Meetings
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[Bradley Schulman, Legislative Counsel]: Thank you very much.
[Rep. Matthew Birong (Chair)]: All right. Good morning, everyone. Tuesday, May 5, a little after 09:30AM. We are picking up work with continued conversation on S-three 23, an act relating to miscellaneous agricultural subjects. After all the testimony and conversation last week, counsel has honed in some language for us to review and consider. It's addressing a couple of the opinions and buckets we heard from stakeholders in and around the temp sector. So with that, I'd like to invite counsel up and run us through the words on the page. Good morning, sir. How are you?
[Bradley Schulman, Legislative Counsel]: Good morning. Bradley Schulman, also legislative counsel. And I just want to remind the committee that I should be on the Senate floor on ASA. So I am going to have my phone out just in case someone pings me. And let's walk through the language. So we are on draft 6.1. If you have draft 4.1, just look in the bottom and to make sure when it says VT Ledge, there's a v six at the very bottom. And then that's the most up to date version. I just forgot to update the draft number when I sent last night. So if you have 4.1 at the top, just double check that there's a six at the very bottom in the footer.
[Rep. Matthew Birong (Chair)]: 6.1 is posted on our page.
[Bradley Schulman, Legislative Counsel]: Six point yes. 6.1 is posted on the page. Thank you. So, we'll look on page two, line 12. And so, this is adding permissive rulemaking. So, it's not mandatory rulemaking, but it's permissive rulemaking to establish sanitary requirements for licensed processing facilities. And I did some research on this and converted it with a couple of colleagues and because often the Vermont Department of Health is someone that would establish sanitary requirements for processing facilities. And these are you're processing it into an item for human consumption. However, we've been told that the Department of Health does not regulate anything related to cannabis and so that they won't go in and touch those things. And so having this rule making in here is kind of a bootstrap approach. We think that there might be authority elsewhere for the cannabis control board to establish sanitary requirements. But this is kind of a boot saps approach that would enable them to do that. You know, in chatting with the control board briefly, we might also want to consider storage facilities for products in addition to just processors. But that is language in here that would enable some sanitary conditions. Moving on to the next change, these are all highlighted in yellow for readability. We're on page three, line 10. And so this is a section concerning fees. And what this proposes to do is what this proposes to do is to give the boards of discretion to issue longer registrations.
[Rep. Matthew Birong (Chair)]: Is it no? Thank you, Siri.
[Bradley Schulman, Legislative Counsel]: The board may issue longer registrations and prorate at the same cost per year for products it deems to be low risk and shelf stable. And so just to kind of enable a longer registration period, but prorating the cost over that that period of time. And the products may be defined and distinguished and readily accessible published guidance. One thing I want to flag for the community is that guidance doesn't go through the rule making process. The rule making process is a process in Vermont law that is the process that's there to delegate legislative authority to determine what rules are and things of the sort. Following that process gives a rule the kind of presumption of validity that is a lawful delegation of authority. Delegating to published guidance is is less secure in that way. It doesn't have to go through public notice and comment, but that is that is a policy choice. And we're looking at page four and sections 23 b. This is what this purports to do is to define an unregistered product and we would kind of try and perhaps massage that language a little bit better to kind of get it both our book. We're talking about a little better. But essentially what this means is unregistered hemp or unregistered cannabis products that are required by state law to be registered with the Cannabis Control Board. And then we're jumping down to number two, subdivision number two at the bottom of page four. No purchase sub cause unregistered cannabis, unregistered hemp, or any unregistered product derived there from purchased by mail through a computer network, telephone network, other electronic network to be shipped anywhere else other than a licensed cannabis establishment in the state. And so this would kind of criminalize or penalize excuse me, kind of penalize with a civil penalty shipping cannabis into the state cannabis or hemp products into the state that are not registered. And so they give the the AG that that would be sections give the AG kind of authority to enforce that the same way that they do for tobacco products. We we think after having done some research on this, we think this this language would fit better in the cannabis section subsection itself as opposed to just under nestled under tobacco. It's nestled under tobacco, and the cannabis control board might be able to testify directly to this. But based on my knowledge, they've been conferring with the AG's office, and the AG's office says, okay, well, this is how we do it with tobacco, so maybe we could do it the same way with hemp and hemp hemp and cannabis products that are being shipped into the state to provide these penalties and things of that sort. So was trying to kind of piggyback something that already exists, but having it nestled under a tobacco sub chapter likely doesn't make the most sense in terms of readability and followability for the statute, we want to put it into the cannabis provisions.
[Rep. Matthew Birong (Chair)]: And that's with the Department of Electoral Lottery being a portfolio within our jurisdiction, testimony to conversations in and around those internet sales that's changed to both tobacco and alcohol over the years. So I think that personally makes a lot of sense to have it a paralleled and uniform approach. So no, putting that into this function within that substructure, think it's logical right then, go.
[Rep. Matthew Birong (Chair)]: So, this is not the place for that language, is what you're saying?
[Bradley Schulman, Legislative Counsel]: Ideally, it would go into the cannabis subcapter in the same title. I think that is a policy choice. If the AG is saying that it's easier for them to enforce this information enforce these provisions under tobacco, you know, that that's a policy choice based on kind of feedback from those folks. You know, we think from a readability perspective, it might make sense to mirror this in the cannabis subchapter. But that's a policy choice. I mean, I guess like your question representative is like, does it live in cannabis chapter? Does it live in tobacco chapter? Like, I guess in my mind, like, as long as it's known to exist by the AG's office, it's something that falls under the same structure. And I just asked Nick to try and get Todd from AG for us to offer anything that's one. Yep. And then I think one of the other final footnotes, and I can go to your other section on the screen. Passage it. Have a note here for myself. Excellent.
[Rep. Matthew Birong (Chair)]: Questions from the committee right now? I know I had this down for us to
[Rep. Matthew Birong (Chair)]: take a position this morning, but the goal is right now to take this up at 01:00 again to give us time to, like, marinate on the language, because there are some changes to this. And I realize it just got dropped in boxes a short time ago, so I wanted to be conscious of that. So questions for counsel right now before we release him to chamber?
[Rep. Matthew Birong (Chair)]: No.
[Rep. Matthew Birong (Chair)]: I see no hands. All right. Thank you, sir. Thank you very much. I appreciate you all.
[Rep. Matthew Birong (Chair)]: So I see some representatives from the CCB here, but other representatives from stakeholder groups.
[Rep. Matthew Birong (Chair)]: Not to put anybody on the spot, but thoughts about the words on the leakage of stakeholder group?
[James Pepper, Chair, Vermont Cannabis Control Board]: Happy to just kind of give you my concluding thoughts.
[Rep. Matthew Birong (Chair)]: That would be, I mean, you're here. Okay. Yes. Here we got sixteen minutes.
[James Pepper, Chair, Vermont Cannabis Control Board]: All right, I'll try and speak quickly. I really appreciate, oh, sorry, James Pepper, chair of the Cannabis Control Board. Really appreciate you all taking a second look at this. I just want to reiterate what a difficult situation we're in with this legislation. There are a lot of great hemp processors in the state that even in the absence of regulatory oversight have been voluntarily holding themselves to a very high standard. I've toured the clean facilities. I've toured the San Belovinces facilities. Even without that kind of verified aspect, have been doing a really great job holding themselves to kind of CGMP standards and all the rest of it. But there are thousands of hemp processors around the country that have been pushing the envelope on hemp for years and have found that no one's pushing back, not the DEA, not the FDA, not the TTB, not the State Department of Health. And they have become more and more brazen about the products they're making, the ingredients that they're using to make those products, where they can sell them and to whom, what's on
[Bradley Schulman, Legislative Counsel]: the
[James Pepper, Chair, Vermont Cannabis Control Board]: label. And the fact that they are not subject to state or state regulation or tax structures. So with respect to hemp products, we really are back in kind of pre 1906 when the Food and Drug Pure Food and Drugs Act was passed. That's where we're living in with these products. And why do I say that? Well, I mean, Oregon, they were setting up their state reference lab on the cannabis side. The Oregon liquor and cannabis control board just started grabbing hemp products from wherever they could find them. They tested 50 hemp flower products and 50 edible products. And I submitted the report to Nick for posting today. Mislabeling and no age gating were almost table stakes for all of them. 88% didn't require any sort of ID to purchase them. Seventy five percent did not have an accurate label. They mischaracterized the amount of THC was in them, the amount of CBD. It's really important when you think that people are potentially consuming these products and hopping into a car, or consuming these products thinking that they don't have THC in them, and then they need to pass a drug test for their work or some other reason. Fifty two percent exceeded the per package THC limits, both in serving side per serving size or per package amount. Fifty six had synthetic cannabinoids in them, which we have no very little knowledge about about their kind of human impacts. But also they usually belie that someone did something wrong in conversion process if they have synthetic cannabinoids in them. So it's really kind of the Wild West when it comes to hemp products. So this bill attempts to thread a very delicate needle between those two realities and in the context of incredible uncertainty at the federal level. When the bill that closed the hemp loopholes first passed in November with a one year delay, my first call was to the chair of the Senate Ag Committee who had been looking at hemp legislation and asked them, shouldn't we put a pause on any sort of regulation until we know whether these products are going to be considered cannabis at the federal level, of where the THC is sourced from, or if they're going to be, they were going to continue to have this bifurcated hemp and cannabis situation. And his response was, let's move forward. These folks need regulation regardless. And we'll just kind of make this bill as flexible as possible to accommodate whatever happens in November. I have a strong feeling that there's not going to be a change to that federal definition of hemp, because it would require bipartisan support in Congress. And there was bipartisan support to close these hemp loopholes. In fact, there was 39 attorney generals, state attorney generals signed on to a letter saying, please close this. They sent that in October, and it was closed in November. So to overcome the amount of bipartisan support in order to overturn the fix, to me, is just unlikely to happen before November. And it would have to raise to a priority in Congress to actually do this. And there's a lot of other things going on. What I think is a much more likely scenario, because we're already seeing the Trump administration do this, is to reschedule all products containing THC, whether they're hemp or cannabis. So that fixes that disparate tax problem, that 280E problem. So everyone's going to be considered a marijuana company, whether you're making hemp products or cannabis products. But you're not going to have those, you know, that terrible tax situation that people find themselves in. So that process has already happened to the Trump administration, without any of the process that's required under the Controlled Substance Act through an obscure treaty provision, just rescheduled all medical THC products. And of course, there's no such thing as a medical THC product. There's adult use products that get sold to medical patients. Do those become medical products? No one knows. They didn't say they didn't tell us in this order. So, but then they set a schedule, they sent a hearing to do an expedited rescheduling on June 29. So they may just reschedule all products containing THC on June 29. And then, you know, what I so what then what I see happening, because frankly, there's some kind of, you know, touching on this in the executive order, which is he's going to direct his attorney general to say interstate commerce between two legal states, so long as the sending state and the receiving state are okay with it, is going to be deprioritized for federal prosecution. So I think that's going to be the state of the world after November. We don't know that for a fact, but that's the kind of path of least resistance for these products. And this bill accommodates, you know, this bill is essentially asking us to build a hotel. And we don't know if it's going to have just Vermont residents, a handful of small Vermont operators in them, or it's going to have hundreds of out of state companies that are going to try and play in Vermont. And that's why I just think it's so incredibly important to have the flexibility that's built into this legislation right now. The amendments that you saw today try to accommodate the testimony that you heard. It offers maximum flexibility for us to extend product registrations. That was a big concern of Stan Belovance and he didn't wanna have to register products every year. If he's a CGMP certified facility, and he's testing his products, if he has a third party, a creditor testing his products, why does the CCB need to look at them every year also? And I agree with that. So it gives us the ability to establish standards for certain products that are, you know, maybe have, you know, other third party predators looking at them and move them out of that annual product registration. They still have to pay the same fee because I think the Ways and Means Committee would have a problem if we're kind of have the authority to waive fees kind of at our own discretion. But at least we don't have to they don't have to submit any paperwork to us every year. It clean both companies also ask for greater enforcement over the really bad products that get shipped through the mail to us. That's what that section around the kind of delivery sales ban, the Internet sales, is targeted at. It just piggybacks off of existing authority over illegal tobacco products that get sent into the state. I've had conversations with the attorney general about this starting last summer. They are understaffed. That division is understaffed. This really would just be a kind of break glass in case of emergency style authorization for a really bad product that both our office and their office agree deserve one of these letters. But I think just given what's happening at the federal level and this push that there's going to be to push these products into any market that will accept them, I think it's really important that we have some authority to at least send a cease and desist letter that has some teeth to it, to the to the worst to the worst offenders. And then the sanitary requirements, that was a specific ask from clean, just saying explicitly that the CCB can establish sanitation criteria, because the Department of Health will not certify commercial kitchen. That's a request from their out of state regulators that want to know that someone is looking at their sanitation requirements. So we thought that it was included by implication or by reference elsewhere, but making it explicit is totally fine with us. And then the on passage, effective on passage, we don't have a problem. We were going to get started as soon as possible. As soon as we knew this bill was signed by the governor anyway, we were going get started on drafting rules. So pushing that date up by a few weeks or a month or so is fine. And that's all I have for you. But I'm happy to answer any questions that you might have about this legislation.
[Rep. Matthew Birong (Chair)]: Again, we're going to pick this back up at 01:00. Conscious of time, we have a
[Rep. Matthew Birong (Chair)]: few minutes before floor starts. Questions for Chair Pepper? Cool. All right, I wanna thank you,
[Rep. Matthew Birong (Chair)]: and I would like to thank your attorney for the
[Rep. Matthew Birong (Chair)]: work on this, as well
[Bradley Schulman, Legislative Counsel]: as the other member of the board in the room. There's been a lot of
[Rep. Matthew Birong (Chair)]: opinions, thoughts, and concerns
[Bradley Schulman, Legislative Counsel]: to take into consideration here, so I wanna thank everybody over in the gallery for their work on this. This has been a lot of moving parts to try and organize with a big fat unknown landing in November. So I want to recognize that
[Rep. Matthew Birong (Chair)]: as well. With that, we are offline until 1PM, and we're going pick this up, and then we are going to get also into conversations with the Senate bill on a S-two 78 and Act relating
[Rep. Matthew Birong (Chair)]: to cannabis. So we got hemp and cannabis. Or afternoon. All right. Thank you.