. In January of 2018, Vermont legalized cannabis via state legislature; however, this legislation fell short of establishing a safe and legal market for businesses to flourish. Instead, this legislation allowed adults to possess, consume, and cultivate their own cannabis – but they had nowhere to purchase it legally.
Although this was a monumental step forward for cannabis reform, the act inadvertently paved the way for a flourishing black market. While Vermont does have a medical cannabis program with established dispensaries for registered patients to purchase their medicine, these dispensaries cannot sell cannabis to non-patients. Without retail stores, adults over 21 had no safe access to cannabis or manufactured products. Instead, they can either cultivate their own cannabis at home or illegally purchase or procure their medicine from other home growers. The legislation passed on October 7, 2020, S.54, will help lay the foundation for a legal cannabis industry that creates new jobs, provides safe cannabis-access to adults 21 and older, and will generate millions of dollars in tax revenue that can directly benefit the community.
The adoption of S.54 requires the oversight of the medical cannabis program to transfer from the Department of Public Safety to a new Cannabis Control Board. The Cannabis Control Board must begin the rulemaking process for adult-use cannabis no later than April 1, 2021, and final rules for retail dispensaries must be adopted by March 1, 2022. Following this timeline, the first adult-use dispensaries in Vermont must open on or before May 1, 2022, and licenses for cultivation can be issued as soon as 2022.
As part of this rulemaking process, the Cannabis Control Board must establish a system of prioritization that would give licensing-priority to pre-existing medical cannabis dispensaries; operations with environmentally sustainable operational plans; minority or female-owned business or business with plans to recruit and promote minorities, women, and those disproportionately impacted by cannabis prohibition; or have plans to pay livable wages and offer benefits. Additional priority considerations would go to small-scale cultivators who utilize 1,000 square feet of canopy or less. Promoting smaller cultivation facilities will help develop a \”craft cannabis\” market and provide small businesses with the rare opportunity to excel in an industry that is commonly flooded with large companies financed by billion-dollar corporations.
Governor Phil Scott acknowledged several areas where lawmakers can improve the recently adopted legislation in the 2021 session. One area of primary concern is the licensing format could \”disproportionately benefit Vermont\’s existing medical dispensaries by giving them sole access to integrated licenses, and an unfair head start on market access. This creates an inequitable playing held both for our smaller minority and women-owned business applicants, and other small Vermont growers and entrepreneurs.\”
This concern is well warranted, and Vermontians should be comforted by the fact that their Governor wants a level playing field where small growers and beginning entrepreneurs have an honest chance to succeed. License scarcity combined with high demand and an unjust licensing processes has historically been problematic for states who are establishing a new cannabis industry. For example, Florida’s licensing process has created a situation where companies are profiting millions by selling their highly desirable state awarded licenses to extremely wealthy businesses – many of which with roots outside of the United States. In other states, like Missouri, applicants are suing the state, claiming the scoring and licensing process was unfair.
S.54 would allow the Cannabis Control Board to issue cannabis business licenses to retailers, cultivators, product manufacturers, wholesalers, labs, and vertically-integrated licenses. Although the recreational cannabis market will be one of the smallest in the United States, adult-use cannabis sales could reach $230 million in 2023, generating significant tax revenue and economic activity for the state.
You can expect more details on the application process to unfold in the coming months, but now is the time to start forming your cannabis business plan. Applying for a cannabis business license is a time-consuming process that requires a tremendous amount of planning, designing, and regulatory compliance preparations. Once you have finalized a design, the build-out process can take months to years depending on scale.
Other considerations include site preparation and zoning, establishing community support and developing procedures specific to local and state regulations. It is time to start planning to win, and Catalyst BC is here to help. From conception through execution, our team can provide market insight, strategic planning, financial pro forma modeling, grow room and facility design assist, equipment selection and integration, standard operating procedures, employee training, full-service project management, and data-driven cultivation and retail operational support to drive performance and ensure sustainability.
If you are thinking about starting a cannabis business in 2021, the Catalyst BC team is here to support your goals and vision. If you have any questions or you would like to schedule an introductory conversation, contact us today. We are here to help you go from aspirational to operational with this Vermont cannabis license opportunity.
Andy is an Operations Advisor at Catalyst BC.
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