Vermont’s Cannabis Control Board, which is still in the early stages of developing a commercial regulatory model, settled on a series of recommended license fee schedules and social equity discounts for the state legislature.
The Control Board recommended a six-tier licensing structure for both indoor and outdoor cultivators. A thirteenth cultivator license type would be for small operators who could grow up to 1,000 square feet indoors, as well as 50 plants outdoors, depending on what the weather allows.
The Board split retail licenses between nurseries, which can sell plants and seedlings, and storefronts, which can sell cannabis products, along with everything nurseries are permitted to sell.
Manufacturing licenses would be split into two tiers. The first allows all of the typical THC extraction methods, while the second would limit extraction methods by excluding more dangerous solvents.
“This is aimed at a lower cost license for businesses that want to make infused cannabis products,” said Julie Hulburd.
The final three types of recommended licenses were for wholesale, testing laboratory and integrated. Wholesale would broadly allow an entity to buy and sell cannabis from other cannabis companies, but not directly to the consumer, a testing laboratory license would allow a research facility to receive and study cannabis, while an integrated license would be used for medical marijuana operations with consolidated ownership between cultivation, production and distribution.
In terms of licensing fees, the control board submitted two options to the legislature. The first option for cultivators, would cost outdoor growers $1 per maximum allowable square-footage. For example, Tier 1 allows up to 1,000 square feet and the licensing fee is $1,000.
Indoor operations have a similar formula, but at four times the rate, so Tier 1, which allows up to 1,000 square feet, costs $4,000 for the license.
Storefront retail operations would pay $10,000 in licensing fees, while nurseries would pay $4,000. Tier 1 manufacturers would pay $15,000 for their license, while the lower-cost tier would be $5,000.
Wholesalers would pay $4,000 for a license, while testing lab licenses would cost $1,500. Integrated medical licenses would cost $125,000.
The fee schedules were presented in two sets, Plan A and Plan B. Plan A includes fee estimates that are sufficient to cover the board’s annual budget. Under Plan B, which the control board favors, fees would be reduced by 25% to 60%. The loss in fee income would need to be supplemented with tax revenue.
“This proposal was designed to balance the goals of generating significant revenue with providing low-cost entry into the market,” said Brynn Hare, executive director of the control board. “Some tax revenue would be needed to cover operational expenses, but we believe this investment will help ensure Vermont has a functioning and inclusive market.”
The proposed licensing fees included discounts for social equity applicants, including a full fee waiver for the first year, a 75% discount in the second year, 50% for year three, 25% for year four, and the expectation of full payments by the fifth year.
Board chair James Pepper did not directly oppose the recommendations, but said he was reluctant to recommend specific discount rates for social equity licenses. He explained that this was only because there was still more work to be done defining rules such as equity status when there’s an ownership change.
“I fully support having some sort of reduced fees for economic empowerment applicants who meet some sort of income based criteria or socioeconomic criteria, but I don’t know what those will look like at this point.”
Ultimately, the Board unanimously approved the recommendations.