Vermont Legislature SmartTranscripts:

[Kyle Harris]: I'm Kyle Harris. I'm one of the commissioners with the Cannabis Control Board. So I'm Gabriel Gomez.

[Gabe Gohman]: I'm the Cannabis Control Board's general counsel. And we're just gonna do

[Kyle Harris]: a little tag team just based on the type of questions that were that came up for you guys yesterday. I mentioned it when half of everybody was in the room, but I feel right at home being in a committee like this. I think I appeared here once last year, but I grew up on a farm, beef cattle operation. My dad's a veterinarian. I worked in DC in the ag sector, worked at the agency of agriculture before I was appointed to this position. So it's always great to kind of talk about ag and ag adjacent types of businesses. Cannabis blurs so many different lines and jurisdictions, always feels a little bit closer to home. So after listening to testimony yesterday, we kind of developed four main buckets for conversation here, federal status. I know Pepper ran through the history of hemp and cannabis at the federal level and at the state level at this point almost a month ago. We thought just a quick refresher on where things were after hemp is so confusing to understand, let alone regulate and be a productive business in this marketplace. So I think refreshers are always helpful even for me. Happened Vermont, what are we trying to do here? What is three twenty three trying to do? And I want to use some graphics to show you that THC percentage essentially determines four pathways, four main buckets for consideration. Only a couple of those are considered with what happened at the federal level. We view three twenty three as giving us the authority to initiate rulemaking, do notice, full notice and comment rulemaking, understand interests from Vermont hemp businesses. I mean, nothing changes at the federal level, it was exciting to hear from at least one business yesterday that wanted to figure out a path for her products in state regardless of what happens. I think this committee needs to understand certain things about what that looks like. That's the intent of the General Assembly moving forward. Some of the other constraints she might find herself on from a federal perspective. And then fees. It seemed like there was a lot of talk about fees at the beginning. So I'm going turn it over to Gabe to just give you the brief overview of this.

[Gabe Gohman]: Thanks. So again, I'm Gabe Gohman, cannabis control board general counsel. Unlike folks that feel comfortable with an ag committee, I have killed three office plants in three months. So I'm not here to kill anybody. But it might be helpful to very quickly give you an overview of how we got to the place we are legally between the state government, the federal government, and hemp, because it explains some of the oddities about what probably looks like a quite odd section. Successive farm bills in 2014 and then 2018, the federal government opened up the possibility of what was otherwise CSA prohibited marijuana being recognized as hemp for those varieties that had trivial or no real THC and therefore no potential to be used as an intoxicating drug. The hope everybody knows was to use those as an agricultural product and to exploit them for their uses as a plant. That includes CBD that the plant produces, which is not intoxicating. Vermont was a really enthusiastic participant in that experiment, and some of you almost certainly were involved. The agency of agriculture where Kyle worked for a time was involved in putting together a really neat program for hemp producers. And that program kind of bloomed, but then market conditions changed, and a lot about federal law changed. So the Agency of Agriculture oversaw this as in conjunction with the United States Department of Agriculture through with a state hemp plan and had hemp farmers and whatnot. And the original regulation of hemp, as it came down at first, focused really on cultivation, on the growing of it, making sure that those plants didn't have a lot of THC. Nobody paid much attention to the downstream products that were made with the hemp because they were assumed to be things like soap and rope and lip balm and whatnot. In 2018, the Congress made what I think is widely recognized as a significant mistake and created an unintended loophole in the definition of hemp. That enabled people to take hemp that was grown as hemp from low THC plants. It is ultimately the same species. And it was very easy to convert those cannabinoids made by the hemp plant into intoxicating cannabinoids. That's where you get Delta-eight and Delta-ten THC, which has since been banned in our state by the board. And the other thing you can do is just take Delta-nine and concentrate it, which is to say, although it's low in THC, there's not none. If you have enough biomass, you can get pure THC oil. And so there came to be a robust interstate market in what was for all intents and purposes intoxicating cannabis masquerading as hemp. This was followed, of course, by the pandemic, there were a lot of distraction to the government and public health authorities who were dealing with bigger things and sort of chaos ensued. And so the result of that is that my child or yours can take their Venmo card, go on the internet and have mailed to them in many places what anybody would recognize as a cannabis product that would get them by and has all the risks associated with a cannabis product. This state of affairs got really, really drastic and the states had a lot of difficulty dealing with it. The board got out in front and was one of the first anywhere in the country to ban eight and ten outright and then to define in a rule that is now it's rule 2.17, what's the real difference between hemp that can't get you high and isn't a drug and cannabis that is because the distinction was falling apart at the federal level. So the board did in 2023 adopt an emergency rule. It was really effective. And I mentioned that rule 2.17 because I want you to remember it because it really has been the policy about where the line should be that almost all parties agree on. People really like it, it's working. And it does allow up to a one point five milligram THC to be sold outside of dispensary and recognized as something that doesn't have to be regulated as intensely as a drug. But it does create some problems because there's nobody left regulating. When the hemp market sort of went bust in 'twenty one or so, there really ceased to be people who were interested in being regulated by the agency of agriculture as hemp producers because there was no money in it. It just wasn't profitable. And so the agency's last year of regulating through the program was to the 2022 growing season. It just shut down the program after that for want of anybody seeking to use the program. And when I said earlier that the history matters to what you're looking at now, this is where that comes in. The way that was done was by going into Title VI, into the chapter that set up the hemp program and imparted upon the Ag Commissioner all the authorities necessary to run it and changing a shall operate it to a may operate it. And then the commissioner stopped operating it. The authorities in Title VI never were moved. They just sat there inert. And somebody looking at them today would probably think we ran a hemp program. We don't. And the problem that sets up is that all of the legal mechanisms and processes through which the state would make sure it had a safe and appropriate program that wasn't a front for drugs and was with pure products that were safe and labeled appropriately, all those mechanisms rest within the agency that is not driving the car anymore. The Cannabis Control Board has limited authority in statute to regulate all cannabinoids, synthetic and otherwise. It used that authority to ban the really bad stuff in the emergency rule I was talking about. But it has no authority under current law to do the things the ad commissioner used to do about running an AMP program. And so what you see here is the final follow on where the authorities that were located in Title VI are moved into Title VII so that the board can essentially step into the shoes of the ag commissioner. Where it's important to note a difference is the size of those shoes has changed a lot. They used to be very closely focused on production. That is no longer necessary, USDA overseas production. And they used to pay little or no attention to downstream products. Now downstream products are the most important thing to look at because they have the potential to be dangerous or intoxicating, etcetera. Whereas we're really not that worried about production. So what you see in the language is an importation of the Title VI authorities to Title VII, but also a shift in focus from production to how are those products going to be handled and how we're going to make sure they're safe and secure in the products that come out of our label. So that's a big picture of why you see what you see. That's why it's moving from one title to another. I think there's broad agreement among policy folks that the states that have consolidated their hemp and THC cannabis regulation in one place have had more effective regulation. When there's a split among agencies, the agencies get triangulated, the rules don't line up and confusion ensues. So I think almost everybody involved, including my colleagues, Collier and partners at Agency of Agriculture, agree it makes sense to make this move. So I kind of said enough about how we got here and I should hand things over to Kyle to discuss what the market really looks like and why we're all here. And he can discuss with you the serious challenges affecting industry if the planned closure of the loophole occurs on November 12.

[Kyle Harris]: Thanks, Gabe. So, yeah, so earlier or in late twenty twenty five, and it took regulators completely by surprise in all honesty, language was put into the appropriations act at the 2025 to essentially kill ninety nine percent of all hemp related products. I think there was a question of pepper was this point four milligrams of combined total THC per container. Was that a scientific number or not? I believe after I rewatched this testimony, somebody in the room asked that question. The answer that I feel comfortable most saying is it was not. It was looking to make a hard break between what is a cannabis product and what is a hemp product. Unfortunately, none of these products really live along those bright lines that most of these products don't live along those bright lines that the federal government chose in the middle of the night, from some people's perspectives to implement. This has really made it really challenging moving forward for the cannabis board to understand what these impacts are gonna be and even harder for the businesses that you heard from yesterday. I'm sure you're hearing from in your own districts to understand what's life gonna be like after 11/12/2026. And my guess is as good as yours right now. Think there was some musing that this will get pushed yesterday. Without getting too political, it's mid cycle election. There's a lot of very important things going on in the world these days. Are they gonna find the time to talk about this? Your guess is as good as mine. I did put in a slide and this is for later as you review it. When we talk about intoxicating hemp and we do have a definition for what is intoxicating, because I think that came up yesterday. This is how the cannabis board views what is an intoxicated hemp product. And any one of four triggers could make a product seem or be intoxicating, whether it's how much THC is in a package, whether it's a certain ratio CBD acts as a natural balancing point to the intoxicating effect of THC? Or does it have direct market appeal? We have been running this program with success in a large number of Vermont operators who are involved in a robust notice and comment rulemaking on this role for almost three years without little pushback from the community. But I wanted to include a visual because there's so many different pathways that these products go into. And the ones in green are really where we're focused on post what happened at the 2025 and with uncertainty moving into 2026. So I can see my mouse. So this is a CBD isolate prop. This has zero THC in it. I think you heard from some folks yesterday that yes, they could do this, but they don't want to do this. That's just the world that we're living in right now. I can understand why. So that was the broad spectrum. I like the whole milk analogy, quite frankly. Thought that was really good. Full spectrum would be the whole milk that has THC in it. Broad spectrum has all the cannabinoids still in the product except for THC that has been taken out. An isolate has isolated a specific cannabinoid, in this case, CBD that is used. And this is a Vermont company that has a tincture bottle dropper top of a strictly CBD isolate material. This would not be impacted by the federal change because it has under point 4% THC in that container or that package. What we're really focusing on, and actually this is Primal Botanical, who you've heard from yesterday, this is their product. This is where a lot of the concern I think was, because it doesn't fall into the intoxicating hemp product. They haven't been bothered by the federal government. They're not doing anything that we would be considered an intoxicating product. And now they are swept into this federal change that is impacting CBD businesses all over the country. There's an opportunity for these businesses to be licensed and regulated by the cannabis board. If they're falling between 0.4% THC up to what we consider an intoxicating product, which is what we call board rule 2.17. And that goes back to those four ways to be intoxicating that I had on the prior slide. Next one, and then I put them in red just because that's not really what the focus of this conversation is from my perspective, although always happy to answer them. These- Representative Bos-

[Rep. Michelle Bos-Lun]: I mean, I'm just wondering, like the second one up there, I believe is the same, the label of the same product that the woman that testified Yeah, brought that's her product. Okay, so is that she said that her product was not intoxicated and it has in there in parentheses intoxicating product.

[Kyle Harris]: So I'm using intoxicating product to refer to rule 2.17. So Which is the federal rule? No, that's the board rule. So 0.4% THC is the federal rule. Now, as it goes into effect in November to kind of determine what is hemp and what is cannabis. Before this in 2023, board promulgated a rule to determine what an intoxicating hemp product was. But there's a big delta between what 0.4% THC per package is and what an intoxicating product is. And Anika's product falls directly in that delta. And so I can clean up this language if I'm sorry that it's confusing the way I drafted it, but 0.4% THC two board rule 2.17, which is our intoxicating product rule. That's the result of the federal definition change. Sweeps up full spectrum products, low THC beverages, which you might see at healthy living or under mountain co op or any of those types of stores around Vermont. Even in some corner stores now you'll see one milligram THC beverages to fifteen milligrams of CBD. Those are legal because they're under our what we consider to be an intoxicating product. And then all the way on the right, this is ten milligrams of THC in a can. That would be something you could only find in a dispensary. But there's four different lanes here and it's a little convoluted. But everybody who you heard from yesterday falls in this second green category. They're kind of in this area between how the federal government is now going to look at THC versus where the board thinks a hemp product becomes intoxicating. Representative

[Rep. Heather Surprenant (Chair)]: Nelson. You're muted, Representative Nelson.

[Rep. Richard Nelson (Ranking Member)]: Thank you, chair. Your second column of green, the point four THC to board rule 2.17, because the federal rule now says that second green column is not legal for interstate sale. Does, is this rule now, so it still can be sold, but it has to be sold through a dispensary because of the money handling aspects that go with this, the banking rules?

[Gabe Gohman]: Can, if you want me to

[Kyle Harris]: share that. Think you're anticipating in the next couple slides, but yeah.

[Gabe Gohman]: I can hand these over to Kyle. But in short, you can always sell a cannabis product with very little THC and a dispensary, But the challenge is going to become for the people that don't want to do that, the common carriers won't carry the product, banks and insurers won't deal with them, etcetera. So those incidents of federal illegality will be a problem. But I like Kyle, I think has plans to address that.

[Rep. Richard Nelson (Ranking Member)]: Okay, thank you.

[Rep. Heather Surprenant (Chair)]: So what do we feel like

[Kyle Harris]: this bill is a huge undertaking and what does this accomplish for happen for the board as far as clarity goes after what happened in November? We believe that what is on paper and there's some adjustments that I think could be and I'll turn that over to Gabe to talk about where we think there still could be some opportunities to improve some language and maybe Gabe can work with Bradley if that or ludge counsel if that feels appropriate to you after this conversation. But we do think it provides rulemaking authority to largely address that regulatory gap between the point for THC and what is an intoxicating product as defined NCCB rule 2.17. That's where the products that you heard from yesterday currently are in limbo. We think this section of 03/23 is very broad and it's kind of done that way because we just don't honestly know what's going to happen in November. We don't want to craft a rule and go down one path and then they push the effective date. They have carve outs, so on and so forth that make us have to go through a full notice and comment rulemaking process again. But we do think it provides flexibility to assume there will be adjustments for non intoxicating hemp products or category carve outs at the federal level. FDA is supposed to be determining what package or container is actually defined as. They're supposed to be looking at what is appropriate dosing for full spectrum products. And a lot of that, even in our regulator circles, FDA has been very, very silent on what those are moving forward. Some of that could really help products like we heard from yesterday to find a place in interstate commerce, depending on what they're trying to produce. Is it a tincture? Is it gummies? Is it beverages? So on and so forth. How are they being used? How are they being produced? So on and so forth. But really, we view this as an opportunity for us to do full notice and comment rulemaking. There's a lot of questions that need to be answered, assuming that there will be some carve outs for interstate commerce as it relates to these specific products. How is hemp being processed at cannabis? Can hemp be processed at cannabis manufacturing facilities? That's something that we would want to do and figure out in rule because you need strong standard operating procedures to make sure you're not commingling what is hemp and non intoxicating with what is cannabis and intoxicating and not trying to masquerade one as the other. Manufacturers in the cannabis community that we've talked to seem interested in doing something like that. How to handle possession and transfer of hemp intermediaries. This gets back to a little bit, as Gabe alluded to, you have hemp biomass and you're turning it into a distillate. It might be CBD distillate, it might be a full spectrum product. You can then turn those into intoxicating products. And it's really challenging because crossing state lines with biomass is different than crossing state lines with a concentrated product that is above what the federal definition of cannabis has been and especially moving forward. Which testing, labeling, safety standards apply to hemp products intended for human consumption? Right now, things are basically tested after they leave the farm in an agricultural product form. There is no testing done for any products that you see unless it's on the will, the goodwill of a good business to kind of have their products tested. As we heard a little bit of yesterday, there's no statutory federal or state requirement that anybody test any of those products to determine what other additives were used, were they grown with pesticides, so on and so forth. None of that is present currently. Are there additives that should be prohibited? Are there hemp products that contain certain amounts of THC restricted to people over the age of 21? I think there's opportunities depending on again what happens in November for folks to sell products not necessarily through a dispensary. We think about the beverages that I talked about the one milligram THC to fifteen milligrams of CBD that you might see at a co op. Should those because they contain THC be only for 21 and up folks, you know, should you be able to buy those at eight zero two spirit stores or just get carded at a, corner store like you do with alcohol sales? We think that there's opportunities for that. I don't think we're trying to force everything into a dispensary, but there's a lot of conversations we would like to have with the manufacturers of these products to understand their supply chain and where they would like things to be sold or not sold. I don't think anybody really feels or and are the way that it makes sense to cover for us to receive, you know. John

[Rep. Michelle Bos-Lun]: Bartholomew, I think that's your

[Rep. John L. Bartholomew (Vice Chair)]: Yes. I know.

[Kyle Harris]: How do I So

[Rep. John L. Bartholomew (Vice Chair)]: I was trying to come on. Let me I was trying to log on so I could see the screen and because I don't have the hand.

[Kyle Harris]: As soon as I'm done talking, can forward the presentation to and so you guys can have it done. I'm sorry, didn't get it to you beforehand. And to the question, and I can turn this over to Gabe, I think it's very Again, we haven't had a lot of conversations because we don't know what the interest is going to necessarily be in a post November 12 world where there are no adjustments made. What appetite a lot of these businesses that are more in the less beverage type of products specifically, but like the CBD balms, the body butters, the lotions that you heard, the tinctures that you heard about yesterday. Is there still business interest in an intrastate market just along the four borders of the state of Vermont. And there's some challenges there. I think there might be some amendments that would need to be put into this bill to kind of make it a little bit more clear there. I think the problem's going to be that if the federal government decides the definition of cannabis is one thing, and we decide that the definition of cannabis is another thing, financial institutions at the federal level are still gonna force these businesses to carry types of insurance that cannabis businesses typically carry. And they won't work with certain businesses without high banking fees. No federal FDIC insured bank will work with a cannabis business. It all has to go through a credit union. So there might be constraints that the cannabis board isn't putting on folks, but it just might not be economically feasible with all of the stuff that they're gonna have to go through. That doesn't mean that we shouldn't attempt to provide those folks an opportunity, it's a challenging position to be in because then you're basically creating, as we call it here, like an over the counter or out of dispensary low THC product, but it's still treated as cannabis at the federal level. It's just treated as hemp, quote unquote, or an over the counter product in the state. Those

[Rep. Heather Surprenant (Chair)]: concerns that would be out of your control or effectively out of our control are banking issues, insurance. Else does the cannabis industry have to deal with?

[Gabe Gohman]: The big one that would kill interstate commerce is the cessation of access to common carriers and parcel carriers. Within the state? Yes, within the state, I don't think they would touch it either, even if they stayed completely. I'm not certain of that, but it seems very unlikely. So if things stay on track and the Congress does not change course by the November 12, for practical purposes, it will be economically impossible to engage in this activity as your primary source of livelihood. Some people, I think and Ms. McCann gave great testimony yesterday, I think. And she pretty much said this. She said, if that happens, this kind of turns into a side gig for me. But as a large commercial endeavor, it would not be viable. So what you see in terms of the question possibly undermines is, well, why have you lawyers delivered this complex thing to me if you just said it's all going to die in November? And that is it's really enabling legislation to hedge against the possibility that the Congress modifies what currently would be very strict ban, such that some of the numbers come up or in such that there are some category carve outs of the kind Kyle was talking about. If the Congress does that, you want something like what is on offer in sections 24 so that the government at the state level can do the things the government at the federal level isn't, such as if you have a field that looks like cannabis and somebody says it's hemp, having simple legal authority for a representative of the government to go clip a piece into the lab and

[Kyle Harris]: see what it really

[Gabe Gohman]: is. Similarly, from a consumer product safety perspective, FDA and DEA have left the scene. And so even the minimal protections around supplements and structure function claims that you see if you want to go to the vitamin store or something, at least somebody is making sure that what the bottle says is in the bottle is in the bottle. And so we would need to be able to backfill that role if there continued to be federal abstention from food and drug regulation of these products. So that's why you see what you do, but it's really an anticipation of a world where it is possible to have some interstate commerce in this stuff. If nothing changes, we very well may find ourselves by Thanksgiving in a world where this is not something that's economically viable for folks to do and then not do it. And in a sense that did happen with the collapse of the first hemp market in 'twenty two. It wasn't that anybody outlawed it. It was that without the THC content, it ceased really to be profitable enough as a product for people to want to grow versus some other crop. And so they just went into other fields. So happy to take any questions you may have.

[Rep. Heather Surprenant (Chair)]: Do have

[Kyle Harris]: one more slide, just because fees came up yesterday. As Gabe just briefly alluded to from a producer perspective, I know ledge council walks everybody through the fees to grow cannabis yesterday. In reality, those are on the books, but they're not being utilized because as we talked about earlier, the agency of agriculture gave up their authority to regulate hemp in the farm field back to USDA AMS a couple of years ago. And it's free for producers to register with USDA as a hemp grower. What some of this language does and affords the board is a producer would need to register with us and pay this nominal $50 so that if we do get reports or complaints that what somebody's doing is in fact THC, high THC cannabis and not hemp and it's masquerading as such, we have the authority to go and sample that and run it through our lab, which is at Colchester. And so we wouldn't be looking to regulate the farm field as it relates to hemp. It's more so just giving us that authority to make sure what they're growing is, in fact, what they say that they're growing. As far as the processor and product fees, it's really challenging to predict. These fees feel appropriate if interstate commerce does happen, maybe not so much if interstate commerce is the only availability to a lot of these products. I'd be remiss if I also didn't say that this is adding more responsibility to work and we've got to think about FTE and how we implement a program. I'm not going to sit here and say this will cover the full price of one employee of the cannabis board to kind of help move this prop this program along. But we have to consider the work that we do in our office from a licensing rule development and compliance considerations as it relates to this. And just not knowing what the interest is going to be. We might have six folks that take advantage of this. We might have significantly more than that. We just don't know until we kind of get to the opportunity to do kind of more robust rulemaking to see who's participating. And just by way of comparison, we've got a couple of manufacturing licenses that feel appropriate for a comparison to a processor and our manufacturing license cost in the cannabis world is $15,000 and our less costly one is $2,500 it's a little bit of apples to oranges because things are not the same. But if we are thinking that this is gonna not change in November, and the federal government is still treating this as cannabis, it's a little bit better of a comparison. Would be, so you don't know, of course,

[Rep. Heather Surprenant (Chair)]: we don't know how many people might take advantage of this, how many producers, how many processors. But thinking again about the maybe the the four slides, the two green, the two red columns, who would be coming to the board and saying, I wanna be in this business, in this federal environment that exists today as of November? So there are

[Kyle Harris]: are cannabis businesses that have separate LLCs, fully separate businesses that are operating in like the low THC hemp space, a lot of the beverages that you see, beverages are a really good focal point for this conversation, I believe, because you're starting to see those in stores that are not dispensaries. And so if nothing changes in November, we've heard anecdotally from a couple of the bigger ones, I'm out. I can't do it. It's not not realistic for me. I think the unfortunate folks are and they have, you know, that's something that they're trying to do in addition to their cannabis operation. I think, you know, the folks that you heard from yesterday are really the ones, you know, that are shrapnel here. They're getting the unintended consequence of these folks, this infused Skittles. Those are the folks that have really spawned this kind of rollback of what the federal government considers to be hemp versus cannabis. We don't see a lot of intoxicating hemp products in Vermont. We haven't registered a lot of those products, but you can certainly get those products shipped to you to your door. And it's just a really challenging thing to kind of reel in from that perspective. I don't know if that answers your question or not.

[Rep. John L. Bartholomew (Vice Chair)]: So in your slide about the fees, the folks we heard from yesterday would be at the $500 level, is that where they are? Yes. That raises a question about amendment. The fees that, as Kyle sort

[Gabe Gohman]: of said, the fees make sense if there is some interstate commerce. In fact, they're really necessary to cover the costs in particular because the incoming product is essentially unregulated and would have to be tested and evaluated here within the state, at least by professionals who would look at it at laboratory analysis if it was credible. So that's going to be expensive to do. In that case, where the federal government kind of changes course a little bit and there's some interstate commerce, those fees make sense. Who they don't make sense for is really Ms. McCann, the person who really looks at the scene with all its constraints and says, you know what, I just want to sell this stuff at farmer's markets, I understand, I'm never going to be able to mail it, I'm never going to be able to really have a insurer or something, but I want to do this as a craft business because I like it. That bureau is not appropriate for her. It's meant for something else. It's meant for a world where we have some hemp moving into the state and around and it's really expensive to look after it. I can imagine a way, if the committee wishes to work with ledge counsel to carve out something for somebody in Ms. McCann's shoes that we could then flesh out in notice and comment rulemaking. The challenge for us with that always is that the agents can't spin up a fee after the fact, the only general assembly could do that. I might suggest to you that the way we could do that is amending the, have an amendment in mind that could create a safe space for somebody like her who's operating just in the state with what we would regard as 2.17 compliant safe products that would allow her to do what she's doing and then maybe attach a separate fee such as an interstate registrant fee or something just for that very narrow activity and assign an appropriately low number to it, because it's really not expensive to oversee. So I think that could be done if you feel like that is appropriate to do. Candidly, I think many of us weren't thinking of that because we thought the economic viability would be so low that it wasn't something people would be interested in doing, but we can make room for it if you feel that's appropriate. Watching her testimony, if something does need to be done, she's right. She'd be out of business even interested if nothing was done.

[Rep. Heather Surprenant (Chair)]: And if the federal regulations were to change in a way that you can imagine they might, so as you say, yep, there are other things happening in the world, it is election year, and who knows what that might mean. But if there were good faith effort to try and change what seems like that's arbitrary, it's not scientific, we're going to fix that. Is the world that we would then be in in November 1 where those businesses, business like the one we heard more than one we heard about yesterday, they could go back to selling across state lines.

[Gabe Gohman]: They could, what's awfully likely to happen if that happens is the same kind of federal state interplay. What the federal government did in the 2018 Farm Bill was it said had a non preemption clause that said states could do basically whatever they want in terms of the health safety regulation, this stuff, ban it out, whatever. And then a preemption clause that said, what you can't do is arrest truckers who are moving it through your state on the interstate. Makes sense. They probably would do something like that. And what would it look like? It would look, for example, like the Congress saying, okay, up to one milligram per serving, that will be legal in interstate Congress. And I'm just using this. Instead of what is now four tenths of one milligram, which is a minuscule and effectively prohibits everything. But if they were to say something more moderate, the tolerance for THC amount so that there would be some interstate transit in it or traffic or commerce in it, then the rest of the bill makes sense. That's what it's really built for. Then you've got these kind of unregulated products coming in. You've got some THC that can be abused. Then it really makes sense if things stay as they are, as everybody said, we're kind of talking about a notional thing.

[Kyle Harris]: And again, we think the language except for the new stuff we've discussed here about strictly interest aid and maybe a fee if somebody just wants to kind of focus on the state of Vermont and not whether they can or not ship outside the state borders, we think this language allows us some flexibility, just completely not knowing if something's going get snuck into a bill at midnight that changes things between now and November. This allows us to start work in the summer after everything is signed, that's how this bill goes. And we can start a notice and comment rulemaking. And no matter if things change in November or not, I don't see us finishing that rulemaking by the time you all are back in session in January, and we'd be happy to come and report on how things go or how things are going. So again, I think the challenging thing with the interstate specific market is if there are no carve outs, Ms. McCann or another similar business would still be selling something technically defined by the federal government as cannabis, even if it's not defined as cannabis by the state, which means it's just going to be not no matter what rules we put in place, there's going to be other considerations that are going to

[Rep. Heather Surprenant (Chair)]: make it harder for her business to be That might change though, that the Feds might look at that and say, Oh, we I think

[Kyle Harris]: that I think that they are hearing from the hemp industry and not just the intoxicating hemp industry, but the, the CBD industry. And my guess is as good as yours right now, anxious to go down too many kind of thought bubbles here. I think, again, we've anticipated that some things may change or the implementation date may get pushed, but we want to set folks up to take advantage of those opportunities if things do change. Again, this is kind of like a trigger rule that we would work on to help keep the lights on for some folks that want to stay in this

[Rep. John L. Bartholomew (Vice Chair)]: industry.

[Rep. Heather Surprenant (Chair)]: Let me phrase the question this way, then I won't ask it again a different way. But if we were to stay in the status quo that we're in today, if Congress said we're gonna just go back, we're gonna get rid of that, then would we be in a situation where what you're proposing is helpful to the smaller producers?

[Kyle Harris]: I think the answer is yes. If we make those, if Gabe works with ledge counsel to make some amendments, there could still be some opportunities. I think unfortunately, they would be treated as cannabis at the federal level, though. So I think it would be great for the board to even get to the point where we can kind of hear what's viable and what's not from these businesses that are completely outside of the control of the board and the general assembly. It's really dependent on what happens at the federal level.

[Rep. Heather Surprenant (Chair)]: Well, I appreciate your offering to work with us, and I think that's a good approach. So we'll direct Ledge Council to have conversation with you and see if we can come up with

[Kyle Harris]: I something. Just can't guarantee that that means that their businesses are going to be viable. I understand. It's a shot in I don't wanna say shot in the dark that feels ominous, but it's an opportunity to kinda keep moving the ball, the ball of wax uphill.

[Rep. John L. Bartholomew (Vice Chair)]: Represent Bartholomew. When you're saying businesses being viable, are you talking about interstate or interstate or both?

[Kyle Harris]: If nothing changes, there's not gonna be any interstate. And I think all of these businesses are not going to be viable regardless. I think if some of the if we can figure out a way to do this out of dispensary or over the counter model, this low THC limit where folks are strictly focused on intrastate in in the state of Vermont. There may be an opportunity for some folks to still find viability, but I still think it's an uphill battle. I think if nothing changes in November, we can try and pull as many last minute levers as we possibly can. But I think, you know, I don't see a lot of viability if nothing changes in the broader hemp conversation, unfortunately.

[Rep. John L. Bartholomew (Vice Chair)]: I'm also curious about the logic. If you said, say, an ointment that even if the THC level is high, you're not gonna eat that, Or most people, I don't think would eat it. So, but if that got sent to a state where there's no recreational cannabis available at all, would a consumer be able to take that ointment and somehow extract the stuff? I mean, it doesn't seem like something you do in your home, in your bathroom.

[Gabe Gohman]: That's sort of one for the Congress. I'm just wondering. You're not wrong. Think once this thing's emulsified in something you don't wanna eat, nobody's gonna-

[Rep. John L. Bartholomew (Vice Chair)]: You could theoretically extract it, but you're gonna do that as a consumer.

[Gabe Gohman]: Work. Yeah, I take your point. Think that's one of the things

[Rep. John L. Bartholomew (Vice Chair)]: that you know, grow your own plant and hide it in the basement.

[Gabe Gohman]: I just wondered if there

[Rep. John L. Bartholomew (Vice Chair)]: was any logic to this.

[Gabe Gohman]: That one's for the Congress. I think people wish that they would carve those out.

[Rep. Heather Surprenant (Chair)]: Is any level of THC,

[Kyle Harris]: does that make the product, I guess, illegal for children? Or is it just the 0.3?

[Gabe Gohman]: That's one of the reasons this is actually important. You're gonna have products in that zone under, right now, 1.5%, which is basically the line. Right now, those one well around drinks that you might see a sitting market or something are not regulated by anybody. There's no requirement that they not be sold to Chittenden. Many of those businesses are, just because they're responsible people or they don't like liability, are only selling to adults. But that's not because of dental law. And so this legislation would allow the board to write terms of sale and conditions of sale to cover that of right now uncovered space in the event we wind up with a modified version of what the Congress is saying right now, where these one milligram drinks are a viable commercial product.

[Kyle Harris]: So the language in 03/23 would allow us to help determine where age gating is appropriate depending on the product formulation, the method of consumption, so on and so forth.

[Rep. Heather Surprenant (Chair)]: So I think what I'm envisioning sort of next steps here would be to have you sit with Ledge Council. I can be part of that conversation too, if that would be helpful. And draft an amendment, you can come back and take a look at it here in the committee. And then I have asked the chair of the government operations committee to also take a look at this since they're more familiar with the work that you do. I think that would be important. Having the original language plus our amendment, if we are able to come up with an amendment, I think would be useful for them. Plan So on that if that makes sense.

[Gabe Gohman]: Happy to.

[Rep. Heather Surprenant (Chair)]: Thank you. So we'll get this up on our website. We will take

[Kyle Harris]: just