Vermont Legislature SmartTranscripts:

[Robin Scheu (Chair, House Appropriations Committee)]: Good morning. This is the House Appropriations Committee. It is Wednesday, 01/07/2026. I have a feeling I said 2025 yesterday, but that's 2026. And we are continuing our tour of various changes to the Budget Adjustment Act for the FY '26 budget. And this morning, we're delighted to have Big Hartman from the Human Rights Commission to talk about what they have in the budget adjustment. So welcome to Big. And I also want to introduce you. You've met everybody except you. I don't really if met Martha. Yeah. Martha Feltus is our new vice chair. Nice to meet you.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Nice to meet you.

[Robin Scheu (Chair, House Appropriations Committee)]: So great. So introduce yourself and take it away, please.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Thank you so much. My name is Big Hartman. I'm the executive director and general counsel at the State of Vermont Human Rights Commission. I use theythem pronouns. Thank you so much for having me today. I did submit a memorandum for you this morning. The Human Rights Commission is a state agency that operates independently, primarily to enforce Vermont's anti discrimination protections in fair housing, places of public accommodation, and state employment. We currently have nine employees, including myself, thanks to the addition of two positions this fiscal year. We have historically had a cooperating agreement with HUD to conduct fair housing investigations and enforcement activities. Historically, I know that that contract goes at least ten years back. And it's often been under about one hundred thousand dollars each year that we've received. And the way it works is we dual file cases with HUD, any case that implicates both federal and state fair housing laws, we dual file with HUD. And any case that HUD accepts, they dual file with us. And then we conduct all of the enforcement activities related to those complaints. We do extensive reporting for HUD about all of our activities on our cases. And at the end of each year, they total up all of the cases that we investigated and closed and did litigation for. And we get a set dollar amount depending on the number of cases. So as you may recall from my testimony in the past, I saw the HUD cooperating agreement as a place to really grow our capacity, because if we investigated more fair housing cases, we could get more money for those cases from HUD. So we did double down on our fair housing activity, which was very easy to do, because there is no shortage of fair housing discrimination complaints in our state. And that resulted in HUD notifying us that we had earned almost twice of what we had budgeted to receive this year. Unfortunately, we have no assurance that we are actually going to receive those funds. As the year has progressed with HUD, they have really gone about decimating all fair housing enforcement across the country. And that started with a large round of cuts to staffing there. And and now, in the last six months, we are seeing policy changes occur. So typically, by September, I have already received our money for the prior year. So this

[Robin Scheu (Chair, House Appropriations Committee)]: is money work that you actually did Last year.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: You're basically entitled to Correct. Under the agreement. This is for cases that we closed in fiscal year 'twenty five. We usually get paid. We do all the paperwork for it and get paid for those cases in August or September of each year.

[Robin Scheu (Chair, House Appropriations Committee)]: What So far

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: was your typical amount? And then what was this amount? We had budgeted to receive $93,000 give or take. And we were slated to receive 187,000 So we were very encouraged that we were going to be able to really amp up our fair housing enforcement capacity this year with that additional funds, do some additional outreach and possibly some testing activities. Unfortunately, we now have no reason to believe that we are going to receive that money from HUD at all. And they have also advised agencies like mine across the country that if we are going to receive any HUD dollars, that we need to sign on to what they're calling mandatory requirements. And those mandatory requirements include an assurance that we will not violate the Trump administration's various offensive executive orders, including those pertaining to so called gender ideology, that we will not provide any DEI, which is basically all of the training that we offer to state and public entities as part of our prevention work, and also that we will not be doing any disparate impact findings of any kind. Why does that? Explain that. So a lot of typical discrimination cases are going to involve disparate treatment, someone being treated differently because of their membership in a legally protected class. Disparate impact cases are more they're more about a policy or practice that has a discriminatory impact on members of a protected class. And it's one of the cornerstones of antidiscrimination work historically. It's where we address redlining. It's where we address segregation. It's where we address discriminatory practices in banking and other larger housing providers. And and it's not just like you won't use HUD dollars to do these things. It's like your agency will not issue any disparate impact liability theories, findings based on that theory. So this reflects a larger scale effort for the federal government these days to do away with the civil rights progress that we've made in the last fifty years. And it's hard for me to envision a reality where I can sign off on agreeing to those mandatory provisions without violating our state law that protects people from discrimination based on gender identity, among other things. And also, really runs afoul of our mission, which is to advance full civil and human rights for all Vermonters. And Tom, have a question or comment.

[Thomas Stevens (Member, House Appropriations Committee)]: Two things. Just to be clear, I'm gonna start on acronymisms here. You use the acronym DEI, which has been now turned into a political tool. Just wanna be clear that you're using it as diversity, equity, and inclusion.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: That's correct.

[Thomas Stevens (Member, House Appropriations Committee)]: And then just to point and just to make clear on disparate, is the core of all discrimination is being able to determine whether or not somebody is not receiving something or is excluded from something simply because you could get into that club. That club's a bad idea, but you could get that apartment just because of how you appear, whereas I may not because of how I appear. That's really the core of all the is it not?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yes. Less favorable treatment based on one or more legally protected characteristics. Vermont has extremely expansive, legally protected characteristics far beyond what's protected under federal law, including, just last year, we added immigration status and citizenship as legally protected categories in housing and places of public accommodation. And that that's where we could start using the disparate impact analysis. We could start to see if there are housing providers who have practices that are facially neutral. They are not discriminatory on their face, but they may have an impact on members of protected classes that is less favorable or more likely to exclude them from opportunities.

[Thomas Stevens (Member, House Appropriations Committee)]: And so if the federal government essentially unplugs that, like, says to you or says in general that we're no longer going to use that as then there's no they're essentially saying that there's no such thing as discrimination.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: What it's really going to, I think, is systemic oppression, systemic discrimination. They'll still allow individuals to bring an individual claim saying, I was brought I was treated differently. But when we're looking at the bigger impact of policies and practices, any examination of whether there's a disparate impact on those types of things is something that the federal government doesn't want us to look at anymore, doesn't want Department of Justice to look at anymore, even though historically we've relied on the Department of Justice's guidance on disparate impact. And it's federal courts that this whole line of

[Robin Scheu (Chair, House Appropriations Committee)]: case law comes out of. So You were created the federal government required every state to have a human rights commission, right, or something? Every state has a human rights commission.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Every state has an As far as I know, every state has an agency like ours that enforces the state version of federal civil rights protections. And most states have contracts or cooperating agreements with HUD. Some even have, like, county jurisdiction or, like, city. Cities have their own human rights commissions. And they can all attempt to be part of this program with HUD. It's called the FAT program, the Fair Housing Assistance Program, where we help the federal government enforce fair housing protections by doing all of the investigative and litigation work. We have a similar dynamic with employment discrimination and a relationship with the EEOC that does where you have federal law sets the bar for what anti discrimination protections need to be. And then states can go above that and provide additional protections. And so when they do that, there's often a state counterpart created to help enforce those laws. The reality being that if we don't have human rights commissions, we don't have civil rights enforcement, because individuals who experience discrimination generally do not have the means or capacity to take that to court themselves. They need a governmental entity to help look into those situations and enforce compliance with our anti discrimination laws.

[Robin Scheu (Chair, House Appropriations Committee)]: Don, you have a question.

[John Kascenska (Member, House Appropriations Committee)]: So they've issued new requirements.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yes. In regards to

[John Kascenska (Member, House Appropriations Committee)]: future cases here. Could they require you to respond to what you proceed for these new requirements?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: So what they did is they issued a guidance memorandum, which they do every year. They say, these are gonna be our standards for how you're going to get paid. They issued that. And then there was, like, this brand new addendum to that that we'd never seen before that is the new kind of Trump administration strings attached to a lot of federal funding. But I think the civil rights agencies are getting these additional things, impact. So they just put that out in October, and then the government shutdown happened, like, two weeks later. And then they brought everyone back after laying literally everybody off at HUD. And then they've come back. They've been back for a couple of months. And no one is giving us any assurance about getting paid this year for last year. We keep asking, you know, and I'm in a consortium with other counterparts from other states. We're all kind of like, Have you heard anything? Have you heard anything? No one's getting paid. Other agencies are much more reliant on federal money to keep their offices afloat. And they are looking at significant layoffs in Massachusetts, for example, if they don't find an alternative way to support their offices. We are fortunate. We only need $25,000 to make it through the year to maintain our base operating expenses. This is not including any money for outreach, not including any money for preventive work, but really just to pay for our salary and benefits and operating expenses,

[Robin Scheu (Chair, House Appropriations Committee)]: like keeping the lights on. Which is what the request then the governor put in the BAA. Right.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yeah. And that's it's almost about one pay period of payroll.

[John Kascenska (Member, House Appropriations Committee)]: So there's no time frame? Yeah. We have no time frame from hearing back at all, even though you're prior to reach out.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Right. We have no sense, even though typically we've already got the money deposited months prior in the course of the year. And they also did tell us before the shutdown, there's going to be this new vouchering process. Typically, HUD signs it and sends it to you. You sign it, and you can immediately do the drawdown. This year, they're like, There's going to be a new process. But they're not telling us what it is, and they're not telling us when it's coming out. And it feels very unwise to kind of cross our fingers and hope that they're going to give us this voucher without all of these strings attached, if they ever give us the voucher at all.

[Robin Scheu (Chair, House Appropriations Committee)]: Wayne and then

[Wayne Laroche (Member, House Appropriations Committee)]: Just a couple of no no signal. Since you haven't been paid for the passes, there's no likelihood that's any kind of clawback or anything that they would try to do for anything you've got passed.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: I don't think I don't know about the past. Yeah.

[Wayne Laroche (Member, House Appropriations Committee)]: Probably not. I would guess because you haven't got paid already.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yes. That money was spent, like Last year. The money we got from the year prior.

[Wayne Laroche (Member, House Appropriations Committee)]: So then of your cases that you pursued, just roughly what percentage of those are found to be founded and result in actions and what proportion are not?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Each year is a little different. I'll say housing cases are at least half, if not twothree of all of our cases. And last year, so for fiscal year 'twenty four, we had two thirds of our cases, in general, had what we call reasonable grounds determinations. Meaning, one third, we found no reasonable grounds to believe that discrimination occurred. In fiscal year 'twenty five, the numbers are looking a little different. And it's like it's almost swapped that we had more cases that we found no reasonable grounds than cases that we found reasonable grounds. But we did have a lot more settlements before we had a determination.

[Wayne Laroche (Member, House Appropriations Committee)]: So do you make those determinations? Or some of them go to court in their court determinations?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: The determinations are made by our commissioners. We have five commissioners appointed by the governor. And our staff do the investigative work. We write investigative reports. And then the commissioners read those reports, conduct an informal hearing, and they make the actual determination. A determination is going to open the door up for more extensive settlement conversations in a six month time period. And if we aren't able to settle the case, we have the ability to enforce that matter in court by filing a lawsuit where the Human Rights Commission is the plaintiff. Our HUD agreement has provided, historically, requires that we go to court for any case that we aren't able to settle in fair housing. Right now, we have, I believe, nine lawsuits involving or at least in the last year, we filed I'm sorry, eight lawsuits involving fair housing.

[Wayne Laroche (Member, House Appropriations Committee)]: And what proportion goes out of those usually filed?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: What proportion what?

[Wayne Laroche (Member, House Appropriations Committee)]: Again, the ones coming out of court, the decisions coming out of the court, how do those usually favorable, not favorable?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: So far, we've settled cases that have gone to court. And in my four and a half years at the Human Rights Commission, we have not had a trial yet. So we haven't gone that far. We had some motions to dismiss that we have prevailed on each time. But that's so far, we haven't had a jury trial yet. We're ready to, but not yet. We think it's a better outcome to see a settlement whenever possible. Yeah, I just want to clarify here. You had $93,000 more or less for 2025. That was what we budgeted to Did you receive all of that? Oh, for the last fiscal year? I'm sorry. Yes, we did receive the money last year. We received more than what we had budgeted for because we had amped up our enforcement action in my first year as

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: executive That

[Robin Scheu (Chair, House Appropriations Committee)]: was for FY '24? No, that was FY '24 money. It was in FY '25. Correct.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: It was But was for the pieces we closed in fiscal year twenty four, but we got paid for it, and it was in the budget for fiscal year twenty five. Yep. The 'twenty five money you would be getting this year.

[Robin Scheu (Chair, House Appropriations Committee)]: Is this the money that's in dispute?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: This is the money we haven't gotten yet. Yes.

[Robin Scheu (Chair, House Appropriations Committee)]: They budgeted to have revenue come in of $93,000 They were told they'd get $18,087,000 dollars and they've gotten zero. Zero. Which is why the request for $25,000 is in the budget.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: So the 25,000 is just to get you through the end of twenty six thousand Correct. Based on your 'twenty five. Fair housing. So

[Robin Scheu (Chair, House Appropriations Committee)]: it's still Lynn, it's still they had budgeted for $93,000 in revenue. They've gotten zero. But they're using some carryforward and then money from budget adjustment of the $25,000 to help cover the gap of the $93,000 Yes.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: And we'll still probably need Pay Act to kind of get all the way to the end of the year here. But we wanted to make a very conservative and based on the projections, I think we'll be Okay with just '25. And this also reflects that we were made to budget in a vacancy turnover savings last year. So if we hadn't had that, we might have not have needed to have this conversation today. In the PAY Act, so your employees are in the BSEA, there would be? No, we're exempt state employees. You're exempt.

[John Kascenska (Member, House Appropriations Committee)]: Okay. So you're not

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: in the PAY Act? We have been in the PAY Act. I think all state agencies are in the PAY Act. Okay. Even though you're exempt? Yes. I think we get lumped in with the classified employees, but it might be a different amount, because

[Robin Scheu (Chair, House Appropriations Committee)]: we don't

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: have classified pay plans. Yeah. Okay.

[Unidentified Member (House Appropriations Committee)]: All right. Thank you. So you want to obviously continue your activities through the end of the fiscal year and you need another $25,000 to do that. But it sounds like you don't anticipate doing very much fudge work because you don't think you'll get paid for it nor will you do not feel inclined to sign the guidance documents that they've given to you. So what will you do?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: So we are still doing all of our fair housing work. And we are continuing to dual file because we have a cooperating agreement with HUD that we're following through on. We will do fair housing work regardless of whether there's a HUD contract involved, because we have state fair housing protections that it's our primary task to enforce. And fair housing complaints make up more than half of the calls we get every day. It's a significant portion of all of our work. We do have some fair housing cases that only implicate state law. They only implicate our state fair housing provisions because they're not protected classes under federal law. Federal law has about seven express legally protected categories. In Vermont, we have additional ones like receipt of public assistance, immigration status, citizenship. There's a few others that aren't coming to me at the moment, but just a couple others. Like, status as an abuse victim is another legally protected category just under Vermont law. So I think one of the things that I talk about with my counterparts in other states all the time is, What does this mean for fair housing if we don't have any HUD dollars? And our message to Vermonters is, We aren't changing a thing. We are going to keep enforcing these anti discrimination protections regardless of what the federal government is doing. These are enshrined in state law. And we are going to continue our duties under state law, regardless.

[Unidentified Member (House Appropriations Committee)]: Just that. And we have not received the HUD money, the federally. We

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: just feel very unwise at this time to expect to receive it this fiscal year. There may need to be litigation. If they ever do, tell us, You have to sign this mandatory agreement, or we're not going to give you the money. But that will not get us an answer this fiscal year, as far as I could see.

[Unidentified Member (House Appropriations Committee)]: The rest of the work that you do, you indicate that housing is about half of what we do. But what else do you do? Is it labor?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: We enforce the public accommodations protections. So this is where we have So it's actually the Fair Housing and Public Accommodations Act that is entitled nine of our Vermont statutes. And this provides that people who are availing themselves of places of public accommodation this is going to be any school, any business, any public entity. Basically anything that serves the public is considered a place of public accommodation. And we all have a right to be free of discrimination when we use those services. And so that does make up another substantial portion of our cases every year. And then we have a small portion of our cases that are employment discrimination, but only for the state of Vermont as the employer. All the other employment discrimination complaints are handled by the attorney general's office, civil rights unit.

[Robin Scheu (Chair, House Appropriations Committee)]: Landa, do have a question?

[John Kascenska (Member, House Appropriations Committee)]: Yeah, just real quick, just so understand the agreement that you signed off on here. We've doing it here for a long time. It's not a per year agreement that you sign off on or is it a multiyear?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yeah, we have to Talked

[John Kascenska (Member, House Appropriations Committee)]: about it last year, remember.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: First of all, when we first became what's called a FAP agency with HUD, we had to affirm that we had statutes that were substantially equivalent to the federal Fair Housing Act. We got certified as substantially equivalent. And then we have to go through various performance reviews every two years. And each year, we execute a new cooperating agreement, because they do change how much you get paid per case or what the standards for performance are each year. So each year, we sign off on those, but it's typically a bit of a formality. It's not a place where there's huge substantive changes. So just last spring, I went through many, many hours of a two year review process with HUD. We were stamped as approved that we're meeting the performance requirements under their program. And yet we're still waiting for payment for the year. HUD has also advised us that they've advised all FAP agencies that they will be doing a new substantial equivalency review of all FAPs. So any agency who enforces laws that have more legal protections than the bar set by the federal Fair Housing Act are likely to lose our certification, which is most states have, one or two more categories. So this is the next thing they'll be doing to destroy fair housing.

[John Kascenska (Member, House Appropriations Committee)]: Any indication as to why that's happening?

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: They said it would be this year.

[John Kascenska (Member, House Appropriations Committee)]: This year.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Yeah. So Thank you. Yeah. Thank you.

[Robin Scheu (Chair, House Appropriations Committee)]: And it shows up.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: That's So what that's likely to mean is that when we're talking about fiscal year 'twenty seven, I'll be saying we should not be counting on any more HUD dollars in the future. We expect, even if we do get paid this year, that they will undertake to remove us from the FAP program, because our state law is so much more expansive than federal law. And they don't want that. They don't want additional protections for people.

[Robin Scheu (Chair, House Appropriations Committee)]: Thank you for coming in. I'm not seeing other questions. Sorry you don't have better news, but glad you got some money to get you through being proposed. And we'll see you back here with FY27 once we hear all about that. All right, great. And thank you for the primer again and to get our heads back in the game.

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: Thank you all. Okay, take care. Take care.

[Robin Scheu (Chair, House Appropriations Committee)]: Thanks, Pete. So breathe for about thirty seconds, but we have the cannabis control board here too. So if you guys want to come to the table, shift our gears completely. Put her inside on the spreadsheet. Canvas control board or this? The first page of the spreadsheet has two thirty six. In fact, below it is the campus control board. I don't know if you're in it in more than one place. Are they in a couple places? Is Mike's.

[John Kascenska (Member, House Appropriations Committee)]: Yeah, they're transferred to the model.

[Robin Scheu (Chair, House Appropriations Committee)]: Okay, great. So we'll get reoriented about So what's that second page where they are?

[John Kascenska (Member, House Appropriations Committee)]: Oh, the very last page. So the

[Robin Scheu (Chair, House Appropriations Committee)]: back. So we get it from the back, very easy. Okay. So welcome, if you guys would like to introduce yourselves, and before you do, I'm going to introduce you to Martha Feltus, who's this is our vice chair. You probably know Pepper from From Wayne Laroche. Yes. Okay,

[James Pepper (Chair, Vermont Cannabis Control Board)]: great. So thank you for having us. My name is James Pepper. I'm the chair of the Vermont Cannabis Control Board, I'm joined by our executive director.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Yes, Olga Fitch, and I'm the executive director for the Cannabis Control Board. So nice to see those who I've met before and your face as well. So

[James Pepper (Chair, Vermont Cannabis Control Board)]: we put together a presentation that gives a little bit of a snapshot of the market, and then it has our budget adjustment request in it. We don't need to go through it. I mean, our I think the budget adjustment request is really correcting just an inadvertent transfer that happened a while back to build to help build our lab that was delayed for a number of reasons. But I would just defer to you if you find the information interesting.

[Robin Scheu (Chair, House Appropriations Committee)]: Yeah, mean, gave you thirty minutes. It may round us again a little bit if you want just sort of and then that will help us because we'll be there when we get the FY27. Sure. Sounds good. Are you going?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: It looks like I both have joined.

[Wayne Laroche (Member, House Appropriations Committee)]: There you go.

[John Kascenska (Member, House Appropriations Committee)]: Looks like that, yeah. Open the screen magically.

[James Pepper (Chair, Vermont Cannabis Control Board)]: While Oleg is pulling that up, I can just say a little bit about the lab because this is the budget adjustment is fully focused on restoring that. So we were authorized to build a state reference lab for cannabis, because none of the other state labs can possess or, you know, run cannabis through their machines. And that was done in BAA twenty twenty three. We were kind of assuming that we were going to join an empty room at the bail lab in Randolph. BGS had to do an air quality analysis, determine that the HVAC system in that building couldn't handle any additional capacity. And so and then, of course, there was flooding that happened in July 2023. There is just a lot of, you know, attention was needed elsewhere. So the lab kind of got deprioritized as far as finding a space for it. And eventually we did work out a space in Colchester and we went to buy equipment and the money. That's when we realized the money had inadvertently been transferred back to the general fund and not carried forward. And for which fiscal year for FY '25 it was supposed to be, it was authorized? Was authorized '23, and we can get there.

[Robin Scheu (Chair, House Appropriations Committee)]: Okay. Yes.

[James Pepper (Chair, Vermont Cannabis Control Board)]: I was just waiting for all

[Robin Scheu (Chair, House Appropriations Committee)]: the pull ups.

[James Pepper (Chair, Vermont Cannabis Control Board)]: So we could give a little

[Thomas Stevens (Member, House Appropriations Committee)]: bit of context.

[Robin Scheu (Chair, House Appropriations Committee)]: Yeah, okay.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: So we'll start with a little bit of a market update to sort of introduce you to the work of the agency, sort of our metrics for the last calendar year and the state of the market. So, we'll start there, and I'm going to walk you through the slides that you all should have available to you as well. So, here, you're looking at the chart that's showing the total number of active cannabis licenses on a monthly basis dating all the way back to July 23 through December, of this last year.

[Robin Scheu (Chair, House Appropriations Committee)]: Are these not all five levels of licenses?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: All of them included, so all tiers, all types. As you could see, at the end of this year, of past year, we were at five seventy one active licenses. You could also see that there is this bump in this chart right, between late twenty twenty four and early twenty twenty five. Some of you may remember that that was the period of time where the board had temporarily closed and announced the repair of retail and cultivation licenses. What ended up happening is we had somewhat an artificial spike in interest in the number of applications we received, processed and ultimately issued licenses to folks who jumped in at the last minute, but since then, we could see the trend, numbers are trending back down to the pre closure levels, and we expect to see them stabilize at that level. But that's just a quick little indication of what's going on here. And a reminder, those two license types, most popular retail and cultivation, are still currently on hold to new applicants. Moving on to the next slide, oh, I jumped a little too far. So, it's a little bit of a deeper look into the licensing data, so here we are breaking down our licenses by group and priority status, so you can really see who it is that we have in the market currently. Cultivators, the first chart here, right, is our largest category, very obviously, if you adopt all of the numbers in color, it's three fifty eight active licenses. And the color is to show you the different priority status categories, with orange being our standard applicants, and then you have blue for social equity and green for economic empowerment licenses. So, you could kind of see proportionally, we're at about 64% of standard, I think it's about 15% of social equity, and a little more than that in economic empowerment licensees. But that's sort of been the trend, the numbers are pretty stable and they have been over the last two plus years in terms of the proportions between those categories. Wayne, did you have a question?

[Wayne Laroche (Member, House Appropriations Committee)]: Yeah, just wondered what is the difference between a cultivator and a propagator?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Oh, propagator is our newest license type. It's a much more limited license. You could really just sell the plant that is not yet mature, and propagators are allowed direct sales as well now. So they're a little bit of a nuanced license.

[Robin Scheu (Chair, House Appropriations Committee)]: So, they can sell to other growers? Yep. They're like, it could be a nursery kind

[James Pepper (Chair, Vermont Cannabis Control Board)]: of nursery.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Exactly. That's what that license is. And many cultivators also have a propagator license. So, I would say if we have five currently, I think at least four of them are also cultivators, if not all. It's just more of a niche license type. Okay, so that's sort of a breakdown of our electric licenses, And if there are no more questions on this, let me switch to the next slide, and I'll just share you on the numbers related to our medical program, because that has seen some changes over the last year. So, this slide shows you that we currently have 25 locations where medical patients and caregivers can receive service. So, we just over the course of the last six months gained 22 medically endorsed businesses. You may remember that this is a new addition to our program, medical endorsements, our licensees, retail licenses are now able to apply for medical endorsements, so they could serve medical patients as well as adult use population. That became available in July, And 22 out of 109 retailers have already jumped in, gone through the proper motions and have secured the endorsements and are able to serve patients. And looking at the chart, you could probably also see here that we are showing a steady growth in the number of patients and caregivers, looking back to last December, and that is a new trend for the last two plus years. Ever since the Adult Use Program, we've seen a decline in the number of patients and caregivers, but with the medically endorsed businesses coming to mind, we're seeing a renewed interest and excitement in the medical community.

[Robin Scheu (Chair, House Appropriations Committee)]: So caregivers, are they the people who are authorized to purchase for a patient? They're not doing it themselves?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: No, no, no, it's usually patients who cannot travel,

[John Kascenska (Member, House Appropriations Committee)]: for

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: example, or younger patients, right? Thank you. John?

[Thomas Stevens (Member, House Appropriations Committee)]: Can you take a step sideways and just re explain for us overall since you started? We've legalized medical before we did recreational so called and so the concerns when recreational was legalized was that medical would be unnecessary. I know there's been a change medical used to be under the purview of the Department of Public Safety. All those changes happen. Can you just give us a couple of minutes of what it means, what the differences mean to have medical when someone can buy cannabis just at any given store, why do we need a medical permit or why would I need to get a medical prescription from a doctor to purchase marijuana?

[James Pepper (Chair, Vermont Cannabis Control Board)]: Yeah, happy to talk about that because yes, when there was a lot of debate when the tax and regulate bill was going forward, do we even need a medical program anymore? The patients came out very strongly in the legislature and said, absolutely. They pointed to a few benefits of being a medical patient. One of them is the blood tenders have kind of an enhanced training at the medical. So they do intakes and they kind of help patients pick products. They're not necessarily I mean, the dispensaries used to be nonprofits. They got to convert to for profit. But it was really not about upselling patients. It was about getting the right product for them. They also have a higher transaction purchase, essentially double what an adult use consumer can purchase. They have access to specialty products, things that are prohibited on the adult use side, things like transdermal patches. We just don't allow them on the adult use side. And they have access to higher potency products as well. We have certain potency caps on the adult use side that don't apply on the medical side. And then, of course, they can purchase tax free as well. And they also have access to caregivers if they're invalid or can't get to a dispensary. So there are certain benefits that cannot be supplanted by the adult use system. But despite that, as is true in every state, once you open up adult use, the number of patients starts to decline. It becomes all of a sudden economically impossible to run a dispensary for a very limited number of patients. And we saw that in Vermont. I think we had six medical dispensaries pretty well distributed around the state. All but two have closed, including the one in South Burlington, which serves seventy percent of the patients. So the response to that was to merge these two programs to allow retailers that have gone through an enhanced training and subject themselves to additional regulations around confidentiality, products segregation, how to handle these higher potency products, they can serve medical patients at their dispensaries, at the adult use dispensaries, if they do kind of give one of these medical use endorsements. Right now, we're actually seeing unprecedented access for medical patients that we haven't seen since the advent of the program.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Surely, I'll pull up the next slide to show you sort of the locations where we now are able to serve medical patients. So you could see we went from three locations all the way.

[Robin Scheu (Chair, House Appropriations Committee)]: Yeah. But Wayne, had a question.

[Wayne Laroche (Member, House Appropriations Committee)]: Medical patients, are they required to have a prescription diagnosis by a medical doctor?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Not a prescription, but definitely.

[James Pepper (Chair, Vermont Cannabis Control Board)]: Yeah, I mean, you can't prescribe cannabis just because it's a schedule one. But what they need to do is the legislature has identified 13 conditions that would qualify a person for a medical card. And what the doctor needs to do is verify that the patient has one of those 13 conditions.

[Wayne Laroche (Member, House Appropriations Committee)]: So he has to sign off. Sign off on

[Robin Scheu (Chair, House Appropriations Committee)]: it, right. So where are the three medical dispensaries now?

[John Kascenska (Member, House Appropriations Committee)]: I think

[James Pepper (Chair, Vermont Cannabis Control Board)]: it's Brandon Mounuski Montelier.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Oh, it's Montelier. Yeah.

[Robin Scheu (Chair, House Appropriations Committee)]: Great. Thanks.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Alright, so that's what we got to you for medical. If we'll get on that, I'll give you a quick overview of our compliance and enforcement numbers, pretty straightforward here, indicating that we received over four forty complaints over the course of the last year. Those led to 162 formal investigations, and as a result there were 105 letters of warning issued and then notices of violations as well. Letters of warning do not carry administrative penalties, and then notices of violations come with penalties, possible suspensions, more severe punishments. So, a lot of oversight, a lot of important work, but that's all probably so what we are seeing is our enforcement arm is getting a lot more out there and really focusing on those who need our attention most.

[Robin Scheu (Chair, House Appropriations Committee)]: Wayne and then John.

[Wayne Laroche (Member, House Appropriations Committee)]: So who makes the complaints? Where complaints are coming from? And then get a second question.

[Robin Scheu (Chair, House Appropriations Committee)]: It'll come to you while she explains the

[Wayne Laroche (Member, House Appropriations Committee)]: first one.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Yes, we collect them. So on our website there is a web form, you could submit an anonymous complaint. You could submit a complaint formally. Our partners at DLL may catch something and refer somebody to us. Any member of public can email to us and report a complaint. So, most of them come through the community. Luckily, we have a very vigilant community, we have a lot of licensees willing to share what they know about the activities of their friends out there in the industry, so we have direct communications as well, but most of it is from the public.

[Wayne Laroche (Member, House Appropriations Committee)]: Nothing comes from law enforcement?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: No, we don't get anything, again, DLL might be the only other agency that in the course of their activities may reach out to us and say, hey, this looks like maybe something you may want to look at, see something on the shelves in one of the establishments and want for us to take a look. But mostly it's the community members and other licensees that submit those complaints. They are very of course, we have a lot of advertising complaints. We have complaints about safety and security or a minor on-site or on-site consumption. So it's a myriad. Some of the complaints we have to dismiss because it might not be much to those, right? So, some of them are referred out, maybe find out not ours, and then we reach out to DLL and say you gotta pick this one up. So

[Robin Scheu (Chair, House Appropriations Committee)]: John and Mitch, don't know, the general themes of

[John Kascenska (Member, House Appropriations Committee)]: things If someone writes to you and says we don't like the factors that dispensaries have, well, okay, you don't know what to do with that, but if it's something else they're observing, that might warrant an investigation.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Exactly. You know, could be a product complaint, we have a lot of those, I didn't feel good after I consumed that product. Next thing you know, we are looking into product testing, analysis, etcetera. So a lot of complaints like that, people complain about labeling of packaging, and this may appeal to children, so we'll take that, we'll review.

[John Kascenska (Member, House Appropriations Committee)]: Thank you. Just curious.

[Thomas Stevens (Member, House Appropriations Committee)]: There was a federal

[Wayne Laroche (Member, House Appropriations Committee)]: government, I mean, the

[Thomas Stevens (Member, House Appropriations Committee)]: last several weeks talking about where the president was going to just say, we're rescheduling marijuana. James, you mentioned that because marijuana is still a schedule one drug for whatever prohibition reasons, I've received comments from my local dispensary just about what does rescheduling mean when you have had states developing their own federally illegal or federally problematic things. What did that announcement mean to you in terms of how you and or the state is going to handle? Because if it's rescheduled and it's now just a product like, then all of these independent dispensaries or businesses are going to face, our world will be able to allow, Philip Morris will be allowed to make marijuana cigarettes or whatever products. Is this something that you talk about over the water cooler in terms of like what is the reaction going to be because of the impact on all of these businesses? Yes.

[James Pepper (Chair, Vermont Cannabis Control Board)]: So there is a lot of misinformation about what moving from schedule one to schedule three will do. There's a lot of speculation, I should say, about what it may or may not do. We have a cannabis regulators association where everyone in our seats around the country talk about these issues and all the emerging issues. Moving from schedule one to schedule three will definitely do is be kind of a very immediate boost for cannabis businesses in the state. They'll be allowed to write off their business expenses, the kind of section of the tax code that says you have to pay taxes on your illicit profits, which the federal government considers these, will not no longer apply to these these businesses very likely. Immediate economic benefit to the cannabis industry. That's why all those kind of stock prices on the Canadian Stock Exchange, you know, the multistate Canadian cannabis businesses just shot through the roof when this announcement was made. It's not really we don't believe that it's going to affect our state market in any significant way. It doesn't open the floodgates to interstate commerce of cannabis products. What it does is it says that a Philip Morris could try and create a prescription cannabis drug, and then that would be allowed through interstate commerce. But you'd have to go through the whole FDA approval process to get that prescription drug. So the cannabis products that are sold in Vermont, manufactured in Vermont, are going to be just as illegal from a federal standpoint if they're scheduled one or scheduled three. So our market, as long as we keep doing what we're doing, should still not attract any attention from the Department of Justice federally, but it's not going to change their dynamics significantly of our market other than this, you know, 280E, this tax situation. And then it will open the door to a lot more research. It will make it a lot easier for anyone who's receiving federal funding, any research institute to possess and study.

[Thomas Stevens (Member, House Appropriations Committee)]: But it's limited. Going to schedule three, it would be limited to it would not deregulate it to or deschedule it to a level of tobacco or alcohol or anything that qualifies for interstate commerce?

[James Pepper (Chair, Vermont Cannabis Control Board)]: That's correct. It will not legalize interstate commerce. I mean it will allow There's two FDA approved cannabis drugs currently. It'll allow for a lot more research and development of cannabis drugs that could be I should say, it's very odd to have cannabis, which has hundreds of cannabinoids in it as a scheduled drug. Like really, they should focus on the various cannabinoids that are within cannabis. Have a CBD, should that be schedule one, schedule three? To THC be scheduled one, three, you know, it's I think it'll be very difficult to get an FDA approved prescription flat like joint because the quality changes, genetics change over time. If you were going to make a THC pill, for instance, that could be FDA approved.

[Robin Scheu (Chair, House Appropriations Committee)]: I'm going to move us along. Think Lynn, did you have a question? I

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: know wanted about the impact of banking on this.

[James Pepper (Chair, Vermont Cannabis Control Board)]: Schedule three will not change banking at all. The banking restrictions, I should say that federally chartered banks historically have not been willing to bank cannabis funds, cannabis money. That's because of Financial Crimes Guidance Network, Financial Crimes Enforcement Network guidance document. So there would have to be separate legislation to fix the banking problem. Schedule three doesn't do anything No, about it may. It indicates that I mean, what is really important about Schedule three, and then I can leave this alone, is this the first time in fifty years that a Republican administration has acknowledged that there are medical benefits to cannabis. And I think that will really change the dynamic, the kind of treatment of cannabis in Congress. And they may be willing to do things like safe banking and actually do some legislation around it. But as far as just moving it to Schedule three, it's not going say.

[Robin Scheu (Chair, House Appropriations Committee)]: I'm going to move us along, because now I'm mindful of the time. I would like to go quickly to your excise tax dash or wait, no, the one before it, the revenue projections and actuals by revenue, that one.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Yes, so I could quickly fix you up. So changes from FY '26, to remind folks in the room, the excise tax revenue used to first go into the special fund, cannabis regulation fund, right now it goes, as of this year, goes directly into the general fund. So the special fund now consists solely of the administrative penalties, licensing fees, application fees, product registration fees, etcetera. Historically, and what we see moving forward is the funding, that fund can cover about a third of our operating budget, and we'll need two thirds out of the general fund to supplement the rest. And the little table to the side sort of summarizes the first line there is the GFO projections related to the taxable sales and excise tax revenues for this fiscal year. So 157 plus million in taxable sales is expected with over $22,000,000 in excise tax revenue. That is the projection. And that second line here is our actual numbers for the first four months of this fiscal year. And the reason I put that in is to show you that we are tracking proportional risk projections at this time, dollars 7,380,000.00 in excise tax revenue collected in the first four months of the fiscal year, which is right on track. And line three is the projections on fee revenue, those are CCB developed projections, and we project to receive about $2,600,000 through collection of fees, penalties, etcetera. And so far, for the first six months of the year, the last line here, we're at 1.38, which again is just a little over, about 52%. So tracking perfectly on track with their projections.

[Robin Scheu (Chair, House Appropriations Committee)]: Is there any seasonality that affects the sales?

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Actually, slide right here, could sort of see I took this little table from the Department of Taxes, and so if you focus on just the first chart above, you'll see the it's a monthly number, 23, 24 and '25 data. And you can see we tend to peak around August, the highest months where we collect the most the highest sales. But you could sort of see year over year it's the same, so we are starting to see certain trends. And again, you could see kind of consistency in the green and black now. I do want to point out that our retail window, application window, has been closed for a year now. And yet, if you look at the black line, every month over the course of the last year, the tax revenue is higher than the prior year. So it means that the overall market activity and sales numbers continue to grow, even though we haven't seen any new retail entrants. So again, a pretty good sign as far that goes.

[Robin Scheu (Chair, House Appropriations Committee)]: So let's go to the request in our final couple of minutes. Yes,

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: so we are requesting, and I'll just put this slide here, 130,000 plus to restore one time funding, which was appropriated to us previously to stand up a state operated cannabis lab. Some background: so it was Act 158 from 2022 that directed CCB to establish an in house cannabis testing lab. We were given a mandate to establish a lab so that we can establish potency and contaminant testing protocols, verify cannabinoid level guarantees, test for pesticides, solvents, heavy metals, bacterial fungal contaminants, and certify that labs are capable of providing these tests and services. It was Act 83 from 2022 that authorised an allocation of $8.50 from the FY22 unallocated reserve to the Cannabis Regulation Fund, so the money was dropped in our fund as a part of BAA23. We were also allowed to create three positions, one lab director and two chemists to do their work. And so, in the 2023, once the money were received and in the fund, we went out, we began the procurement process, we actually went through the entire requisition process, selected the vendors, and we're ready to make the purchases. At the same time, as James began telling the story, we are working with BGS on securing the space, That turned into a much longer experience that we all had hoped for. So we were at a place where we had to make a decision, do we purchase that equipment, when we had no space, we did not have a director, we did not want to hire anybody, and we had no timeline. So, we were looking at renting some space, storing, paying storage fees, we decided no, we're not going to pursue the purchases. Year 2024 was the year where we kept looking for the space. January 25 is, so a year ago, we found the space with the help of BGS. We worked with the landlord on making a plan for the fit up. Between January and June. They set the place for us. We were lucky that we had money in our budget because of some delays with ADES, but we found the money to pay for the fit up, so we did not need to request anything else. And in June this past year, we signed a ten year lease for the space that is fully fitted for the lab. We hired a director, same month, and in July, we went back to begin the lab equipment purchasing process, got a lot of equipment by October and November, it's in boxes, some of it is getting ready to be set up. What we anticipated, we were going through those steps and we were really focused on getting that done, because again, we are behind the schedule and we are fully aware and we need this done yesterday. Our expectation was that we had the funds secured, that the funds were in our cannabis regulation fund, and we will just pull as soon as we were ready. We put together a list of expenses, sent it off to finance and management in November, and at that point we learned that the prior allocations were inadvertently reverted back to the general fund at the close of fiscal year twenty four, actually. We did not realize that, and then finance and management informed us that we would be required to seek out an equivalent funding in this BAA. So here we are

[Robin Scheu (Chair, House Appropriations Committee)]: exploring what was taken in it.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Yes, and no money was spent from the original BAA. Okay. Think we

[John Kascenska (Member, House Appropriations Committee)]: have that.

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: Okay, try to go first.

[Robin Scheu (Chair, House Appropriations Committee)]: Apologize. Did everybody understand that? Okay,

[Big Hartman (Executive Director & General Counsel, Vermont Human Rights Commission)]: great. I'm

[Unidentified Member (House Appropriations Committee)]: just saying wouldn't that have been a BAA decision in board why didn't we know that

[Robin Scheu (Chair, House Appropriations Committee)]: everything got delayed no how

[Olga Fitch (Executive Director, Vermont Cannabis Control Board)]: the money was swept I think this verbiage is what I received from the finance and management is that basically says this amount has been added to the fiscal year and 2025 balance retained. I think it was just something internal to the way finance and management managed that fund, maybe it's just gotten forgotten.

[Robin Scheu (Chair, House Appropriations Committee)]: Well, and it didn't get noticed because you didn't need the money until because you had the flooding and all the other stuff was going on. So I just assumed it was there the whole time. Yeah. Yeah. And now we're all going to pay attention to these special funds all the time because inadvertent things didn't happen at this time. Yeah. Yes. Okay. Thank you very much. See you back here for FY '27 We appreciate your time. At the end of the day, it sounds pretty straightforward, but it's nice to get an update on what things are, what's happening in the world, in your world. Thank you. You. Committee, we're going to take a break for about eleven minutes now, or maybe twelve, but if we have folks at 10:15, we have VHCB is coming in to talk about the