Vermont Legislature SmartTranscripts:

[Sen. Russ Ingalls (Chair)]: We're live. Good morning. Start date, 01/08/2026. Just a little housekeeping for the committee. If anybody hasn't gone on to the website or gone to Monument Farms and watched that video of the state of farming, it's a longer video, very beautifully done, thoughtfully done. I talked about the challenges of what Vermont farmers are facing right now. Yeah. I'm blown away with the production of it. So if you have them at Monument Farms, if you have any problems finding it, let me know, I'll get it sent to you guys. But a very, very great video where I think you guys would be impressed with that. We are honored today. And I say that, you know, in a way because I have really enjoyed the developing relationship that James and James Pepper and his group and I have developed from the Cannabis Control Board. We went on a couple of tours this summer and we've had thoughtful discussions. I'm not going to get into all of what James' presentation is going to be in its group. But I think that we can I'm very optimistic about a new relationship that can be formed where we can all work together for the common goals of what the hemp industry and the cannabis industry is in the state of Vermont. And again, just very, very, very appreciative of the relationship that's been started, and I'm glad to have

[James Pepper (Chair, Vermont Cannabis Control Board)]: you in. Welcome, sir. The floor is yours. Thank you very much. Very gracious introduction. My name is James Feffernan, the chair of the Cannabis Control Board. Around the room, you see the other two board members of the Cannabis Control Board, we are a three member board, and our general counsel, Gabe Gilman. This is a really hemp is a very tricky issue. So you guys are starting the year off with a complicated topic.

[Unidentified Committee Member]: Appreciate that. Yeah. I did

[James Pepper (Chair, Vermont Cannabis Control Board)]: prepare just because sometimes visuals are helpful. I did prepare just a very kind of slapdash PowerPoint, which I'm happy to put up on the screen if that's helpful. Yes. But really, I think a lot of it, I think we just need to talk through some of these issues.

[Sen. Russ Ingalls (Chair)]: I'll say what James is doing that. I've kind of made it kind of clear in my mind, and I've said it enough times now where I see that hemp is a non intoxicant and cannabis is. That's where I've kind of drawn the line in my mind as far as where it's at. I think we might see some of

[James Pepper (Chair, Vermont Cannabis Control Board)]: that today. Yeah. And I think that it it's always really important to start with a basic premise that marijuana and hemp are one plant with two names. You know, this legal fiction exists as a weird quirk in our history for a kind of tortured relationship with cannabis over the last fifty or a hundred years. And what you see is that marijuana is a Schedule I controlled substance. The Controlled Substance Act was passed in 1970. It places various substances into one of five schedules or categories depending on its abuse profile and whether it has accepted medical uses. So Schedule I is the most restrictive and it defines having no accepted medical uses and a high potential for abuse. Other schedule one drugs are up on the board, they have pain, heroin, ecstasy. And these are, you know, just heavily heavily restricted in this state, but or in the country. Sorry. But, you know, you fast forward to 2015, 2014 really, and there was a large number of hemp growers, that said, hey, there's a lot of medical value to well, there's a lot of agricultural applications for hemp, whether that's for, making clove, fiber, seed, hemp oils, or CBD. And so they were able these kind of coalition able to create a separate category of marijuana or cannabis. In 2018, the the farm bill, the Agricultural Improvement Act of 2018 created this legal fiction between hemp and marijuana. And I use marijuana, it's got some kind of derogatory undertones to it, historically. So, you know, I'm using it because, again, cannabis is hemp and marijuana. It's it's complicated. It really should be high THC cannabis or low THC cannabis, so instead hand marijuana. But essentially they created a definition, a legal definition of low THC marijuana that would be considered an agricultural product removed from the schedule altogether, treated the same as a cucumber or tomato. And the distinction here is that it essentially has virtually zero THC. I mean, that's the point 3% because there's always gonna be some amount of THC we grow cannabis, but you know, when you're talking about a plant with no more than point 3%, that's virtually no THC. And it's like, you know, like you think about like non alcoholic beer or like decaf coffee, there's still trace amounts of decaffeine, decaffe coffee, but it's virtually decaffeine free. That's the kind of equivalent for hemp. So, you know, hemp is, federally, this led to a huge boom in the hemp industry, people growing hemp for CBD. It turns out that there wasn't as big of a market for CBD or for hemp as kind of the growers anticipated. And so what they started to do in the subsequent years after 2018 is look at that definition and find ways to kind of poke holes in it and find ways to make THC products, but call them hemp products. So there's the point 3% loophole. So there's a point 3% THC when you're talking about a plant is very minimal, but when you're talking about a product like a 50 gram candy bar, well you can pump that with one hundred and fifty milligrams and still be under that 0.3 on a dry weight basis threshold. So that started to happen. Started seeing kind of candy bars and seltzers that, gummies that, you know, just weigh more and you have a lot more THC. I use the fifty gram, one hundred and fifty milligrams THC example here because on the adult use cannabis side, we have a per package, limit, of a hundred milligrams. So this product, which is in interstate commerce would be illegal in the state of Vermont if it were grown or sold at a cannabis dispensary. So that's one loophole. The other one is the THCA loophole. THCA is essentially a precursor to THC, the intoxicating element of cannabis. You know, you burn THCA and it turns into THC. So, you know, you could essentially sell a joint that's for all intents and purposes, cannabis or marijuana and just say that it's THCA and not THC until it's lit on fire, smoked. And so we're seeing proliferation of these you know, joints, you know, that show up in gas stations, things like that, and the claim is this is THCA, it's not THC, it's a weed score compliant with the farm bill. You can even see on this label, it says US Farm Bill compliant, it's pretty typical of these types of products. And then there's the derivatives loophole, you may remember it said Delta nine THC and all of its derivatives. So what you can't, one way to make synthetic Delta nine THC is to take CBD and hit it with like hydrochloric acid and convert it into Delta nine. You can also convert it into Delta eight THC, has very little, you know, test this, kind of safety, you know, studies have been done, certainly nothing long term about the effects of delta ATHC on humans, and other intoxicating cannabinoids, like all the other ones that you hear about. So these are the three main loopholes that have emerged since the passage of the Farm Bill, and, you know, the basic gist is, well, because the source material is hemp, or we exist in one of these loopholes, that none of the state regulations around who can buy the products, you know, 21 plus, how they can be advertised, how they can be regulated at all, tested, labeled, packaged, labeled, applied, or tax provisions applied to these products because the source material is So that has created chaos around the country, as you may imagine with cannabis regulators that kind of force cannabis growers and manufacturers into this very narrow, you know, path regulatory framework. And then you just go online and you see products that, you know, Snoop Dogg is repping or, Seth Ruggen, Cheech and Chong, even edible arrangements now will sell you, THC infused hemp derived products. You know, some of these, I just point out, have more THC in them again that will be allowed in an adult use products, but they call it hemp derived or full spectrum CBD products. And these are the these are the more reputable brands because they're the whole group of non reputable brands that just fully do the copycat products that have thousands of milligrams of THC in them and all kind of just claims that this is, know, Farm Bill compliant. So the FDA has come out and said that these are illegal for interstate commerce that THC whether it's and CBD whether it's hemp derived or cannabis derived is a drug and does not fall under the dietary supplement framework. They've also said kind of in the same breath that we don't have the resources to police any of this. So, you know, just a major, major interstate market has emerged over the last seven years. And I want to pause here and say that there are Vermont, companies that are participating in this market and they do not, they should not be painted in the same brush as these folks, because they I'm gonna get to this later, but we passed an emergency rule about these types of products, and they have all been 100% compliant with our emergency rule, and they have been, just incredibly transparent with what their operations are and what their business model is. So I just, you know, I know I'm painting kind of a bleak picture about the hemp world, but the Vermont hemp companies are actually begging for regulation. Right. Yeah.

[Sen. Russ Ingalls (Chair)]: And that's one of the reasons why I really thought it was important and to develop the relationship between the ag world and cannabis control board is to My role, I see it as guiding our farmers who want to grow a product, whether it's carrots or cannabis, that they understand what the rules are. As James just said, there seems to be some bleeding in there. If we're going to try to help our farmer to be able to get in the world of simply deducting expenses, being able to go for grants, being able to put their money someplace and all of that. If we're trying to do that, we've got to understand really what the rules are. And I don't think that the rules I think the rules have been fairly clear as far as where the Cannabis Control Board is at, but I don't think that, I think there's just a lot of pushing going on as far as people saying, Yeah, but we're happy, but we're happy, but we're happy. Well, I think that there's a lot of people that want to play in both worlds as and we're learning now. So I got to try to kind of clarify where we stand.

[James Pepper (Chair, Vermont Cannabis Control Board)]: Yeah. And again, I just wanna highlight this incredibly complicated stuff. Know, it really is. And it gets even more complicated because as as we progress, the rules of the road are changing at the federal level and the state level. So Mitch McConnell, who is the kind of grandfather of the 2018 Farm Bill, hemp portion of it, because Kentucky is a major hemp producer, earlier this, I should say last year, drafted an op ed saying that he's closing. He's closing. He's closing the heft of the loopholes, you know, that these were unintended consequences of the way that the hemp definition was drafted. And and a a shock to everyone, really, because this is hard for people to understand and it's controversial, and it's a major, major industry in The United States. But and a shock to everyone, the bill to reopen the federal government had a provision in it that actually kind of systematically closed all four of those loopholes, all the three of those loopholes that I described at the beginning. And it had a delayed implementation date of one year. So, what that bill did is they said, you know, as far as THCA, that distinction no longer applies. You look at total THC, it's got to be less than two years. They said that any container can have no more than point four milligrams total THC. So those one hundred and fifty milligram chocolate bars, they're not gonna exist. It's point four milligrams per container limit, in a year. It also just eliminated the synthetic delta delta tens, the the ones that are created from kinda chemical processes don't exist naturally. So, that of course sent a shockwave through the hemp industry. No one really knows what's going to happen. If you talk to people in the hemp industry, they are 100% convinced that this is gonna get changed through federal federal legislation. What that looks like, no one knows. Subsequent to that the passage of that bill, Trump recently president Trump recently signed an executive order that was on its face about rescheduling cannabis from schedule one to schedule three. But the the main meat of that executive order was actually directing his administration to work with Congress to create a new definition of full spectrum hemp and set thresholds for how much THC could be allowed in a CBD product. So again, like Congress, it doesn't have a great track record right now passing a lot of legislation and this is certainly probably not like a, priority, for them, but, we should we'll see. I mean, there's, you know, it's this executive order, directs his staff to kinda work this out. So there may so again, this and this happened in 12/18/2025. This so the sands are shifting under our feet very dramatically. If nothing were to change, we could build a hemp program in Vermont, but it would be purely it would be almost like a cannabis light. It would be purely int intrastate within the borders of our state if the products had more than point 4% or point four milligrams THC in them, which almost all of them do. Hemp regulation in Vermont, I'm not gonna go into all the details here because we started in 2013 with the hemp pilot program. When the hemp, when the farm bill passed, the legislature came in and said you gotta really kind of ramp up this program and put some regulation around it. So you gave the agency of agriculture a lot of rule making authority over the products to make sure that they were safe. They promulgated that rule in 2020. When you created the Cannabis Control Board, the agency of agriculture kind of said, well, this really should be over at the cannabis board now, at least the product side of things, because these are like THC products pretty much. So you did kind of a mix. 2018, you directed the agency of agriculture to establish this pilot program. You shall establish a program. In 2022, you should turn that shall into a May. And then you gave the cannabis control board authority over hemp products. And so what's happened in the kind of intervening years since 2022 is the cannabis board has created rules around products and the agency of agriculture has stopped their hemp program. They've reverted all hemp growers to USDA regulation, and right now no one is regulating the processes. So we have authority over the products and we don't have authority over the kind of processes that we use products. And that's a problem for the industry, that, you know, they, as, chair mentioned, they need to have a letter, they need to have a letter from the state or a license from the state or a permit or state that they can present to their insurance company to the bank, their banks. If the VA ever comes knocking on the door, they want to show that this is a legitimate business, and right now they don't have that. And, what I think, what I put here is this is the, you know, you directed us, this is the language where you gave us control over all cannabinoids whether they're hemp derived or cannabis derived and we passed an emergency rule back in 2023, I believe, that just prohibited the synthetics, so no creating fake Delta nine from CBD, no creating the kind of alphabet soup of cannabinoids using CBD. And then we put our own threshold as to what's an intoxicating product and what's We said 1.5 or less, go ahead and do whatever you're gonna do with that. We're not gonna regulate it. Anything above that converted into a cannabis product and it has to be sold at a store, has to meet all of the kind of, it's gotta be taxed at 20%, it's gotta, know, meet all of the requirements, all of the testing, labeling, packaging requirements of a typical cannabis drug. So that that's kind of the situation that we're in right now, where we're coming to you now or I guess the industry is coming to you, the hemp industry is coming to you and saying we need regulation, and we are already holding ourselves to a very high standard that the Vermont companies are. That's what I really appreciate about them as and but the question that is being presented to you by by us is you have about 50 pages of rule making authority for the board over cannabis products. Certainly, the industry doesn't want, you know, that level of scrutiny over their products, and they don't want them to be sold just at adult use dispensaries. They want them to be sold as an alternative to alcohol at the grocery store or convenience, you know, an alternative to beer. And so I think there's a lot of questions that we would have for you as to how if we were to take this on the CCB, how do you want it to look? And I think these are just a few basic questions. The first one is one that I just ask the hemp industry is, hey, listen, 90% of your sales are to out of state markets. Do you really if if this point sorry, it's not point 4%. If this point four milligrams of THC goes into effect, those sales will be illegal and they will be enforced at that point because it'll be clear if these loopholes have been closed. So 90% of your if this is purely gonna be a Vermont market, does this even pencil out for you? You know, you can't make a million units of, gummies, that are one point five milligrams or, you know, and ship them across state lines. There's there's not enough demand in the state for that. So so this that's really more a question for the industry. A question for you all is who should do this? I think, the CCB is well positioned to take this on because we're building a state reference lab so we can do the quality assurance testing. We can do the, we can we just we know we've been regulating cannabinoids now since 2020. So we have some background in this and I think, I won't speak to the agency of agriculture, but privately they, they, I think they're willing to kind of, I mean, obviously, they stopped their hemp program altogether, so I think they're ready to kinda hand it off.

[Sen. Russ Ingalls (Chair)]: So And I think that's where the involvement has come as far as this part. I think it's a big mistake for them to hand that off because we can with we we can live in both worlds as well. We do it already with the capable permits, working with ANR and and all of that. So I think what I wanna be very careful about shutting on the regulatory toes of where you guys are. And my whole intent is to give our farmers the framework of where they need to live. There's another problem that's been going on. And again, my my thought process is to make more opportunity for Vermont farmers. And I'm going to frame it and I hope that you can talk about it a little bit more, which is that we don't have enough hemp in our market being grown in Vermont right now. And so we're importing hemp that are over the limits. They're basically transparent and you'll get the language right because we're gonna make a lot of mistakes as far as how we talk about this as we learn about it, but they're basically, in my mind, transporting marijuana into our state against federal law. And yes, those hemp products at the end of the day, if they are following what they're supposed to be, are being reduced down to within the limits so that they can still qualify as hemp. My goal would be to, figure out a way of how we can not starve these farmers, I mean, these producers from their product, but give an on ramp to say, okay. Well, buy in three years' time, We're not going to allow that anymore. You producers get with your farmer and start making contracts with them to grow what you need to keep it within state to give our farmers chances to basically build their market.

[James Pepper (Chair, Vermont Cannabis Control Board)]: So where am I wrong with that? No. You're absolutely right. So, I mean, essentially, THC is an ingredient in these products. And so what the traditional business model is not universal in all the Vermont businesses, but it's the contract with someone in Minnesota or Oregon that just ship pure THC distillate across state lines. It never reaches the public, but it's used as an ingredient. So it's reduced down to that either 1.5 or whatever the kind of whatever market they're shipping to that. So it's really just an intermediary. But of course, from a state law perspective, that THC distillate, I mean, that's trafficking, THC. It's trafficking cannabis. And from the federal perspective, same thing. They just, again, are just not prioritizing this for enforcement. So and we don't have the hemp enough hemp growers in the state currently or manufacturing capacity to do that work here unless we really use the cannabis industry, the cannabis license to allow them to kind of cross pollinate the hemp. But it would take a little bit of time for us to build that capacity in order to make sure that all the ingredients were grown here or processed here. I mean, the hemp flour itself, as long as it's under 0.3, can cross state lines legally. That's not going to change with the new language, but the manufacturing of it into this intermediary product, we probably don't have the capacity currently. So just and again, the hemp producers have been very open and honest about that. So, you know, it's not like they're trying to hide the ball. They know that they exist in this gray area and it's tenuous and the sands are shifting under their feet. But, you know, that's something they've been pretty open about, that they would need some kind of on ring if we're gonna, you know, just require all the TH, that we stop the process, stop allowing THC to the ambulance. And then, of course, you know, the whole game for them is where can these products be sold, and what sort of testing and safety standards. I think they, you know, what what I have heard from the hemp industry and you should just hear from them directly from what I've heard is they are very, they're already, compliant with, the kind of cannabis level testing and sanitation, sanitary departments. A lot of them are compliant with current good manufacturing practices. But I don't think that they're gonna be and they actually are okay with being age gated, but that creates its own kind of challenges as in twenty one plus for these products. I think where the rub the rub is is they wanna be selling at convenience stores and grocery stores. They don't wanna be limited to either eight zero two spirit stores or,

[Sen. Russ Ingalls (Chair)]: cannabis. And that in itself right there is unfair to the cannabis market or to the marijuana growers and the sellers of it. Mean, we're getting pressured right now for them to get into farmer's markets and all of that. To me, you've got to have that clear distinction as far as what's fair for one and fair for the other. Somebody's heard me talking about this long enough, and I've talked about it at fair enough, is that you knew what you were getting into when you applied for licenses and all of that stuff, but it just seems like the one side of it is blurring those lines intentionally. Not all of them, and as you've said, they are looking not to pit one against the other as far as in the hemp world, but you just seem to have these people who want to follow the rules and are looking for clarity and want to be that good partner and the other ones are deliberately trying to become THC producers, and not have that not have the same scrutiny and the same licenses and the same and the same, requirements. Yeah.

[James Pepper (Chair, Vermont Cannabis Control Board)]: And that's why this is this is why we come to you all because the like, if if you just said, I mean, this is a vegan child created a program for hemp. I mean, we'll have to if the you know, how much regulation is gonna be, I think, really a political policy determination. The board's not really well suited to to handle. I think these are determinations that this body should be making, you know, about where where are these products gonna be sold, what levels of scrutiny they should have. And, you know, I mentioned the 21, the the age gap is progress. There are from what I understand, they're all for that, you know, and a lot of people, I mean, they they you know, they they know that THC is for adults, it's not for kids. But how do you do it? You know, if you like, cannabis controls are seven member compliance team. We can't be in, you know, 4,000 stores every every year. Right.

[Sen. Russ Ingalls (Chair)]: So And that's where yeah. I think that's where the chief agriculture, can help with that as far as to bring that, people power in, but it's gonna take working together and not just somebody brushing their hands off to say, well, we're done with that or whatever. Questions?

[James Pepper (Chair, Vermont Cannabis Control Board)]: I can take this down. I think, you know, we said through emergency rule and then final rule, the non intoxicating, intoxicating threshold at one point five milligrams of THC. That is, I think, be considered a low dose of THC for an adult, but that's really, you know, we went through the rule making process, the legislature had the opportunity to weigh in on that through rule making, but I think that you may want to clarify that. Is that the dose that you think actually is the threshold between intoxicating and intoxicating? Yeah. I mean, don't

[Sen. Russ Ingalls (Chair)]: know. I don't know. No. And that's that's where we lean on you. Yeah. Well, that's that's why I think it can be a partnership here. Yeah. But there needs to be people to stay in their lanes and and truly working as partners and say, okay. Well, we're gonna take care of this part of it, and then you're gonna take care of that part of it. We're not gonna second guess one another. We're gonna we're gonna work together and just tell us, we're over here and you're over there and tell us where we can coexist. But I do have an interest mainly because I wanna open the markets up in a way to where you know, I think that we might be losing a company in Grand Isle area that is hemp. And I think they might be in it. First glance, when I heard that they were having a lot of difficulties, the easiest thing is to blame the state for giving them a hard time. But as we spent some time together in the summer, I think the cannabis control hoard was put into an unenviated position of getting into the party, not on their own doing, but getting into the party a little bit late and then saying, No, this is the way it needs to work. But at that time, I see all sides of it that I'm sorry, rambling here a little bit, but I'll clean it up in a minute. I I just think that there needs to be, as we've said, clear business models so that people can make, investments into this business and have some expectations about how it's gonna turn out for them. And are they in within the law or they're not within the law? And I think it's kind of a lot of these people have gotten ahead of where the regulations are. And so that's why they're asking for clear, regulations. Hey. We wanna be in this business. Tell us tell us where we can go get our monies or or tell us where the rules are so that we can go on these. We can run this as a decline of what the minimum bid is for Vermont.

[James Pepper (Chair, Vermont Cannabis Control Board)]: So ramble a little bit? No. No. I mean, it you have a little bit more background, so you went and visited these businesses and you saw what they're doing and you've seen their operations and you've seen the kind of scope of the issue, so I mean, it's really hard to really understand this without actually getting your hands on some of these products and going to the manufacturing facilities. But yes, I mean, the questions that I have for this committee are, do you want the, like, laundry list of bull making authorities that we should have at the board? Do you wanna I mean, we've already drafted a few possible options for you. Right. Like, the the the light touch option, where we just kinda really just focus on getting these people registered and getting them, you know, getting that legitimizing them as far as, you know, their banking insurance needs. And just really, you know, as far as '21, like age dating of the products, just leave it up to a complaint process, you know, if someone's complaining that, you know, their kids bought this thing, then we'll go investigate it, kinda after the fact. But, and then there's a yeah. And then there's a more kind of kind of bring them in line with, like, cannabis light. You know? They're a cannabis company. They need to be subject to documentation, but they can sell their products at convenience stores.

[Kyle Harris (Staff, Vermont Cannabis Control Board)]: But would you mind if I just Complete. For a second. Tell us you are.

[Sen. Russ Ingalls (Chair)]: I know you're introduced, but people Sure.

[Kyle Harris (Staff, Vermont Cannabis Control Board)]: Kyle Harris, cannabis control board, and I was actually at the agency of agriculture when the rules for hemp were initially drafted. We commented to USDA, I think what might be an important takeaway if a partnership between the Agency of Agriculture and the Cannabis Control Board is something that this committee and the larger body are really interested in is where and how that baton is really passed off. Initially, the Vermont Hemp Program operated under the 2014 Farm Bill, and when the 2018 Farm Bill was passed, you had to get a USDA approved plan to regulate hemp at the state level. There was a lot of changes that needed to happen between what was enrolled from a hemp program perspective under the 2014 pilot and what ended up becoming necessary under the 2018 program. At the Agency of Agriculture, we made a lot of those changes to kind of be in to get a USDA approved plant. But when the cannabis control board was formed, around the time we all, you know, stood up this market, the agency of agriculture gave up their USDA state approved plant. So from a hemp grower perspective right now, they're regulated directly through USDA AMS. They they're the agency of agriculture doesn't do anything on farm from a hemp specific perspective. I'm not sure if there's an example, and I mean, the cloudiness is what's gonna happen in November. Is this gonna continue? Is this not gonna continue? But I'm not sure if there's an example of a state asking for that authority to regulate hemp at the farm level from a grower perspective back after they've given up a state plan, if that makes sense. So I guess what I'm trying to say is considering the the sands are shifting as as James alluded to earlier, we don't know what's gonna happen in November. There's a lot of people with a lot of opinions, but is the thought process, at least in my head, is it ag kind of taking it through the farm field until it becomes turned into something else and the cannabis control board does the processing, the products, so on and so forth, but there's some other questions that I think we can ask of the agency of agriculture through our conversations, but I think it's important for this committee to consider what appetite does the Agency of Agriculture have to kind of try and get that program back from USDA. Yeah.

[Sen. Russ Ingalls (Chair)]: I think that's where I see it as far as what how you just said it. For us to be able to clearly communicate what the what their responsibilities or what what what type of product can you produce and where does that product put you? Are you on this side or are you on that side? Also add that product in the field, be able to guide them as far as what their responsibilities are and be able to in keep their lanes so that we can help them through grants. We can help them become farmers. They're growing carrots or they're growing cannabis, but it's either hemp or marijuana and be able to guide them enough to where we can help their business model succeed. And the regulatory part of it, believe is on your guys' side of it. For us to say, Listen, okay, it's left the field basically. The horse has left the barn, the product's left the field. Now you're moving to the cannabis control part of it. Our job is done here. We've guided you, We've told you. We've we've helped you every bit of the way. We've we've tried to get you dollars to grow your product. The ability is for you to deduct all of your expenses just like real farmers do and all of that stuff. But now your product's done, it's going to the marketplace, they're gonna pass the baton to the cannabis control board. And that's how I kinda see that relationship. I don't wanna be I don't want to be in your guys' lane. I wanna be the best person that you could be for our Vermont farmers and give them the opportunity to grow and make money and give them the rule making that they need to do so they can put their business model in place, but once they cross that line, once the product comes out of the field, the baton gets passed. That's kind of the simplistic view of where I'm of at

[James Pepper (Chair, Vermont Cannabis Control Board)]: with that. And that and that's just the next evolution of what did happen in 2022, which is you gave a story of products, but not the producers. And I think it's coming becoming more and more clear that we should also have, you know, regulatory oversight over the election matters. Right. And register these products because honestly, we can't keep well, depending on what happens in November, we can't keep the out of state products away from us. There is interstate commerce, theoretically Right.

[Sen. Russ Ingalls (Chair)]: You know. Very powerful stuff.

[James Pepper (Chair, Vermont Cannabis Control Board)]: So we should be registering them and holding those out of state products to the same standard as we do for the Vermont products. And because the Vermont products are already setting pretty high bar. They it's the hemp products. They're doing the hemp producers in the state are doing a good job. And we should be able to hold the, you know, the Snoop Dogg and the Cheech and Chong products that have the same standards that will be coming to the stage.

[Sen. Russ Ingalls (Chair)]: True.

[James Pepper (Chair, Vermont Cannabis Control Board)]: I'm sorry. I know. It's yeah. And keep the bad stuff, the copycat stuff, the stuff that's clearly appealing to children or marketed as kind of a, you know, intoxicating bunion or whatever, Dorito. Which world are we living in? The the Cheech

[Unidentified Committee Member]: and Chong and the Snoop Dogg is this gold standard in this country?

[James Pepper (Chair, Vermont Cannabis Control Board)]: Well, I I know. They at least have, you know, lawyers, and they have the representation.

[Unidentified Committee Member]: They have the street cred. Yeah. You know? Can tell you. Brand recognition.

[Sen. Russ Ingalls (Chair)]: Brand recognition. Exactly right. It's what it is. Yes. Thank you, Mr. Chair. So at times it is useful, I think, and helpful to figure out good questions to ask by looking across the rest of the country. I assume that we're not in this space alone. How do other states do it is what I'm trying to get at? How do they regulate?

[James Pepper (Chair, Vermont Cannabis Control Board)]: The states that don't have adult use cannabis programs, it's pretty much free reign on these hemp products, you know, that that's where a lot of when I say that 90% of the business for these hemp products is out of state Mhmm. That's people shipping Florida, Virginia, and places that don't, and so you can have it, I think in Virginia, can have like a ten milligram THC infused, that's the threshold. It's a patchwork, essentially. And what we're seeing right now is, you know, this bill passed in November that it kind of closed these loopholes related for year. And the cannabis regulators are all looking at, okay, well, do I make an in state hemp market? How do I license these hemp growers? And this is all new though, because they're assuming cannabis regulators are assuming that the law is not going change it, you know, takes a tremendous amount of political will to get any bill passed. And so that even with the Trump executive order or not, this is gonna be you know, essentially, you're gonna have, you know, hemp companies are gonna be treated like marijuana companies. They're just gonna be able to sell in different places. So they're they're all creating they're they're all preparing for an intrastate market and not an interstate market. The hemp industry, again, is just really bullish on that they're going to find a common sense, an intrastate level of THC, acceptable threshold of THC that's gonna apply nationwide that will allow them to continue to operate in some capacity. And how do our thresholds compare to other states? So that's, when we set that threshold, it was based upon looking around at every other legal dog used to say that it's, that had tackled this, there weren't ton of them that had tackled this, we're right in the middle. I mean, some of them, they were pretty much right in middle, 1.5. I mean, a low dose, I think the, some federal agency and maybe the FDA said that, you know, a standard dose cannabis is five milligrams and that is the dose you remind for an adult use product. So one point five would be considered a low dose. But some states set it at point five milligrams, some states say zero.

[Sen. Russ Ingalls (Chair)]: We seem to have done a better job with alcohol. I mean,

[James Pepper (Chair, Vermont Cannabis Control Board)]: it's pretty dry. Yeah. Alcohol, you know, of course, one hundred years to get such a.

[Sen. Russ Ingalls (Chair)]: Absolutely be patient with us, and we're going to be looking for your guidance as well. The education is very important for us, and we want to be a partner. We don't want to be an adversary. We want to find a way to give great guidance to our farmers. We want to play a role. I'm being very bold by saying that because I haven't had deep discussions with the agency as far as what their role wants to be, but we will as we move forward. I hope that we are going to get a chance to talk again. We are working on some language, we'll kind of keep on going. But Sean, thank you for the, you know, the developing partnership and and just teaching us on how how it all works. We'll be asking a lot more questions.

[James Pepper (Chair, Vermont Cannabis Control Board)]: That's great. And I mean, as we move towards November 13, when this rule this new law takes effect, now the picture will become clearer. Is is there gonna be a THC threshold that would allow interstate commerce? I think that will be highly relevant to whether this hemp industry actually exists.

[Sen. Russ Ingalls (Chair)]: So I think our next step is gonna be to talk with the agency. Yep. And and then at some point in time, get everybody together and all of that. You know, I'm very proud of this committee for a lot of reasons, but one of them is that they won't shy away from the tough the tough tasks. I think this is a tough task. I really, really do. But I I we're up for it. And again, at at the end of the day, just wanna create more opportunity for Vermont Vermont farmers and to give them a full size, a level playing field, put expect expectations and rules in place, and then pass the baton to you folks. So that's where we wanna get to. Yes. Yeah. Just

[Unidentified Committee Member]: relatively new industry that we we've had in this this state, and I say relative,

[Sen. Russ Ingalls (Chair)]: the past five years or so.

[Unidentified Committee Member]: And we have seen businesses flood in, close. Just can you give the Reader's Digest version of where where we're at and what you're hearing from, you know, Burlington, the White River Yeah.

[James Pepper (Chair, Vermont Cannabis Control Board)]: Absolutely. Sure. And I normally start out with that presentation. Sure, sure. We have five seventy one individual licensees. The vast majority of those are cultivators, and the vast majority of our cultivators are of the smallest tier, tier one small cultivators, 75 are tier one small cultivators. They are an incredible engine of ingenuity. They brought a lot of them were legacy market operators. They brought their genetics into the market. So I think it's fair to say that we have the most exciting market, as far as cannabis market in country, mostly just because of the design that the legislature kind of put in place, the foundation. You know, we have over Yeah. I think 5,000 registered products, unique products. We have, I think, a 108 retailers. They are clustered in various towns because of the presumption that a town can't sell cannabis once the voters have opted in. So you see, you know, 14 in Burlington, zero in Williston, zero in South Burlington. So that creates some I mean, that drives the public health people crazy. You know, you just walk by seven cannabis shops to get to school. You know, it's not like good luck. As far as the kind of business failures, we're not seeing a tremendous amount of fall off, but it may be coming. Because essentially, in the first couple of years, demand is exceeding supply, as you're ramping up, then it kind of fine, it kind of starts to level out. And meanwhile, in the kind of background, have New York that's kind of put a string of cannabis shops right along the western border of the state that is taking a lot of that consumer traffic away from Vermont. New Hampshire still hasn't stabilized, so we're getting a lot of the New Hampshire border traffic. And the market really hasn't evolved all that. I mean, it's it's matured, certainly, but the the regulations, the statutes that underlie those haven't kept pace with some of our other state neighboring states. And so the things like farmers markets, things like social consumption, we just haven't picked those up yet. They're permitted. So really, we've paused issuing new retail licenses and we've paused issuing new cultivation licenses because we think that the supply and demands, you know, on the cultivation side is pretty pretty even in and out. And if we had more classics, it's gonna further depress the cost of cannabis and crunch people's, you know, the profitability. But we you know, I think that that and of course, the cards are stacked against any key to this business with the tax implications, the banking card, cost banking, the regulatory compliance, the fact that we still have these, well, we have these hemp products that can be delivered to your door, to your mail, and, you know, it's just, and we still have less market, you know, there's no arrests in our way out of the markets, and then continue to kind of alongside. So we need to have the regulated market be able to provide the same services and services products on the regulated side so that people actually have a choice between the regulated market and unregulated market. So I know Nextdoor, they're working on a kind of big omnibus cannabis bill as far as the regulated market side, and if you guys do hemp work, then we're kinda hitting both sides. But but we we've seen forget how many we do interviews with anyone who's exiting the market to see as why. Most of people point to the cost of banking, the lack of relationships with retailers to get into their stores, and we may see more drop off this year.

[Unidentified Committee Member]: Thank you. I appreciate that.

[Sen. Russ Ingalls (Chair)]: We good? Yep. Paula, thank you very much. Yeah. Thank And we'll be back in touch. Thank you. And thank you for the education. Very valuable for us, and, again, thank you for being patient. Yeah. Thank you all. You're next? Great. We'll take, five minute breaks.