The Vermont Cannabis Control Board met on December 10, 2021.

The Vermont Cannabis Control Board released their recommendations during its Dec. 10 meeting, for code compliance and penalties in the state’s upcoming adult-use cannabis market. The new rules are the latest from the board’s weekly work to codify the emerging market in time for sales to begin by October, 2022.

“The board made some broad scale decisions about what compliance and enforcement will look like in the regulations,” said control board Executive Director Brynn Hare. “[General Counsel] David [Scherr] and I took a look at what some other states do and talked with our consultants and fleshed out those recommendations to put some more details in about what kind of violations will trigger what kind of response from the board.”

The board would have the authority to issue stop-sale, quarantine or destruction orders for contaminated products.

When levying penalties, the board will consider prior violations, if it is ongoing or has stopped, efforts to prevent the violation, the size or finances of the operator and whether or not the violator self-reported or otherwise preemptively made an effort at corrective action.

Board chair James Pepper said that he expects the board to favor warnings or corrective action plans, especially in the first few years of the new adult-use market.

“I want to make sure we are affording people the opportunity to come in and explain why these violations may be happening,” he said.

The board separated violations into five categories based on the severity of the infraction, with the first category covering the most severe violations.

This category includes allowing unlawful activity on site or during transportation that results in serious physical injury or death, threats to board members or inspectors, or blocking them from establishments or otherwise attempting to obstruct them, as well as trafficking cannabis out of the state or working with the unlicensed market in any capacity, whether sourcing flower, transporting or manufacturing.

The first category also includes various administrative violations, such as operating without all required or with suspended permits and licenses, failure to pay taxes, disregarding a corrective action plan, attempting to transfer a license without state approval, attempting to hide a violation or making a false statement to the state board.

Category 2 involves violations that could pose a threat to public health or safety, such as selling to or employing people under 21, unwittingly making a false statement or concealing evidence of a violation before the board or employing someone without proper cannabis worker ID credentials. Second category violations also include ignoring maximum transaction limits, mixing adult-use and medical flower or disregarding an order from the state to quarantine or destroy contaminated cannabis.

The third category covers infractions that are potentially public health or safety threats.

These include record-keeping or labeling errors, allowing the consumption of intoxicants of any sort at licensed establishments, allowing any activity that violates state law, and improperly disposing of waste or failing to adhere to other sanitation requirements.

The fourth category covers activity that would make severe violations more likely, such as when employees are allowed to remain at work with their ID, not properly posting required signs or using unauthorized advertisements or transportation vehicles. The first violation could bring a penalty of $5,000 or a corrective action plan.

A fifth category of minor violations includes failing to properly make payments to the board, or failing to respond to records requests. Penalties include a $2,500 fee or a corrective action plan.

First violations, regardless of category, result in a corrective action plan. Any additional penalties for the same instance would be at the discretion of the board.

Category 1 violations can result in a $20,000 fine, suspension or revocation of a license. Penalties are scaled downward as the category number increases, with a $2,500 fine for category 5 offenses. Subsequent violations of a specific category within a three-year period would result in a punishment that matches the severity of the next highest category.

For example, allowing an employee to drink alcohol on the job would be a category 3 violation, which carries a $10,000 fine. A second offense would bring a $20,000 fine or 20-day suspension, which is the same as a first offense for category 2. A third offense could result in the loss of a license, much like a category 1 offense.

“In our discussion on this, there are graduated sanctions that start with a corrective action notice,” said Scherr.

The fine amounts would be slashed in half for smaller operators, including tier 1 cultivators and tier 2 manufacturers.

“We’ve scaled fines to be a bit more proportional to the amount of income a business may be capable of generating,” said Hare.

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