Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: Okay. We are live. We are back.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Don't need some.

[Sen. Ann Cummings (Chair)]: Kirby was here. His phone went off. He's in the hall. When he comes in, I'm going back because I've got it, to see if we can walk through what the current use rules are so we know exactly what we're opening up. There's Kirby. Okay. So we're going to take testimony from Kirby. I hope he can help us. If they do what at least a couple of us are concerned that they're doing, probably strike that section maybe. Other than the proposals about letting you donate $2,000 worth of food would be a qualification for getting yourself into current use. I'm just wondering what what is required right now to get this current use. Said it's no all now you have to do is sell $2,000 worth of food, and you could be in current use. I thought there were land restrictions, size that you had to have, and so if you can help us understand what we're doing.

[Kirby Keith (Office of Legislative Counsel)]: Sure. So, Kirby Keith, legislative council, I'm going to pull up s three twenty three. This is Randy's bill, so I'll be pulling off the committee.

[Sen. Ann Cummings (Chair)]: Yeah. I think we're more interested in what the current use Do regulations

[Kirby Keith (Office of Legislative Counsel)]: you want me to share or just talk?

[Sen. Ann Cummings (Chair)]: You can just talk.

[James Pepper (Chair, Cannabis Control Board)]: Okay. So

[Kirby Keith (Office of Legislative Counsel)]: currently, the way it goes is this this is from my experience, so hopefully the tax department would have a different perspective. But from my experience working there, when a when a person owns a parcel and they want to enroll it in current years, you can enroll it as forest land or ag land. Right. So this S-twenty three change goes to the ag land, so nothing to do with And forest for ag land, if you have a larger parcel, more than 25 acres, generally it's an easier process from my experience, and hopefully I'll cut you a game and keep going and saying about that.

[Sen. Ann Cummings (Chair)]: Okay.

[Kirby Keith (Office of Legislative Counsel)]: But for the parcels that are smaller than 25 acres, know, a little bit more scrutiny, and then, so this language from statute gets applied. It says, shall be of presumption that the land is used for agricultural purposes, which means it shall be presumed that you can enroll. If, first one, it's owned by a farmer and it's part of an overall farm unit. So that would be, you're running a farm and you have the tax data to back up that you're a farmer.

[Sen. Ann Cummings (Chair)]: It would be a farmer's, you would have to earn a percentage of 50%

[Kirby Keith (Office of Legislative Counsel)]: or more of your income has to be from on your tax return. So that's, as far as the administration of that goes, from my understanding, that's pretty easy for the department,

[James Pepper (Chair, Cannabis Control Board)]: The they can check that

[Kirby Keith (Office of Legislative Counsel)]: second is that you have to have a written lease for at least three years between yourself and a farmer, and then the farmer's using that portion of your parcel.

[Sen. Ann Cummings (Chair)]: That's forgotten, I mean their backyard's cut for hay.

[Kirby Keith (Office of Legislative Counsel)]: That's common for this, is hay. It could be other things too. Since for that one, I'm going to detail a little bit more on that one even though it's not the most relevant for our 03/23, that phrase in a way where it says, you know, it's at least to a farmer part of their farm operation. There's no limitation on the farm operation there, as in it could be livestock, it could be a lot of things.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Like, so

[Kirby Keith (Office of Legislative Counsel)]: then we get the third one, which is what is being proposed to be changed, and that one has different parts to it. It's producing annual gross income from the sale of farm crops, specifically farm crops, or the equivalent value of donated farm crops, And then over a period of time, and it's at least 2,000 per year or one and two or three and five were the last event of this last year's

[Jennifer Carbee (Office of Legislative Counsel)]: for up

[Kirby Keith (Office of Legislative Counsel)]: to twenty five years. So so 2,000 in in annual gross income from the sale of farm crops, this change would allow that to be 2,000 of annual donations upon the screen. Right.

[Sen. Ann Cummings (Chair)]: I'm I'm getting confused because said that in order to qualify, I had to be a farmer. Yeah. And in order to qualify as a farmer, I had to make 50% of my income from Mhmm. Farming. But

[Kirby Keith (Office of Legislative Counsel)]: But but you you can qualify under this what work the subdivision we're talking about? You qualify No.

[Sen. Ann Cummings (Chair)]: I that's what I'm I'm talking about current law.

[Kirby Keith (Office of Legislative Counsel)]: I that is current law is

[Sen. Ann Cummings (Chair)]: So current law, if I sell $2,000 worth of vegetables, I can put my land in current use.

[James Pepper (Chair, Cannabis Control Board)]: Mhmm.

[Kirby Keith (Office of Legislative Counsel)]: For if

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: for parcels up to 25 acres. Really?

[Tim Barnett (Interim Fiscal Office)]: Yeah. Been missing out on that. I the

[Kirby Keith (Office of Legislative Counsel)]: the way

[Sen. Ann Cummings (Chair)]: I'm putting zucchini on my back.

[James Pepper (Chair, Cannabis Control Board)]: Is there

[Unidentified Committee Member]: a minimum parcel size?

[Kirby Keith (Office of Legislative Counsel)]: There's not. There's not a minimum parcel size. It's, you know, 25 or fewer acres. And it's If if you're a farmer and you have the farming covered, then you are gonna bother with this other other stuff. Yeah. It's easier for you to enroll. So this one's more more niche. You could ask PVR maybe for, you know, what percentage of enrollees would qualify under this only? Like, I I actually don't know that. So I don't know how common it is to you just

[Sen. Ann Cummings (Chair)]: But I'm thinking if I can donate to the food bank, I can just take Mhmm. And I'm sure, you know, and can tell me how many bushels of zucchini it's gonna take.

[James Pepper (Chair, Cannabis Control Board)]: $7 of goods.

[Sen. Ann Cummings (Chair)]: Yeah. Yeah. $7 of tomatoes. That I could take that gap. If

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I've got nine

[Sen. Ann Cummings (Chair)]: acres of land over in Lake Champlain or any other body of water in this state for donating $2,000 worth of vegetables, I'm gonna save a lot more on having my prime land. Great. Designated.

[Kirby Keith (Office of Legislative Counsel)]: So So so kind of give you a picture of how that could play out, you know? Okay. You're liable to have a certain value. If you were taxed normally, it would be the tax rate applied to that value.

[Sen. Ann Cummings (Chair)]: It'd be the highest and best use, which is developable.

[Kirby Keith (Office of Legislative Counsel)]: Yeah. Yeah. It'd its fair market values, brand list value, or less than we'd like it. And, you know, what what being rolled out this does is bring that down to for Agland, I wanna say it's around 200 an acre. Yeah. Value

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

[Kirby Keith (Office of Legislative Counsel)]: It's value. Yeah. So so even you know, and then sort of percentage tax rate will be applied to that value. And but what we said yesterday, I mean, one of the big costs in current use are the farm buildings because they become zero and they can be a farm building can be the most valuable part of that parcel.

[Sen. Ann Cummings (Chair)]: Mhmm. Yeah. So for for

[Kirby Keith (Office of Legislative Counsel)]: some parcels, maybe this isn't a whole lot of work on tax revenue because the difference between the market value and the use value isn't isn't that big, and they don't have farm buildings. And then in

[Sen. Ann Cummings (Chair)]: another case my house count is a farm building?

[Kirby Keith (Office of Legislative Counsel)]: No. You you have your two acre

[Tucker Anderson (Office of Legislative Counsel)]: house. Residential Two acres.

[Sen. Ann Cummings (Chair)]: Then it would be the tool shed, which isn't your

[Kirby Keith (Office of Legislative Counsel)]: If it's used

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: her head about whether She's going to do the three eighty five tomatoes. I'm I'm just

[Sen. Ann Cummings (Chair)]: wanting more rhubarb out. My bad.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Can I ask him a question? And I'll ask Martine has a question. Yeah. You go first. Okay. So, Korean, I mean, I'm looking at the language right now and it's the the equivalent, the sale or equivalent of donated in one of two or three of five years preceding the enrollment in the

[Kirby Keith (Office of Legislative Counsel)]: so if somebody does it one year, they can get into current use. And then is there a requirement that they continue to do it every year? No, they can unenroll, but then they're No, no, but they continue to donate every year. So they continue They to donate to would need

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: every other year.

[Kirby Keith (Office of Legislative Counsel)]: They would

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: they would every other year. So Three of five years.

[Kirby Keith (Office of Legislative Counsel)]: Three of five. So that way if you have two bad years in a row as far as crops go, then then you can rely on three to four.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Right. Okay. So there is somebody checking to make sure they're continuing to do it. Not

[Kirby Keith (Office of Legislative Counsel)]: just doing it once You have to submit your application every year. Yeah, okay. Yeah, show how you qualify.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Thanks Kirby. On the smaller than 25 acres, is there a minimum size? No. So I am going to do a hypothetical. So if I

[Sen. Ann Cummings (Chair)]: live on

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: a two acre lot and I grow asparagus. And then I can put it out on the table on my front yard. Mhmm. It was a little, like, pay up on, you know My neighbor does that. Yeah. And if you make $2,000, you could be in current use.

[Kirby Keith (Office of Legislative Counsel)]: You can, but, I mean, there's some practical things I've pointed out about that. Let's say you have a half acre or something, and you're barely hitting the 2,000. And the fair market value between between the fair market value of that half an acre and the use values, maybe it's a few thousand. But then when the tax rate gets applied to a few thousand, you know, you don't have that large of a tax bill for that. And then you've got to pay and go through all of the bureaucracy to enroll in current use. So there's still some practical effect of like, there's a point at which it's probably not worth it even if you can save a few dollars. So there is that, but the high potentials for savings would be if you had maybe 10 acres and you actually do have some buildings and you are using those buildings for add. Right. And you're not a farmer though because let's say you have income from other places. Right?

[Sen. Ann Cummings (Chair)]: Hedge fund.

[Kirby Keith (Office of Legislative Counsel)]: But let me ask And does it

[Sen. Ann Cummings (Chair)]: count as a as a farm building?

[Kirby Keith (Office of Legislative Counsel)]: Yeah. There's the farm crops definition. So Okay. And if that helps, I can tell you that.

[Sen. Ann Cummings (Chair)]: Well, I've been thinking maybe. A

[Jennifer Carbee (Office of Legislative Counsel)]: greenhouse. Oh yeah, greenhouse,

[Sen. Ann Cummings (Chair)]: a barn. Probably one of the larger ones is

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: farm worker

[Sen. Ann Cummings (Chair)]: housing. That's tax exempt. So if you put up a nice house Mhmm. We had a slight argument on floor with the former chair of ag about why did farm worker housing have to be on the farm, why couldn't it be somewhere else?

[Kirby Keith (Office of Legislative Counsel)]: So farm crops includes animal fiber, cider, wine and wine and cheese produced on the enrolled land. So it's those things plus orchard lands producing bushes, vines. They're not yet a bearing age.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: It does say produce on the emerald land or on the house site adjoining the emerald land. You can produce in your home. Make the cider at home, especially thanks to the velvet. That's right. Can

[Sen. Ann Cummings (Chair)]: do pickle asparagus. I'm thinking more of yak fiber. That's going dollars of pow, though. You could be knitting with that yak fiber. I think

[Kirby Keith (Office of Legislative Counsel)]: there have been people's

[Sen. Ann Cummings (Chair)]: little arms. Late. Okay. I think right now, if I sell $2,000 worth of zucchini, I can go in and I can ask if I wanna go through all the paperwork and I guess the tax department knows because I'm supposed to clear the income.

[Kirby Keith (Office of Legislative Counsel)]: And you let them put a lien on your land.

[Sen. Ann Cummings (Chair)]: Don't forget that. Oh, that's right. But they might want to un

[Kirby Keith (Office of Legislative Counsel)]: You've changed tax if you developed it. Right. So you are you are binding yourself to some things.

[Sen. Ann Cummings (Chair)]: So you are binding yourself in, and the value of that acre in the city of Montpelier probably won't the difference won't cover the cost of the fertilizer and whatever compost or whatever else I need to put on there to do high intensity gardening. But if I own 25 acres and it has a guest house on it and a barn and a really nice tool shed, and I grow $2,000 worth of crops on two acres, I can have my entire property or just that two acres in current use?

[James Pepper (Chair, Cannabis Control Board)]: They

[Kirby Keith (Office of Legislative Counsel)]: require maps, and you have to map out what is there.

[Sen. Ann Cummings (Chair)]: Okay. So I'd have to spread out the crops.

[Kirby Keith (Office of Legislative Counsel)]: And I think people who have a house in 25 acres will often have a lot of forest land. You can get forest management plan, and that could easily be better way of produce.

[Sen. Ann Cummings (Chair)]: Forest. There is a fairly high penalty for coming out of current use, so you can't it's not worthwhile to park your land there for a short amount of time. I'm just not I'm not comfortable with this or whatever. I'm not sure. I mean, doesn't take that much to return open land to agriculture if the soil is good and suitable. For ag. We do prime ag land and make it difficult to build on. Committee. Thoughts on this one?

[Unidentified Committee Member]: My my thoughts are is that donating is a lot easier than selling. I mean, it just says and 25 acres of land? I mean, I I don't even in my area, I don't see much land as well for less than 5,000 acre, and a lot of it's a lot more than that. That's a big difference between that and $200 or whatever current value is for Okay. Or what is current value valuation for, you'd say, 200 currently? Yeah.

[Kirby Keith (Office of Legislative Counsel)]: Would say that was what? It's a panels on May. May. Lands 208. Forest land greater than a mile.

[Unidentified Committee Member]: $2,000 for tomatoes. Believe me.

[Sen. Ann Cummings (Chair)]: You got me spend that buying Quite. Three pound, 10 pound boxes And

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: there wasn't I mean, I I agree. I think there's a lot it's a lot easier to to donate things than to try to sell on a market and do all the stuff you have to do to be an actual farmer. So I I'm wondering and they didn't seem to there has been no haven't had much testimony on what the impact of this would be and

[Sen. Ann Cummings (Chair)]: because that's going on. That will that difference is paid out of the general. The different coverage It's

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: not that education. So this is We don't know

[Sen. Ann Cummings (Chair)]: what the money It's in education.

[Unidentified Committee Member]: Yeah. It's buried in those homestead and nonhomestead revenues. It's buried in those

[James Pepper (Chair, Cannabis Control Board)]: numbers. I don't what's it.

[Sen. Ann Cummings (Chair)]: Okay.

[Unidentified Committee Member]: And in the general fund too, because once you put it in current use, they get the municipal deduction and the general fund covers that. So it's both.

[Sen. Ann Cummings (Chair)]: That's what the gen fund

[Kirby Keith (Office of Legislative Counsel)]: That's what's

[James Pepper (Chair, Cannabis Control Board)]: general Yeah.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I forgot about that one.

[Unidentified Committee Member]: Yeah. Okay. It's both. And I think it's I think it's when you add it all up, it's about $80,000,000. So Any It's foregone.

[Sen. Ann Cummings (Chair)]: Of moving this forward.

[Sen. Randy Brock (Member)]: I

[Sen. Ann Cummings (Chair)]: think I've got a majority vote. I'm looking for two more in here. Would we be okay with deleting this section and moving this bill out?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: The other sections that have to do with the donated crop seedless, problematic, There are three sections.

[Kirby Keith (Office of Legislative Counsel)]: I think Bradley was interested in cleaning that up. I don't know if you wanna Oh, because of the The reference to the old land part of it. Think he wanted to get the reference correct.

[Sen. Ann Cummings (Chair)]: Okay. So maybe this won't come out today. If you can draft an amendment to strike.

[Kirby Keith (Office of Legislative Counsel)]: It would be the sections you're talking about would be sections five and six. Okay. But I understand you just wanna remove those. Yeah. Section four that Ellen went over, you're you're fine with it sounds like.

[Sen. Ann Cummings (Chair)]: Yeah.

[Kirby Keith (Office of Legislative Counsel)]: And then yeah. The and would you like also to include in that same amendment just Bradley making those tweaks?

[Sen. Ann Cummings (Chair)]: Yeah. Bradley was gonna clean up some of the language. It was a little

[James Pepper (Chair, Cannabis Control Board)]: I can

[Kirby Keith (Office of Legislative Counsel)]: I can connect with him to get you an amendment? Have I no idea if it'll be till there tomorrow.

[Sen. Ann Cummings (Chair)]: Okay. Because we've got this has to go across the hall. I'm pretty sure they're taking testimony on it, but I'd like to get that out. Okay. So as soon as you get us something, maybe hopefully, we won't be on the floor as long tomorrow. We can start around that. Nobody asks questions. We do not here at 01:15 with lunch. Okay. And

[James Pepper (Chair, Cannabis Control Board)]: Just talking about it.

[Sen. Ann Cummings (Chair)]: Because cannabis I think both cannabis and tobacco are gonna take us a while and they've all gotta go too, so I'm gonna keep us moving.

[James Pepper (Chair, Cannabis Control Board)]: Alrighty.

[Sen. Ann Cummings (Chair)]: Okay, so if you could do that, we will go back now. And we're still going through testimony on the tobacco bill without benefit of having walked through the bill, but we do have it on our website so you can follow along with comments, concerns that we hear soon as as soon as we do yeah. As soon as we get Jen, we'll go to her. So let's see where we are. And Ted's not here, and I'm gonna send ads. But the next witness I have is my permission.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Perfect. Time being trying to shine on her. This

[Sen. Ann Cummings (Chair)]: You want to room room is is bugged. There's too much perfect timing with people. Well, she's If I say the word Vince, he'll come through the door. Guarantee. Miss Hannah texted me to let me know. Yeah.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: She took away the mask. My time was up. Okay. Thank you. Okay. Thanks, very much. Appreciate the opportunity to talk about the tobacco bill. Okay. I will be brief because it's late.

[Sen. Ann Cummings (Chair)]: I think that's probably the concern I've heard Okay. Floating around is the increase with knees. At least that's where my emails are saying I'm sure. Concern is in the public.

[James Pepper (Chair, Cannabis Control Board)]: I'm

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: sure. So the administration would not support an increase in fees. The governor's been very clear about that. The department doesn't support an increase in fees. We're part of the administration, and our retailers are already struggling to stay in the business, so we don't support an increase in fees. Okay. Which section of the post? Because I'm sorry. It's okay. Is this the Yeah. Big So, the other piece well, I can stop there, and you can ask them. Walk us Yeah.

[Sen. Ann Cummings (Chair)]: Through what the rest of your testimony. They I've been told disaster paid an Forcement Officer. That was my next piece. Keep going.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So, we do not support the addition of another position at the department. It is not in our recommended budget to the governor. It is not in the governor's budget. Governor is focused on affordability. We already do this work with the 14 sworn law enforcement officers, so we do not support the addition of a physician. Could you use another recourse? We are all set with the current staff we have, Madam Chair. Thank you. One other, two other pieces, Deputy Commissioner Sam Roth talked about the discussions that we have already had with PACS, DLL, and the AG's office, and we think it makes absolute sense to move the authority of regulating and licensing the tobacco wholesalers to the Department of the current lottery. We already regulate retail tobacco, we regulate wholesale alcohol, retail alcohol, so it makes imminent sense to do that. As Deputy Commissioner said, we don't need a study, we just need to do it. We can work on that, we need a year to do. So, we're fully supportive of that. That makes it a lot easier for us to do our job. There a study in here? There was, sorry, and apparently I'm gone, which is Good. No study needed. Can I ask you a question? Just back to the enforcement, the proposal of a new position. I What, because we haven't had a walk through of the bill, so I'm still I'm not sure that I'm not happen again. But is there I mean, have you all I know you don't want a position. I know you have to say all that. I get it. But have there been issues that would lead someone to believe that there should be

[Kirby Keith (Office of Legislative Counsel)]: more enforcement? Not on our

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Not from our perspective. Okay. This this again who's leading this bill is the attorney general's office. So I think maybe that's a question for the attorney general's office. Why they're asking for us to have a position. Okay. Maybe the Attorney General's office needs to ask for a position for their department, but we don't need law enforcement to do online tobacco compliance. Okay. And we're not asking for possession. So that's what this is about, online tobacco. Correct. Again, that's about issues. Correct. That would be a question from

[Sen. Ann Cummings (Chair)]: the Attorney General's office. Alright. That's good to know. Is this a question?

[Kirby Keith (Office of Legislative Counsel)]: No, so I was gonna ask con with Senator Brock's not

[Sen. Ann Cummings (Chair)]: here, we're both on

[Sen. Thomas Chittenden (Vice Chair)]: the morning committee. It was crossover week and we just knew that this conversation was gonna happen in Finance and Prose, so I won't speak for the chair, but in my impression, she's is quite deferential to us to have this conversation here to calibrate those fees to something that's a little more palatable to both the administration and otherwise we just didn't have the time.

[James Pepper (Chair, Cannabis Control Board)]: So, I

[Sen. Thomas Chittenden (Vice Chair)]: don't think we

[James Pepper (Chair, Cannabis Control Board)]: were hardened in numbers that came in.

[Sen. Ann Cummings (Chair)]: She's got less time. In Greece. I know that we sent Cheese. Pizza.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yeah. The alcohol fees. So we sent you what the fees are for alcohol, and you can look at that to see whether or not you would align them, the tobacco, with the alcohol fees. Okay. But are we changing any

[Sen. Ann Cummings (Chair)]: do we have a shortfall that requires that we raise these at all, Or should we just

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I don't understand your question.

[Tim Barnett (Interim Fiscal Office)]: Well

[Kirby Keith (Office of Legislative Counsel)]: inflation adjusted?

[Sen. Ann Cummings (Chair)]: Yeah. Should we adjust the fees? I mean, these are supposed to cover the service. A thousand dollars is a lot of money coming up from what? 2 something. 100, I think. Yeah. I mean, for both. Yeah. The easiest thing for this committee is to just strike the increase just because we don't really have any more time than the morning committee had to do a rational discussion. So unless and this is going to the other body where perhaps there would be more time. I'm wondering, you know, should we keep it where it is? Should we get up a little bit?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So the governor would not support nor would the department support an increase in fees? Yes. So I would so the the alignment to the liquor fees wouldn't be an increase in fees. Right? If you're trying if you have you're trying to structure it to align with, for example, the the wholesaler. Now we have the wholesale licensing of tobacco is going to move to the department. Okay. There is not a fee associated with that, and we would recommend that you align it to what the liquor fees are. You said you sent those to We did. No,

[Sen. Ann Cummings (Chair)]: sorry. We

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: sent it to another committee. Oh, we will send them to this Thank

[Sen. Ann Cummings (Chair)]: you. Yeah, so we should align the wholesaler fee with the liquor wholesaler.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Correct, and if you're asking my opinion about fees, I would suggest that that's the strategy you use for any of the fees you're contemplating for tobacco.

[Sen. Ann Cummings (Chair)]: So these are the new fee because it's coming from tax who hasn't been charged a Correct. Fee. But you are going to need a fee for that. A fee for you to administer. Correct.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Because it would be a new license that we would be issued.

[Sen. Ann Cummings (Chair)]: A new license that you would be Correct.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: But that's not the $100 to $1,000. It's not. It's not. $1,245 if I remember correctly. Wholesale. We charge. That's The wholesale liquor is a wholesale liquor fee, and that's what I would recommend for a tobacco wholesale. Okay. Same. Okay. That's logical. And then the final point I will make is that we are, have an agreement about, prohibiting deceptive products.

[Sen. Ann Cummings (Chair)]: Oh,

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: good. Which is, I don't know

[Sen. Ann Cummings (Chair)]: where it is, but wherever it is in this bill,

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: can, we can, but that makes sense, and we support that.

[Sen. Ann Cummings (Chair)]: And what are the disruptive products?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I think the AG's office is Okay. Yes. It's it's it's their bill. They can tell you about the. Okay. But we think that makes sense. We don't agree with

[Sen. Ann Cummings (Chair)]: the receptor products. Okay, any questions for the commissioner?

[Kirby Keith (Office of Legislative Counsel)]: So, I think just back on the fees, commissioner. So you're not referring to the $110 fee and the $50 fee.

[Tim Barnett (Interim Fiscal Office)]: What page are you on? Page five. Yes.

[James Pepper (Chair, Cannabis Control Board)]: Are those I think I think that's what Yeah.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yes.

[James Pepper (Chair, Cannabis Control Board)]: Referring to.

[Kirby Keith (Office of Legislative Counsel)]: So you want to go from a 110 to 1,250?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: No. No. No. I don't know that. It's just a reduced fee. Oh, okay. Senator. So what I'm suggesting, it's new. So it's not so what's happening is the tax department has, right now, has their authority of, you know, licensing of a wholesalers of tobacco, combustion of tobacco. There's no fee associated with that. So, if we're gonna move it over to DLL, which makes sense for us to issue the license, we have to attach a fee to that license.

[Kirby Keith (Office of Legislative Counsel)]: You're talking about the PH6, which is wholesale?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yes. That's what I'm talking about. Okay. Correct. Yes. Yeah.

[Kirby Keith (Office of Legislative Counsel)]: Okay.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So we need to attach a fee to that, and we're recommending that you we use the fee that we need to Full service.

[Sen. Ann Cummings (Chair)]: Okay. Yeah. And there are

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: other things in the bill depending on how far this gets we can talk about details that we would need to talk about, but I don't think we're at that position. We're not there yet. I don't wanna take the time to go over all the details. There's some nuances of how we do things. The way the bill is written isn't how we do things, and so at another time, assuming you're able to address the increase in fees in the position, then we can have more conversations about those. Okay. So, I'm vision of

[Sen. Ann Cummings (Chair)]: liquor license fee. This ups from license fee from 110 to $1,000 municipal license? Correct.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So we don't support any of those increases in fees. Okay. So the other thing to point out is I don't

[Sen. Ann Cummings (Chair)]: But there's no fee in here for the wholesaler. Correct. Okay. That's correct. So that is what you like us to draw Senator. Down all of those fees and do the wholesale.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Correct, so you're attaching a new fee to the new license of a wholesale tobacco and then we're recommending that you align the tobacco fees with what we do on the liquor side. Okay. I

[Kirby Keith (Office of Legislative Counsel)]: don't want to steal Ted Barnett's thunder. I think he's going to come in and suggest if we were to look at the last time his fee was set and adjusting for inflation, it would increase to $143 and $65 position on it but if you have any reactions to what I think GFO was going to suggest that would be in 2016 inflation's just for about 30%. Let me get to $143.65.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I have nothing to say at this point. I mean, fees are I don't know how long our fees have been in place. I I think you're gonna need at some point to we'll talk about them. We've talked about this development. Mean, why you would attach a, what have you been calling it? Inflation. Inflation. You would do that for one fee and not the rest of them, I don't know. I mean,

[Sen. Ann Cummings (Chair)]: I'm We do it because we did a three year cycle and the owners ended the three year cycle. Yeah. And so we end up, as we did with motor vehicles, with large increases which people hate. Of course they do. Yes. So it's easier to do 3%. Understood. Yeah,

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I don't have a position to Okay. Defer on

[Sen. Ann Cummings (Chair)]: Okay. We understand about supporting the governor's budget.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Well, I'm also supporting our retailers. Yes.

[Sen. Ann Cummings (Chair)]: Right? And Well, there's there's a big space between a 100 and a thousand. Yes. We have a draft charge. The right one. Yes. You are. The right one. It'll make our life a lot easier if we know what we're talking about. Think we've got your gesture. May I ask you a question? Yes.

[Sen. Randy Brock (Member)]: And that was, perhaps you've already gone over it, but that increased from $100 to $1,000 what is your understanding of the rationale behind that desire from others?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I had no idea. I didn't propose it. Yeah, know that. Just wondering if

[Sen. Randy Brock (Member)]: you've heard you've heard as to why anybody wanted that done in that way.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yeah. I think you should talk

[Sen. Ann Cummings (Chair)]: to the people who are asking for that increase. Yeah. And we will. Okay. Jen,

[Jennifer Carbee (Office of Legislative Counsel)]: have

[Sen. Ann Cummings (Chair)]: you had time to catch your breath? Okay. Thank you. Awesome. Alright. Thank

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: you. Have a good night. As soon as you're ready, Jen. Okay.

[Sen. Ann Cummings (Chair)]: We do. Yeah. It'll be really helpful to walk through this film before we Yeah. Should've done that. They took off the car belt on the floor. Okay.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: No. No.

[Sen. Ann Cummings (Chair)]: Can't object to them. So we can't object to their doing that. You're objecting. We to help. They should meet the same no. That wouldn't work either, wouldn't they play med at the same time either. Y'all couldn't just sit in the hall one episode. Okay.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Alright. As

[Sen. Ann Cummings (Chair)]: long as we walk through this one.

[Jennifer Carbee (Office of Legislative Counsel)]: Thank you for your patience. This is Jen Scary from the Office of Legislative Counsel. To speak that language. Oh, it's on the So we are looking at S-one 198, an act relating to the regulation and taxation as introduced of tobacco products and tobacco substitutes. This is the bill as recommended by the Committee on Economic Development of the General Affairs. The Strike All Amendment starts out by amending seven VSA Chapter 40, which is the chapter on tobacco products, and some of these things are more substantive than others, and that is the definition of tobacco license, and part of what is happening in this chapter and in this bill is moving the licensure and regulation of wholesale dealers from Department of Taxes to the Department of Liquor and Laundry. There's an amendment to the definition of tobacco substitute, some of which is just structural, but also looking at mastering any product that contains, that was derived from or manufactured from tobacco or nicotine, natural or synthetic, including nicotine alkaloids and nicotine analogs. It's intended for human consumption by smoking, chewing, inhaling, sucking, absorbing, or consuming in any other manner. There are all kinds of emerging products. And it is not a tobacco product, which is also a defined term, which includes things like cigarettes and some cold scars while you're on the back over. The existing definition is still here as well. The term tobacco substitute includes electronic cigarettes, that's really where it started, and other electronic or battery powered devices that contain or are designed to deliver nicotine or other substances into the body through the inhalation of vapors and have not been approved by the FDA for tobacco cessation and other purposes, medical purposes, and that specifically includes nicotine pouches and any liquids, whether they have nicotine in them or not, and delivery devices sold separately for use with a tobacco substitute. This term tobacco substitute comes up a lot in the bill, so it's good to know what that is. We already have an existing carve out saying, Canvas products are handled differently, so that's not what we're talking about here. Then we add in definitions of licensed wholesale dealers and issues related to wholesale dealers. These are really the same definitions with minimal changes to refer to this chapter, things like that, from the tax statutes. So I won't go through those definitions, but they're the same definitions that we're gonna repeal in the text. Actually, the underlying provisions go away. This is

[Sen. Ann Cummings (Chair)]: the movement from tax. This is part of the movement from tax, in that case.

[Jennifer Carbee (Office of Legislative Counsel)]: Part of that is just starting by using the same definitions. Section 1,002, we're still in Title VII, clarifying that we're talking about licenses for retail sale here, because we're about to add in provisions on the wholesale dealers. This bill decouples, it separates liquor licenses from tobacco licenses. Currently, they can be issued together, now is required them to be issued separately, and it increases some fees. So, existing law, for a license or endorsement licenses to sell tobacco products, Endorsement is on top of the license to sell tobacco substitutes. And the person needs to apply to the legislative body of the municipality where the retail location will be located and pay certain fees. So this would increase the fees to the legislative bodies of the municipality from $110 to $1,000 for a tobacco license or renewal, from $50 to $1,000 for a tobacco substitute endorsement. It also increases the penalties for selling tobacco products, tobacco substitutes, or tobacco paraphernalia without a tobacco license and endorsement as applicable. Changes it from a misdemeanor and a criminal fine to a civil penalty, and it increases from not more than $200 to not more than $2,000 for the first offense, and not more than $500 to not more than $5,000 for each subsequent defense services. Sales retail sales or sales without a retail base. We've got a question.

[James Pepper (Chair, Cannabis Control Board)]: Why do we why do we have

[Kirby Keith (Office of Legislative Counsel)]: the establishment send it to the legislative body of the municipality and then then forward that on to the DLL?

[Jennifer Carbee (Office of Legislative Counsel)]: We don't I I don't know how the this came you know, this came about.

[Kirby Keith (Office of Legislative Counsel)]: I'm I'm thinking about, you know, large retailer establishment at 50 towns, let's say. They have to go through 50 different towns just for those 50 different towns to send it to the same place.

[Jennifer Carbee (Office of Legislative Counsel)]: It appears that way, but I don't know how I think that would be a question for

[Sen. Ann Cummings (Chair)]: the towns. Well, you have to have a Wellsburg liquor license. I know they have to. Because the town well, yeah. The select board usually bless you. Got the town ordinances.

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: Brandon King. I'm the deputy chief of liquor and lottery for the record. So to answer your question, all the towns need to approve a liquor license before the state can approve them. While the language in the current statute says that the municipality takes the fees, collects them, and then forwards them to the division, That is not practically what happened since we went to the online licensing portal in 2022. We collect those fees directly on behalf of the municipality because we saw exactly the problem that you're bringing up, that that was an undue burden and we could just collect the fee directly.

[Sen. Ann Cummings (Chair)]: So all the time I'm

[Jennifer Carbee (Office of Legislative Counsel)]: gonna put on my liquor, because anything are

[Sen. Ann Cummings (Chair)]: a crack at both liquor license. Any money collected from that didn't go to the municipality?

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: Only for tobacco and tobacco substitutes.

[Sen. Ann Cummings (Chair)]: Only for tobacco,

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: alright. The municipality still get a portion of the fee

[Sen. Ann Cummings (Chair)]: from liquor licenses. Okay, that's alright. So this is a new tobacco.

[Kirby Keith (Office of Legislative Counsel)]: So in that same day, how towns have to approve them, is that prohibition

[Sen. Ann Cummings (Chair)]: come down prohibition? Not the law prohibition. Don't think that's a prohibitive tobacco. There's all kinds of, you can't put a bar near a school, a church, there's local ordinances. We have drive tickets, At least we used to have one in my county. I don't know if they've overridden it yet. It's the locals have to both pull out cannabis in. It goes back to you regulating your town and what you want in your town, and if you don't want liquor establishments.

[Kirby Keith (Office of Legislative Counsel)]: But if everyone, yeah, like, don't want outlaws it, Why does why do these establishments have to go? I'm not thinking about bringing it up at current times versus having to go through it

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: every single day. This is tobacco. Right.

[Sen. Ann Cummings (Chair)]: So I don't think municipalities issue tobacco license.

[Jennifer Carbee (Office of Legislative Counsel)]: But so far these have been a combined that were To

[Sen. Ann Cummings (Chair)]: sell, right? For retail sale. For retail sale. So if we separate it, I guess the question is do we want the municipalities to be able to regulate themselves to back up? They don't now. That I I never voted on.

[Kirby Keith (Office of Legislative Counsel)]: Might be a different committee to have that discussion. I don't know, but we did have that discussion.

[Sen. Ann Cummings (Chair)]: Okay. So right now, you can go online and get your license for liquor and I assume tobacco once all of those licenses

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: currently go to the municipality prior to coming and be approved by them prior to coming back to us for issuance. The So the statute, as it's currently written, right, it does direct the municipality to collect the fees for a tobacco license and tobacco substitute, but then take that money and forward it back to us. We thought that didn't make a lot of sense when we went to the online portal and got away from our paper forms. So we just collect that money ourselves and save them the hassle of having to forward it back to us. Alright.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So if that's the case, then it does doesn't it do you think it makes sense to just update the statute here under b and c? I think it is, page five. Just get rid of the, to the legislative body of the municipality.

[Jennifer Carbee (Office of Legislative Counsel)]: I think, yes, I think we have

[Sen. Ann Cummings (Chair)]: to look at this because after that,

[Jennifer Carbee (Office of Legislative Counsel)]: the Subdivision 2, the municipal clerk forwards an application to the division and forwards the fees to the commission? I mean, think there would need to be some Multiple places. Yeah. Yeah. Which doesn't mean you can't do it. It just means you're not prepared to do it on the floor. Yeah, yeah, yeah.

[Sen. Ann Cummings (Chair)]: So is everything now done through the online portal?

[Kirby Keith (Office of Legislative Counsel)]: Yes.

[Sen. Ann Cummings (Chair)]: So everything's done. This is tobacco and alcohol sales, not

[Unidentified Committee Member]: where you put a bar. So liquor licenses still go through the

[Kirby Keith (Office of Legislative Counsel)]: local municipality. They have to either select order or a dedicated liquor control board, but does that happen with tobacco sales?

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: Does also happen with tobacco licenses. Now the town's authority on what they can or cannot do, I'm not prepared to speak to. That is really a league question. League of cities and towns. I'm not really prepared to talk about that. Our direction would be getting questions from municipalities about what they can't like can they deny a license as an example for tobacco? We tell them we are not the authority in that regard and they should consult with their town attorney.

[Sen. Ann Cummings (Chair)]: Okay. I don't ever remember a time. They have a lot of moving lights in you know? So some Catering permits or yeah.

[Kirby Keith (Office of Legislative Counsel)]: But those three got great years if you have to renew every year all the liquor licenses. I just I don't remember doing it tobacco.

[Sen. Ann Cummings (Chair)]: I don't either. But they would tie.

[Jennifer Carbee (Office of Legislative Counsel)]: Right. Because they're they were the

[Sen. Ann Cummings (Chair)]: same license. And the town's really

[Kirby Keith (Office of Legislative Counsel)]: But I I don't think the fee has to go to the municipality. I think you can still collect the fee as part of the application, but you still need the local municipality to review the application to ultimately bless it.

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: Yeah. I don't think anything would change if you just struck out part that said the municipality would forward the money back to the division. Everything else should stay the same. Yeah,

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I think I wasn't suggesting that we make any bigger change rather than just cleaning up the statute because I think it's a bigger discussion about the whole

[Kirby Keith (Office of Legislative Counsel)]: girl life thing.

[Sen. Ann Cummings (Chair)]: Let's keep, okay.

[Jennifer Carbee (Office of Legislative Counsel)]: Looked at these penalties and then an expansion a bit on the prohibition on engaging in, right now, no person shall engage in the retail sale of tobacco products, tobacco substitutes, and other products unless they are a licensed wholesale dealer or purchase them from a licensed wholesale dealer. This would add in as well, no person shall engage in the importation, distribution, wholesale sale, or retail sale, or a combination, unless they either, unless they are a licensed wholesale dealer or acquire them, purchase them from a licensed wholesale dealer. Then we get into the wholesale dealers themselves. There are five sections in the tenancy statutes that deal with different aspects of licensure, and I've combined them into one section here in Title VII, and just used their, for the most part, former section headings as the subsection headings, so they'll appear in bold in the statute book if this goes all the way through the process. So this is requiring the license for a wholesale dealer. It gives information on the application and the issuance of the license. Licenses are issued by the division upon application without charge on forms prescribed by the department, so I have not changed anything on that in here. Penalties for sales without a license, I'm not recalling offhand what they were. Penalties were in previous law that there was interest in Senate Economic Development in having them mirror the penalties in enhanced retail penalty, so it was 20, that's what it was, it was $25 so in the tax statutes right now, the penalty for a licensed wholesale dealer who sells, offers, or possesses with intent to sell without getting a license is fined not more than $25 for the first offense and not more than $200 or less than $25 for each subsequent offense. This instead tracks with increases for retail sales at a license to 2,005 thousand.

[Sen. Ann Cummings (Chair)]: The judiciary doesn't wanna take that. It sounds like $25 is hardly a slap on the list. We probably put that in in the 1940s. With $25 was a lot of money. Especially if you're a wholesaler. I mean, this is a business. We shouldn't be operating without a license.

[Kirby Keith (Office of Legislative Counsel)]: What did that line up with, Jen? Again, you said that

[Jennifer Carbee (Office of Legislative Counsel)]: The the numbers to to line up with the increased retail penalties and that.

[Sen. Ann Cummings (Chair)]: It would change without any penalty for use? They were not there yet though. Okay. So

[Jennifer Carbee (Office of Legislative Counsel)]: we're still in the wholesaler. We've got language on the term of the license and the revocation or suspension of the license. Again, other than waivers, increases, and a couple of conforming language changes, for clarity, the language is the same as what is in the tax statutes. Now we're at the language that is Greek y'all. This is section 1,005 of the existing chapter, and this is the section on minors, persons 21 years of age, possession of tobacco products, or misrepresenting age, or purchasing tobacco products. This would strike the anguish prohibiting a minor from possessing, purchasing, or accepting the purchase, except for any very specific circumstances that are working at retail establishment, or it's in connection with indigenous cultural tobacco practices. Also taking out the provision on misrepresenting age to purchase, and the penalty, which is a $25 civil penalty confiscation and $25 civil penalty brought in the judicial bureau in the deferred traffic ticket. I do remember Additional provisions on false Having some real

[Sen. Ann Cummings (Chair)]: disagreements with this at one point. This is not the first time. So it's still illegal for you to buy tobacco products under the age of, what, 21?

[Jennifer Carbee (Office of Legislative Counsel)]: Currently, yes. Under this with these provisions removed, I believe it would be illegal to sell or furnish to a minor. It would not

[Sen. Ann Cummings (Chair)]: be illegal to a minor to all of this. I'm a seven I'm an 18 year old. I look really mature for my age. I've got a false ID. There is no, it's illegal for me to go in and misrepresent my age and buy alcohol or tobacco, but there's no penalty. There is no negative consequence for breaking the law.

[Jennifer Carbee (Office of Legislative Counsel)]: So let's keep alcohol separate because this is

[Sen. Ann Cummings (Chair)]: But the only deal with there is no negative consequence for If these provisions were repealed, then

[Jennifer Carbee (Office of Legislative Counsel)]: there may be separate legal provisions dealing with the use of a false identification, but specifically for purposes of the tobacco statutes, this would be removing the penalties or purchase use or possession of tobacco products, tobacco substitutes, tobacco paragonalia by law. Right.

[Sen. Ann Cummings (Chair)]: So it's illegal for me to do any of that. And it could

[Jennifer Carbee (Office of Legislative Counsel)]: not be explicitly illegal for you to do it

[Sen. Ann Cummings (Chair)]: because it would not be because because so we're making it legal to buy?

[Jennifer Carbee (Office of Legislative Counsel)]: No. No. Right. See, I was busy getting putting the onus on the person selling or or sell to or providing to the minor. Alright. Having had a son

[Sen. Ann Cummings (Chair)]: to get bail for selling to one nine nineteen or 20 year old who had been buying for ten years. Now, this said son was like 16 or 17 working in the grand union. Now you say that 17 year old clerk is probably gonna get fired. That's I mean, that's But not changing one year, but the ticket year, no. But you're not he's the seller. Right, the seller. So you're not removing the penalty for a minor seller acting in good faith, I'm not, you are removing the penalty from the new 20 year old who goes in and misrepresents their age.

[Jennifer Carbee (Office of Legislative Counsel)]: I'd say the Committee on Economic Development is Yes.

[Sen. Ann Cummings (Chair)]: They did that. I don't know. It was a general term. I've had this fight before, I don't know when, but I remember having it. Yes, it was

[Jennifer Carbee (Office of Legislative Counsel)]: unanimously supported by that committee, whether or not refer to

[Sen. Ann Cummings (Chair)]: the members of that committee at the March about the rationale or If my parent hat, which says if you're not gonna have a penalty, then it's legal.

[Kirby Keith (Office of Legislative Counsel)]: I wouldn't mind hearing from the members on that committee. So so I have reservations with this too, but I will say this. The kids that do it aren't the one necessarily the ones that I think for you to bear the full brunt of any penalties on. It's really those that are providing the tobacco products. I believe I recall in testimony, and I looked for senator Brock to fill in the gaps on this, that it's not necessarily the stores that are doing it, but it is the cousins, the older siblings, the parents, parents in some cases providing the vapes. So we wanted the front of the consequence to fall on those providing the tobacco, not necessarily all of the consequences.

[Sen. Randy Brock (Member)]: The committee perhaps was somewhat split because I was in favor of not allowing the juvenile perpetrator to bail away Scott's free. I thought that should be something associated with what he or she did as well. She's a sticking point for I'm

[Kirby Keith (Office of Legislative Counsel)]: thinking if you are somebody who's over the age of 21, you're that cousin, older sibling, whatever, and you leave your vape out on the table and your 20 year old sibling snags it. This is for selling

[James Pepper (Chair, Cannabis Control Board)]: or is

[Jennifer Carbee (Office of Legislative Counsel)]: it Just selling or, I mean, we haven't gotten to those penalties yet, but they're for selling or furnishing.

[Sen. Ann Cummings (Chair)]: So, you know you pair

[Jennifer Carbee (Office of Legislative Counsel)]: something out to shake it or not.

[Kirby Keith (Office of Legislative Counsel)]: Is that furnishing?

[Jennifer Carbee (Office of Legislative Counsel)]: I don't know if that's I think it might have to be more of an affirmative act to be furnishing. I mean, testimony, and I don't know what you've heard while I was upstairs, but the testimony was largely around concern by the advocates who are in favor of removing these provisions and penalties, was really concern around penalizing youth who become addicted to highly addictive substances, and concern that if you are penalizing them for their addiction, they will not come forward to receive treatment services.

[Sen. Ann Cummings (Chair)]: If you penalize, you're not penalizing them for their addiction. You're saying there's a penalty for buying that before you become addicted. Just want right thing, it's probably age, but there are negative consequences. And if you don't learn that early on, if there are no negative consequences until you become addicted, that's a hard way to learn. I mean, you could use the same argument for any drug. You shouldn't penalize you or find Alcohol. Alcohol.

[Tim Barnett (Interim Fiscal Office)]: Because that would still Or heroin.

[Jennifer Carbee (Office of Legislative Counsel)]: Or This is not changing. Alcohol's in a different chapter But from last

[Sen. Ann Cummings (Chair)]: this is just principle, I think.

[Kirby Keith (Office of Legislative Counsel)]: I'm just saying that you would you would be charged with the alcohol, but not the tobacco pick itself

[Jennifer Carbee (Office of Legislative Counsel)]: For possession. Right. Right.

[James Pepper (Chair, Cannabis Control Board)]: Right.

[Sen. Ann Cummings (Chair)]: So you think that is would be charged. That is the protection of

[Jennifer Carbee (Office of Legislative Counsel)]: the beef. I have enforcement here too. Okay. Can I So

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I'm getting really tired, so it's hard for me to focus on this? But I think what section 1,005 starting in the middle of page eight, striking that whole section is striking the possession of tobacco products. Or misrepresenting age or purchasing tobacco products. So this isn't about selling them. Right.

[Jennifer Carbee (Office of Legislative Counsel)]: Selling is the next extension.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Or having them.

[Sen. Ann Cummings (Chair)]: Yeah. It's about, no, removing the penalty for the 16, 17, 18, 19 year old who goes in with a fake ID and buys cigarettes, chewing tobacco, whatever they buy. I know the

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: police don't want about them having or getting them. Right. So the next section is about them The furnishing them

[Sen. Ann Cummings (Chair)]: to get to another person. So Or their parents or a 21 year old furnishing them.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Oh, wait. I'm just I'm trying to understand this. Can I just talk to Jen? Yeah. Okay. So so the the first part that the all struck is is is saying, if you're 21 and you possess or misrepresent your age or purchase tobacco, This is taking away the penalties for doing that. Yes. Yes. Okay. And then the second part, the next part, ten ten o seven, is for those same aged people 21 furnishing it? It's not

[Jennifer Carbee (Office of Legislative Counsel)]: specific about the age of the person doing the job.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay. A person or entity, it's

[Jennifer Carbee (Office of Legislative Counsel)]: our broad definition of person from Title I. So anyone who sells or furnishes these items to someone under 21 years of age is subject to this civil penalty.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay. So, it could be somebody 21 years of age furnishing the tobacco to somebody else under 20

[Jennifer Carbee (Office of Legislative Counsel)]: I one believe it should be, but I don't know how that plays out in this map.

[Kirby Keith (Office of Legislative Counsel)]: It says earlier

[James Pepper (Chair, Cannabis Control Board)]: in the bill that they have to

[Kirby Keith (Office of Legislative Counsel)]: be 16 to sell, so there's a minimum age to sell.

[Jennifer Carbee (Office of Legislative Counsel)]: Right, but I don't think Senator Hardy is necessarily talking about illegal retail sales.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Right, yeah, that's not what I'm talking about. I'm talking about the illegal furnishing of. So if there's an 18 year old who somehow acquired this tobacco, it's not they're not gonna be penalized for acquiring it. What they're gonna be penalized for is giving it to their friends, furnishing it to their friend.

[Jennifer Carbee (Office of Legislative Counsel)]: Potentially. Again, I don't know how the enforcement works.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Right. And that I think that's the that's the distinction a little bit that I the way I see it is that we're not getting rid of the penalty for somebody under age 18 to have it because they could be addicted or there could be extenuating circumstances to be this bill. I didn't have anything to do with, but yeah. But the bill is getting rid of the penalties for underage kids. Possessing. Possessing or obtaining it, but they're but not getting rid of penalties for if they obtain it and then try to give it to somebody else. But if Yeah. Okay.

[Sen. Ann Cummings (Chair)]: Then we if it is illegal, there should be a penalty. Otherwise, what's the point of having a law that says it's illegal? If nothing bad happens, then there is no incentive for you not to take your fake ID and waltz in to the local grocery store and buy a carton of cigarettes.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Well, think it's I think that the the sort of argument in that situation is that the person selling the clerk is

[Sen. Ann Cummings (Chair)]: already legal, and they are pretty strict. I have a friend whose brother owns a general store. According to him, they sent in this lovely young woman with a low cut shirt on, very distractive, and she was 16 and tried to buy cigarettes. His response was how dumb do you think I am? But they do work. Right.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: So I think that I think that the I I think the theory is that the penalty should be on us, sort of

[Sen. Ann Cummings (Chair)]: supplier That's every time I try and buy a phone, I'm guessing

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I'm confused as to what

[Sen. Ann Cummings (Chair)]: It's a philosophy. Why make something illegal if nothing bad happens if you break the law? You might as well just say, it's legal. So this would have the law be silent on possession at any age. There's no parent.

[Kirby Keith (Office of Legislative Counsel)]: I would just echo what I

[James Pepper (Chair, Cannabis Control Board)]: heard Jen remind me of,

[Kirby Keith (Office of Legislative Counsel)]: which is kids that haven't are addicted to this very addictive substance will less likely seek assistance if they know that it's going to be a consequence and they're going to get in all these sorts of trouble for just having or even admitting that they have smoking. And I do like the point that you raised, Senator Hardy, is that if there's an underage individual that has a carton of cigarettes from New Hampshire or whatever, they give those packs out to their friends, that's still against the law.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: That's the law now,

[Sen. Ann Cummings (Chair)]: and that gets penalized.

[James Pepper (Chair, Cannabis Control Board)]: Right, and

[Sen. Ann Cummings (Chair)]: not at a state. Don't get addicted without possessing and smoking, and you don't get addicted by smoking one cigarette.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: But I think the argument is is that the way that you're gonna get the cigarettes in a lot of cases by somebody giving them to you, like, when you're a 13 year old, you know, your big brother's gonna give them to you or your your

[Jennifer Carbee (Office of Legislative Counsel)]: parent's pocket. And often what we're talking about here and what was talked about a lot in economic development committee was the nicotine pouches and the the vents that we're gonna get to in a minute here, but that look like video games look like other things that that, in some cases, gamify the number of hits you take on it, which can increase nicotine consumption, which can increase addiction. Yeah. So, again, you get to decide what you wanna do with this. I'm just her Okay.

[Sen. Ann Cummings (Chair)]: Testimony. The cannabis people are here, so I'm gonna move us Alright. Getting through this. I don't think we're gonna get this fill out and

[Jennifer Carbee (Office of Legislative Counsel)]: whether or not we're gonna

[Sen. Ann Cummings (Chair)]: get it, what the vote will be, we'll

[Jennifer Carbee (Office of Legislative Counsel)]: Alright, so we have the 1,007 on page nine is furnishing tobacco to individuals 21 years of age. This would increase the civil penalty for selling or furnishing tobacco products, tobacco substitutes, or tobacco per vandalia to someone under 21 years of age, and that would go from not more than a $100 for a first offense to not more than a thousand dollars for a first offense, and from not more than $500 for a subsequent offense to, and then we go down here, and there's a combination of increased penalties and license suspensions. Expenditures. That goes to judiciary. Okay. So, those numbers go up, and the suspensions, in some cases, go up, or clarified that it's talking about consecutive days. For a fifth violation instead of a one year suspension, it would be a revocation and a $5,000 penalty. Okay. Section 1,009 is on contraband and seizure. It's expanding to some extent the scope of what is addressed in here, although I'm not sure what the, how it's being handled now, but in this case, specifically add tobacco substitutes that have been sold, offered, or possessed in violation of various statutes as contraband and subject to seizure, and it would add language saying that the destruction of contraband would be at the expense of the violator and must be in compliance with the Agency of Natural Resources hazardous waste rules.

[Sen. Ann Cummings (Chair)]: Okay. I'm gonna keep us moving to a bit, something that's in our jurisdiction. Alright. So, couple

[Jennifer Carbee (Office of Legislative Counsel)]: of things around internet. I know it's in a reference to retailers. Section ten thirteen is the one I was referencing that has a new prohibition on marketing, promoting, labeling, branding, advertising, distributing, offering to sell or selling tobacco product or tobacco substitute by imitating something that is not a tobacco product or tobacco substitute, and it gives examples of things that are often meant to appeal to minors, or concealing the nature of the tobacco product or substitute, or using words or descriptions of those items. Ten fourteen directs all penalties collected from violations of this chapter, monies received by the state from settlements based on violations of tobacco laws, and revenue from licensing fees that exceed the amounts necessary to administer and enforce the chapter would go into the tobacco trust fund and be used for tobacco cessation and prevention activities. The next couple of sections are sort of conforming changes in that regard, making sure that that money goes into the tobacco trust fund and that it is recognized as going in there. Section four on confidentiality of tax records would allow the commissioner of taxes to provide tax return or return information to the Department of Labor and Lottery if the information is for the purposes of investigating potential violations of enforcing the tobacco laws in Title VII. Section V has some policies. Now we're in the tobacco tax chapter in Title 32. We've got some changes to the definition of cigarette that aligns it with definition in Title 33 and the master settlement agreement with the tobacco manufacturers. I don't think that has a substantive impact, but keeps us consistent in our terminology, and some changes to reflect the transfer of the wholesaler licensure to the Department of Liquor and Lottery, and some of the language around tobacco substitutes that fall under other tobacco products here. Sections six and seven are more conforming changes addressing the transfer of the wholesalers to Department of Labor and Lottery. Section eight redesignates the one remaining section in that subchapter on licensed wholesale dealers on bonding, moves it to a different part of the chapter, and section nine repeals the wholesale in title 32, again, because of the title seven provisions. And all of that would take effect on 07/01/2027. Section 10 creates a new investigator position in the Department of Liquor and Lottery to enforce and investigate potential violations of Vermont laws related to online sales and other direct consumer sales delivery of alcohol and tobacco products. It incorporates monies from the Tobacco Litigation Settlement fund in fiscal year twenty twenty seven for the position, expresses legislative intent. The money would come from that fund for the first two years, and then after that, it would be self sustaining based on the revenue generated by the enforcement activities. And if that revenue was not enough in the future, then the department would have to propose eliminating the position as part of its next budget or budget adjustment presentation, requires a report by March 15, an update on the status of the implementation of the new investigator physician, and then starting the following year, by December, annually, a report on the impact of the investigator's activities on compliance with direct to consumer sales and delivery of alcohol and tobacco laws. Section 11 will be of particular interest to this committee. This would have the Department of Taxes in collaboration with Liquor and Lottery and the Attorney General's office, and in consultation with wholesalers and others, identifying efficient and effective processes by which to impose taxes on tobacco substitutes based on the concentration of nicotine they contain, was language in the bill that's introduced that included tobacco substitutes with the cigarettes and the stamping provisions, and there were concerns raised about that. This is having them work in a different way to do that, and how to have potentially higher taxes based on higher nicotine concentration, and also to have them evaluate the continued use of tax stamps as evidence of payment of the excise tax on cigarettes, little cigars, rolling around tobacco, and the pros and cons of taking different approaches to certify tax compliance. That report would come back to committees including this committee in January findings and recommendations. Finally, the Act would take effect on 07/01/2026, except as I said, the wholesaler licensure pieces would take effect, would have DLL take over in July 2027, and the first report on the impact of the investigator position would be due by 12/15/2027. Then change the title of the bill because it no longer does tax stuff. Just has to report on it to just be regulation. And Addison's position

[Sen. Ann Cummings (Chair)]: would go to a probes.

[Jennifer Carbee (Office of Legislative Counsel)]: Yes, and I figured that the 160, I'd appropriate the $160,000

[Sen. Ann Cummings (Chair)]: to be so far. Far, there's a request we've had It was from the commissioner. I'm not sure where the committee is going. I mean, she wanted to leave the retail licenses where they were Yeah. Not go up to a thousand.

[Jennifer Carbee (Office of Legislative Counsel)]: Oh, that's the thing you meant.

[Sen. Ann Cummings (Chair)]: But we also would like to align the wholesale fee for a tobacco wholesaler with I think it's 1,200

[Unidentified Committee Member]: Whatever it is for liquor.

[Sen. Ann Cummings (Chair)]: Whatever it is for a liquor wholesaler. As

[Jennifer Carbee (Office of Legislative Counsel)]: opposed to currently, it says without charge. Yeah.

[Sen. Ann Cummings (Chair)]: But they're this will be a new licensing and a new fee for them, so they would like to do that. Committee is I don't know where you are, but I think that one may take more than striking a number. And I'm gonna move us along because we've got couple more witnesses, and then we have cannabis to at least walk through. So, lieutenant King, do you

[Brandon King (Deputy Chief, Department of Liquor and Lottery)]: I have nothing I have nothing for your chair unless you need something else for things.

[Sen. Ann Cummings (Chair)]: I haven't heard anything. It was a boy's name for feeding with And then we have Todd Dallas. Okay. And are you gonna talk to us about new officer?

[James Pepper (Chair, Cannabis Control Board)]: I will talk to you about

[Unidentified Committee Member]: whatever you would like me

[James Pepper (Chair, Cannabis Control Board)]: to talk to you about if it's a chair. You can talk

[Sen. Ann Cummings (Chair)]: In about the our domain, which are taxes and fees. Certainly.

[Todd Daloz (Assistant Attorney General)]: So, Todd from the Attorney General's Office. I'm an Assistant Attorney General. Thank you for taking the time late on Wednesday.

[Sen. Ann Cummings (Chair)]: Oh, it's not late yet. I'll

[Todd Daloz (Assistant Attorney General)]: let Pepper deal with Blake. And I don't wanna stand between you and Pete's at all. So to be clear, think commissioner Knight set this up well. This is a bill that we've been working on. The AGO has taken a legal in broad tobacco enforcement, in country. Bill Sorrell, attorney general free, or attorney generals ago, attorneys general ago, was one of the key figures in creating what's called the master settlement agreement that brought Vermont hundreds of millions of dollars. It's about $25,000,000 right now. So in working in that, we really are engaged in diligent enforcement. We want to ensure that Vermont is enforcing tobacco laws, we really take a public health perspective on this, and I think public health advocates will talk about that after me. I don't want to step into that space except to say we recognize there's a lot of long term costs to the state of Vermont for tobacco usage. And so as we look at costs and fees, I recognize that affordability is a watchword and one that we also think is really important and affordability has to include the cost of healthcare when we have folks who are addicted from age 12, 13, 14 to one of the most addictive substances out there. We started working on this bill last fall, we engaged quite a bit with liquor and lottery, quite a bit with tax, Every bit of testimony I think you've heard from Commissioner Knight is consistent with our conversations. I think we largely agree on the bulk of the bill, and that really is the fees and the investigator position where we don't necessarily see eye to eye, and we do appreciate not only the partnership in working on this, but the partnership we have with both of those entities in the realm of enforcement. Jan just walked you through the big pieces of the build. Septic device to us are one of the biggest ones, and I think you'll see some images of those, but they literally are vapes that look like highlighters, they look like the toggles on a hoodie, they look like cell phones, they look like smartwatches, they look like teddy bears. So creative. Capitalism is an amazing engine, it really is,

[Sen. Ann Cummings (Chair)]: Why don't they they're eldest find a way to get around?

[Todd Daloz (Assistant Attorney General)]: And part of, I believe the role of this body is to kinda keep the path in a direction that keeps certainly our most vulnerable safe, and that's where we see these deceptive devices being really destructive. We are seeing an increase in the rates of nicotine usage, and I would say we're also not seeing a similar increase in revenue coming from that, and that's part of where we came into this bill, also looking at deceptive devices. We wanted to do some true up on the tax statutes because they're really focused. I mean, Jen didn't focus on it, but they're using a unit of measure that is from the 1850s called mills that is unique to cigarettes. We're trying to work on updating that and recognizing that this is a market that's rapidly evolving, right? And we're seeing changes come and part of what this bill does is kind of true that up. Part of what we would like to see, and it's for this committee's jurisdiction, is an increase in those licensing fees. First, the decoupling we think is really important decoupling, and I know Commissioner Knight didn't have an opportunity to speak to this, so that may be something that that DLL wants to chime in on, but the concept that if you get an alcohol license, you can throw in the tobacco license for free, like almost a buy one, get one, we think it's important to separate those, and we think that's a reasonable step, it's one that was the case, I won't be able to speak to this with the same authority as DLL, but they were separate licenses who brought them together, I think it's appropriate to separate them out again. To your question, Senator Brock, about why $1,000 $1,000 so that we provoke this conversation, because we think it is important to talk about how much it costs to provide these products to Vermonters, and we think that there's a real value in terms of looking at the long term public health consequences, in terms of long term costs to the state, and I recognize the commissioner's position on not adding, not growing state government, the governor's very consistent on that. We believe, and I've heard from retailers, you know, you can let the retailers and brokers speak for themselves, but we have heard in talking to retailers that online sales are one of the biggest challenges here, and increasing enforcement in that space is valuable. And so what we wanted to do is create a structure that said, look, we think increased fees is gonna cut back on maybe the number of places selling these products, and we can use that money to fund, an investigator position to cut back on the the sales that are completely unregulated, whether they're going to youth, whether they're going to retailers or not. We know we're not getting the tax revenue on that.

[Sen. Ann Cummings (Chair)]: Okay, but your testimony just was that by raising it up to that thousand dollars, we wouldn't lose retailers?

[Todd Daloz (Assistant Attorney General)]: We would lose people choosing to sell tobacco products, potentially. And can I I don't wanna cut Senator Hardy off? I have a little bit more on that, which is just to say, by way of example, if it helps the committee, New York charges, I believe, dollars 300, I think, for their tobacco license. Colorado is $400 California is $250 and Mexico is $750 So Okay,

[Sen. Ann Cummings (Chair)]: so that's not 1,000.

[Tucker Anderson (Office of Legislative Counsel)]: None of

[Todd Daloz (Assistant Attorney General)]: it is 1,000. We are comfortable seeing that number come down.

[Sen. Ann Cummings (Chair)]: Okay. That's helpful. Yeah. I think

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: it was a conversation starter. Is that why you made it so high so it would get our attention? But but my question is not that, actually. It's these are fees on brick and mortar retailers, and the intention is to use the money that you get from their licensing fees to do enforcement of online sales?

[Todd Daloz (Assistant Attorney General)]: The intention is to increase the revenue to the overall enforcement program to pay for this position, yes. And

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: the position would be specific to trying to do online sale enforcement?

[Todd Daloz (Assistant Attorney General)]: That is a significant area of concern in terms of how unregulated I mean

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Is that is there, is selling I'm I'm gonna sound stupid to a room full of people, but is is selling tobacco and is selling tobacco online legal right now? No. Not not to

[Todd Daloz (Assistant Attorney General)]: an individual. It's and But it happened. It's actually happened to me. We had a settlement two years ago with Amazon for about $400,000 because they were a platform that was allowing nicotine products to come from off

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: the Okay. So you're trying to stop online sales of tobacco, and the it I I just it seem I'm trying to, like, I without there's not the through line for me there.

[Todd Daloz (Assistant Attorney General)]: So the goal to pay for a position to increase enforcement in the space that we understand is an area where no unlicensed, and frankly unregulated products, I mean, haven't gone into it because it's not really the jurisdiction of your committee, but there's something like 13,000,000 applications per vapes in with the FDA, they've approved roughly 50. Technically, those out there are 12,999,950 to A lot of them are not licensed and are a lawful way of being sold. I'm not saying they're being sold from out, but the market is a little wild west, and the goal of this bill, as I said, is to catch the regulatory structure up with the current moment, and part of that is corporate sales enforcement.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: And you don't have the capacity right now to do that?

[Todd Daloz (Assistant Attorney General)]: So, we don't do the, we do the enforcement once, Randy's job hands us cases, right?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: DLL does the enforcement. Does the testify thing, they don't need a position, so.

[Sen. Randy Brock (Member)]: They

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: don't want. Or they don't want a position.

[Jennifer Carbee (Office of Legislative Counsel)]: That is different than the governor's Okay.

[Sen. Ann Cummings (Chair)]: You say we need a new enforcement.

[Todd Daloz (Assistant Attorney General)]: We believe it will be beneficial and we believe it will cut back on unlawful sales, would keep some portion of these products out of the hands of children and from a revenue side it also would move people who may intentionally or not, most of our retailers are very compliant. We're not concerned about that. Moving through the proper channels so that things are taxed. That's why we're pushing for stamps. Stamps make it really easy to walk into a store. Those products have been attacked because we don't have to worry about it. I won't go into that, that's not germanic. That's a study.

[Sen. Ann Cummings (Chair)]: Does the Attorney General's Office have a position on removing a penalty, any penalty for breaking the law?

[Todd Daloz (Assistant Attorney General)]: We support this, and I think you'll hear from the public health advocates, we do support the construct of getting kids treatment, and we recognize that there are studies demonstrating that kids are more likely to engage in treatment when they are not worried about whether it's a $25 fee final fee

[Sen. Ann Cummings (Chair)]: for getting treatment. I don't think your enforcement officers are sitting in the treatment center waiting to nail a kid, I just have a concern about saying to a child, it's against the law for you to do this. But if you do it, nothing bad is going to happen to you. There's no legal penalty. I would rather the legal penalty stop you from smoking the tenth, fiftieth, or two hundredth, however many cigarettes it takes to get you to be addicted. Because if there's no penalty, why have it be illegal?

[Todd Daloz (Assistant Attorney General)]: I understand the the the I can't remember how you characterized it to Senator Hardy, the the principal point, the philosophical point there. I I think one argument our position on it, I I will say, would be comfortable if it was a point of compromise where an individual uses a fake ID, we do feel like that

[Sen. Ann Cummings (Chair)]: That's still it. That

[Todd Daloz (Assistant Attorney General)]: there is a shift in Can they

[Sen. Ann Cummings (Chair)]: make it so they stop ID ing me?

[Todd Daloz (Assistant Attorney General)]: I find it very flattering.

[Sen. Ann Cummings (Chair)]: No. I'm grand total that they're old enough to buy. It's just annoying to have to keep getting my driver's license.

[Todd Daloz (Assistant Attorney General)]: I I would also just say sorry, senator.

[Kirby Keith (Office of Legislative Counsel)]: Oh, so you're saying you're fine you'd like to keep the possession off the table, but any attempt to procure, purchase, or acquire would still be

[Sen. Ann Cummings (Chair)]: Using a fake ID.

[Todd Daloz (Assistant Attorney General)]: Just I believe it's section subsection c of the the section in question, and it's on page nine, subsection C of 10 on

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: file. And this represents their age.

[Todd Daloz (Assistant Attorney General)]: Right, presenting all set, all set of patients. Okay. I would also, just as a counterpoint, not necessarily that, it's simply that we've had these laws in the books for a long time, and it hasn't cut back on you smoking. What's gonna come back on you smoking is

[Sen. Ann Cummings (Chair)]: I'm pinky.

[Todd Daloz (Assistant Attorney General)]: Fair enough. But it's gonna be increased education, increased cessation programs, and cutting back on these very track you know, we were making headway, and then vapes came in and kinda blew the whole thing up. And I the public health advocates are really good and speak to them.

[Sen. Ann Cummings (Chair)]: Okay. But I don't I'm looking at the time. I've still cannabis to go through, and I'm I'm gonna have to hold us just to our sections, should be these. Jill, I'm sorry. I can't get into public health. Instead of Do you want to hear some

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: of our justification? And I do have slides. Well,

[Sen. Ann Cummings (Chair)]: I'm only touching the fees. Okay. Well Okay. I'm not that's we don't have jurisdiction over legal penalties.

[Todd Daloz (Assistant Attorney General)]: But I take it

[Sen. Ann Cummings (Chair)]: sway how I vote on the bill, but we don't have jurisdiction, and I've got cannabis that still do. These all have to go to

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: a probes. Did we talk about the wholesale and retail and that that piece of it too? The fees? No. But there's a there's a potential for, like, just the rationale of moving Yeah. The the decoupling and what we're trying to do there and then having the the wholesale?

[Sen. Ann Cummings (Chair)]: I think we're fine with the decoupling. Okay. If it has anything to do with the thousand dollar fee, that's in our jurisdiction. Do you

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: want me to say my name on the record

[Sen. Ann Cummings (Chair)]: and say? If you want to say something about the that's fine, otherwise you could send us an email on the evils of smoking. I think that's a given.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay, I'm gonna say something on the feeds. Jill said, Karen representing the COVID. Okay, so you can come on. Thank

[Sen. Ann Cummings (Chair)]: you. Thanks, Tom. Right.

[Kirby Keith (Office of Legislative Counsel)]: The biggest action item to propose to our morning committee and the vice chair that we consider what the thought has suggested regarding how possible still allowing the bank ID to still

[Sen. Ann Cummings (Chair)]: That would be very helpful if you could bring us an amendment. Three months ago. Because I really would like She's got to explode it out of here tonight if possible because they do have to go across the.

[Sen. Randy Brock (Member)]: Well, I think we have some time tomorrow morning in economic development Okay. To consider the revisions or for the kinds of things

[Sen. Ann Cummings (Chair)]: Then we can hold off while voting this out until tomorrow.

[Sen. Randy Brock (Member)]: I have no guarantee. Of course, many will do it, but Right.

[Sen. Ann Cummings (Chair)]: We still got cannabis to do this evening.

[Jill Sudhoff-Guerin (Coalition for a Tobacco-Free Vermont/Campaign for Tobacco-Free Kids)]: Jill Sonoff Geren representing the Coalition for Tobacco Free Vermont and the Campaign for Tobacco Free Kids, thank you for having your comments. And I will say that we support the decoupling of the alcohol and the tobacco, and then the licensing fee. We support it being a palatable fee increase, but we do support it being meaningful and that retailers take it as meaningful. So just in comparison, cannabis licenses annually are $10,000 And so we were saying, like, if it was $365 that would be a dollar a day for tobacco retailers and they make considerably more, specifically on the tobacco substitutes which range anywhere from $15 to $25 each. Yep. So, a dollar a day. The other, thing that I'll just remind you all is that, tobacco related health care costs the state $4.00 $4,000,000 annually and 93,700,000.0 of that is Medicaid expenditures. So we are talking about affordability here, because we're talking about kids being targeted by these products. And then, in terms of the puff, is that something that you want to hear, Chittenden? Passion use.

[Sen. Ann Cummings (Chair)]: Purchase Yeah. What we were just talking about. Yeah, as long as

[Jill Sudhoff-Guerin (Coalition for a Tobacco-Free Vermont/Campaign for Tobacco-Free Kids)]: it's related to revenues. Yes. So, if you actually look at some of the school guidance around minimizing the impacts of vape use and how schools are approaching handling youth and the tobacco substitute use. They are recommending that we don't penalize youth. They are recommending restorative justice. And there's a a body research like senator Chittenden was saying that shows that youth are less likely to come forward. And we feel like the manufacturers just continue to ship these products. They're made to appeal and designed to appeal to kids and kids not. And they are using them and the nicotine levels in these products too are extremely high. So it's a very different product than cigarettes.

[Sen. Randy Brock (Member)]: Well, that was obviously in the committee the committee's side in the economic development housing general trustee and I'm sure the committee had considered that time. Is there anything different that you would add to it that would impact what we're dealing with these here?

[Sen. Ann Cummings (Chair)]: Anyway, that

[Sen. Randy Brock (Member)]: you've already testified to in that other advocacy.

[Jill Sudhoff-Guerin (Coalition for a Tobacco-Free Vermont/Campaign for Tobacco-Free Kids)]: On the puppies? I'm sorry.

[Sen. Randy Brock (Member)]: On the issue of changing the fee schedule for any of these projects.

[Sen. Ann Cummings (Chair)]: Of why?

[Sen. Randy Brock (Member)]: Well, I'm saying, is there anything other than what you've already presented to the committee? Then we should consider opening a discussion up tomorrow.

[Jill Sudhoff-Guerin (Coalition for a Tobacco-Free Vermont/Campaign for Tobacco-Free Kids)]: Presenting economic development.

[James Pepper (Chair, Cannabis Control Board)]: Yes.

[Jill Sudhoff-Guerin (Coalition for a Tobacco-Free Vermont/Campaign for Tobacco-Free Kids)]: I think we were suggesting that the fee goes down. Mhmm. We're supporting that it it get to a place that makes sense for the retailers, and I was suggesting a dollar a day. Yeah. And so Try. This is easier.

[Unidentified Committee Member]: I like that. So we'll pick

[Kirby Keith (Office of Legislative Counsel)]: this up and set economic development tomorrow. I'm gonna send this email out now,

[Unidentified Committee Member]: Mister Vice Chittenden will We'll we'll

[Sen. Randy Brock (Member)]: take we'll take a look at it. Absolutely. But as I said, it it sounds like it's much in testimony that we have already heard. Yes. That's That's critical. That's for repeating again.

[Sen. Ann Cummings (Chair)]: Yes. We're gonna have to walk something

[Jennifer Carbee (Office of Legislative Counsel)]: in. Okay.

[Sen. Ann Cummings (Chair)]: I'm starting to lose committee members. I'm these on court tomorrow for amendments and vote. That'll give economic development time. And then we're doing some of the other ones that don't have to go Friday. But we may be one of these days, we may be here. So we're gonna move along to cannabis and we have Tucker in the waiting room. So it's Tucker. Good, this will be a logical one. We can walk through this once before we start taking the testimony. I walked through this other one, which is what it said. Okay. So I've talked to the floor, but at least the room is empty now. Afternoon,

[Tucker Anderson (Office of Legislative Counsel)]: committee. Tucker Anderson, Legislative Counsel. You should have in front of you S-two 78. You should be looking at draft 3.2, which is the strike all amendment that was voted out of Senate economic development. How would the committee like me to approach this? Would you like a high level overview of the sections of the bill?

[Sen. Ann Cummings (Chair)]: Let's do high level and then just focus in on our sections of the bill.

[Tucker Anderson (Office of Legislative Counsel)]: I will do so, and I will share my screen, and I apologize for any toddler noise as you hear. It is late in the evening and my son is attempting to eat his dinner, which also includes throwing his food tray.

[Sen. Ann Cummings (Chair)]: That's fine. You will understand this. Some of us have been on receiving it.

[Kirby Keith (Office of Legislative Counsel)]: My wife probably answered no.

[Sen. Ann Cummings (Chair)]: You may still be on the receiving In

[Tucker Anderson (Office of Legislative Counsel)]: section one, this proposes to raise the packaging limit from one hundred milligrams of THC to two hundred milligrams of THC per package. Sections two, three and four all go together conceptually. In section two, the transaction limit for how much an individual can purchase in a single transaction is raised from one ounce to two ounces. And then the provisions in Title 18 that govern civil and criminal penalties for possession are increased proportionately to reflect the increase in the transaction limit from one ounces to two ounces of cannabis and five to 10 grams of hashish.

[Sen. Ann Cummings (Chair)]: Health and welfare committee is also looking this bill without possession.

[Tucker Anderson (Office of Legislative Counsel)]: Section five and six also go together conceptually. They establish two year pilot programs for two new permits that would be issued by the Cannabis Control Board. The first permit that is part of the program is the event permit. There would be 20 of these permits issued annually, split ten and ten between 10 public events and 10 private events. And structurally, this would be the same as some of the alcoholic beverage permits that you heard about earlier, special events, festivals, things like that. I'm happy to go into more detail if that's what you would like, But I will focus in on a provision that relates to your committee's jurisdiction, which is the fees. So for the event permit, the fee is $500 And the split that is reflected in this subsection E is similar to the split that you see for some of the other cannabis licenses in Title VII. 50% to the host municipality, 50% to the cannabis control group. In section six, the other pilot program is gonna be delivery permits. This allows tier one and two cultivators and tier one and two manufacturers that hold a license under Title VII to deliver from their licensed establishment directly to consumers in Vermont. There will be no more than 15 of these issued annually during the two year pilot period. Again, focusing in on this committee's specific jurisdiction, the permit fee is $100 for the delivery department. Background in case you want it, the language in this section directly reflects the second class retail delivery permit that is established for alcoholic beverages and title seven. Section seven and eight relate to this pilot program. They both make sure that the holders of these permits under the pilot program are included in the statutory requirements for payment of taxes. In section 10, there is a required report on the pilot program from the CCB and a timeline for adopting rules governing this program, along with recommendations for any statutory changes by the time the program ends. If the CCB determines and recommends that the program continue indefinitely. Section 11 amends a few provisions related to regulation by local government related to cannabis. So the First Amendment allows voters to petition for the opt in vote in their municipality. Later on in this section, there is an existing exception to one of the conditions on a local license that is available specifically for outdoor cultivators. Relates to conditions around abatement of public nuisances and added to that exception are indoor cultivators and tier one manufacturers. Section 12 changes the timeline for distribution of local share of license fees from quarterly to an annual basis for the distribution of that local share.

[Tim Barnett (Interim Fiscal Office)]: In

[Tucker Anderson (Office of Legislative Counsel)]: section 13, there's an adjustment to the terms and fee for employee licenses. It shifts from an annual license to a biennial license and the fee is raised accordingly from $50 to $100 for that two year license. There's also an adjustment to the product registration provision here, allowing for certain products to be registered for longer terms provided at their shelf stable. We're gonna zoom through a whole bunch of sections here because they all relate to the repeal of integrated license provisions. The integrated license, from what I understand, is no longer really an active license that is used.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay.

[Tucker Anderson (Office of Legislative Counsel)]: So I'll try to keep track with my own blurry, tired eyes to make sure that I have not gone too far here. Okay. So we're on page 20 going into 21 under the reader assistance heading CBDF grants for cultivators, manufacturers and economic empowerment businesses. This amends the statute related to the Cannabis Business Development Fund and it allows the fund to be used to provide low interest rate loans and grants to tier one cultivators, manufacturers and businesses granted economic empowerment status by the CCB. So this expands the eligible entities and licensees that could get access to these loans and grants. The next three sections definitely relate more to the finance end here. And I'm happy to spend some time on them. But I would recommend that if you want background information and explanation, then you consult with the Department of Texas. Reason being is that these are their recommendations for some clarifications and updates related to taxes and associated overlap with Title VII. So first within the definitions within the, I believe it's the property tax credit chapter in Title 32, there's an addition to the definition for modified adjusted gross income to expressly include cannabis business expense deductions. In the next section, there's an update to the subsection of seven BSA section eight sixty nine that deals with later on in some of the subdivisions listed underneath the use value appraisal program. And the amendments here eliminate a reference to cultivators licensed under Title VII to cultivate cannabis outdoors on a parcel of land and changes that to as defined by CCB rule. Finally, in section 26, this adds an exception to the general rule governing confidentiality of tax records to allow the department to share some of that tax return information with the CCB for purposes of administering the cannabis excise tax and the sales and use tax as it applies to cannabis. All right. Section 27. This is a little bit of a workaround adding a new section to allow cannabis cultivators to form cooperative corporations. Currently, are not included within the definition of agriculture or handcraft products that are allowed to form these cooperative corporations. So this section gives them the express authority to form the same sort of cooperative corporation. In Section 28, there are two appropriations, dollars 1,000,000 transferred from the general fund to the Cannabis Business Development Fund and then 1,680,000.00 appropriated to the Vermont Land Access and Opportunity Board. The repeals listed here, the first chunk relate to the integrated license provisions that we fast forwarded through. And then the last two are the prospective sunsets of the pilot programs that I covered, the event permit and the delivery permit. Quickly note that in the effective dates, there's a retroactive provision that makes the updates to the household income cannabis business expense deduction retroactive and apply to household income received beginning in the 2025 calendar year. That is all from me, unless you have some truly Thank

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: you. So there are two questions. There's not changes to the tax rates associated with cannabis? Okay. I think

[Sen. Ann Cummings (Chair)]: that's correct.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay. Okay. And then my second question and maybe this is for Pepper if he's still

[Sen. Ann Cummings (Chair)]: with us. He's with us and I'm I'm starting to think maybe we could vote this out unless.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Is that the the drive, the delivery program a little concerned about that one? Does it still have all the requirements for IDs and all that? I mean, there's a really strict process for getting into and purchasing something at a cannabis retail operation. Do those all apply with the delivery program?

[Tucker Anderson (Office of Legislative Counsel)]: It's certainly an interesting question because some of the licensees that would be eligible for this don't otherwise sell their products. Right? This would be a new-

[Sen. Ann Cummings (Chair)]: Oh, this is the farmer could deliver to a customer. Oh, this is a little snarky. Yeah. Having

[Kirby Keith (Office of Legislative Counsel)]: said that,

[Tucker Anderson (Office of Legislative Counsel)]: the underlying requirements in Title VII for sale and identification would still apply. And if you take a look at that section, there are specific requirements set out in that statutory provision for how the sale can take place, limited hours, things like that. But also the cannabis control board is given fairly broad discretion to adopt procedures governing the issuance of these permits. And as part of those procedures, they're allowed to put conditions on the issuance of the delivery permit and to adopt security and safety requirements as part of it, which could include, for example, the requirement that as part of the statutorily required training for this permit, that the licensee ensure that identification is taken at the point of sale.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay. Thanks Tucker.

[Sen. Ann Cummings (Chair)]: So our jurisdiction in this bill sounds like there was a fear of tax in the underlying bill?

[James Pepper (Chair, Cannabis Control Board)]: For the record, James Pepper, chair of the cannabis control board. The areas that I see that you have most jurisdiction over is the fee for the event permit.

[Sen. Ann Cummings (Chair)]: Okay.

[James Pepper (Chair, Cannabis Control Board)]: The fee for the delivery permit.

[Sen. Ann Cummings (Chair)]: Okay.

[James Pepper (Chair, Cannabis Control Board)]: The two year employee ID, changing it from a one

[Sen. Ann Cummings (Chair)]: to two year. That's just an adjustment.

[James Pepper (Chair, Cannabis Control Board)]: Right. Same with the product registration, those thing, you know, if people are they're all prorated, so it shouldn't impact the amount of revenue that's coming in, but every one or two year, but possibly the timing. People may, you know, be paying $100 in year one instead of $50 in year one, 50 in year two. But, and then the tax provisions from the Department of Taxes, which, you know, I have an explanation from them, but Addison Shepherd has said she'd be available to testify. They've all been approved by the administration. So, and they're all, I think, were described as this is how we're doing things now. We just want to make sure that the statutory language matches with our current practices. So I don't think

[Sen. Ann Cummings (Chair)]: where is that, Michelle?

[James Pepper (Chair, Cannabis Control Board)]: Those are the three tax provisions are section 26, section 25, so if it's on the reverse order, and section 24. Twenty fourth, 25, and 26. So the event permit, again, the the there were are gonna be no more than 20 of them annually between, now, and I think it's two year pilot. So maybe up to 40 of them. You know, our testimony was it's it's a $500 per per permit. Half goes to the cannabis regulation fund, half goes to the local municipality. Is

[Kirby Keith (Office of Legislative Counsel)]: the event.

[James Pepper (Chair, Cannabis Control Board)]: The event.

[Sen. Ann Cummings (Chair)]: These are really, yeah, those are just clarifying what

[James Pepper (Chair, Cannabis Control Board)]: The tax provisions. What the correct provisions are.

[Sen. Ann Cummings (Chair)]: Right. Exactly. Modified adjusted gross income means federally adjusted gross income.

[James Pepper (Chair, Cannabis Control Board)]: Exactly, and then the outdoor cultivations, now what you said there is, gave outdoor cultivators the right to keep their cannabis cultivation within their current use spot if they're otherwise eligible for current use. They hit the 27 acres, wherever it is. They don't have to exclude the cannabis cultivation of their outdoor, but there's no statutory definition of outdoors. So this is just saying as the cannabis board defines outdoor So that's just without the use of artificially. So The last provision is allowing the tax department to share certain information for investigative relations. And

[Sen. Ann Cummings (Chair)]: they're already that's what they're gonna be counting?

[James Pepper (Chair, Cannabis Control Board)]: They do it for the adult use side, but not the medical use, that's all the Okay. Percentage for the medical So really, I think the main provisions for you all are, is $500 the appropriate amount for an event license? Is $100 the appropriate amount for a delivery permit? I was very clear with the community of jurisdiction that Canvas board may not issue all 20 event permits per year or all 15 delivery permits. We're not getting any additional staff in this. We're just gonna have to see how these things go roll it out slowly.

[Sen. Ann Cummings (Chair)]: And this isn't a lie, so I'd have to commit and pay you the $100 fee to get to get a delivery permit.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: And that's that seems really low to me.

[Sen. Ann Cummings (Chair)]: Does given I'm just I mean, we started this with delivery to to restaurants for small brewers because distributors would and we started with the events and now doing the same for cannabis. I'm Somebody said yesterday one of these events could be at a farmer's market and there's already four, five, six, ten rising sampling going on at farmers markets with alcohol, and there seem to be fewer farmers, so I'm I I'm getting concerned about what we're what we're creating here.

[James Pepper (Chair, Cannabis Control Board)]: And and I think that the senate health and welfare committee is gonna be looking at the these exact provisions tomorrow. Yeah. Yes. Right.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I mean, I'm less concerned about the events. I'm more concerned about the delivery because that just seems like there when you're at a stationary place, you can have more controls. But if you're just, like, driving out to somebody's house in the middle of nowhere, you know, it it feels riskier to me for a lot of reasons. I I don't I didn't really love the delivery of the alcohol either, but I think that happened during camp. Well, that wasn't that wasn't that wasn't the COVID thing that we just made permanent. But I I mean, Tucker was talking about you guys being able to regulate it. I mean, I'm assuming you're gonna still ask for ID and have all those kinds of Right. Provisions.

[James Pepper (Chair, Cannabis Control Board)]: We are in I raised a lot of the similar concerns in the center of economic development. We have a kind of fixed location where retail sales are happening. It's a lot easier to regulate. Yes. Important piece of intent, seem to sale tracking. Exactly. The what gives me comfort about this section, as Tucker described, is there is a very broad grant authority to the board to make sure that we can put in place all of the same restrictions that a retailer would have at a age that fits. What we've seen in other states is the majority of other states have delivery, including all of our New England neighbors, is that the cost of the regulation of doing delivery exceeds the profitability of being a deliverer. So many, many, you know, this isn't a viable business type. In Massachusetts, it required two drivers. The one driver can be in the car, kind of guarding the product at all times. And in order to deal with possible diversion or youth sales, they have to wear body cameras. I don't think we would do that here, especially given the county confidentiality issues that exist, that are inherent in cannabis, Like it's just an example of how regulators respond to the inherent risks of delivery sales. Again, this is a pilot. I was clear with the Economic Development Committee, we will only roll this out in a way that we can actually have some semblance

[Unidentified Committee Member]: of control of,

[James Pepper (Chair, Cannabis Control Board)]: and that the grant of authority for us to develop this program was very broad.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yeah. I mean, for for all those reasons, that's why I I like, the events are much easier to deal with.

[Sen. Ann Cummings (Chair)]: Think You know what they are, where they're at?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yeah. And there's yeah. And they're they're stationary. It's delivery is much more concerning to me. I would prefer not to have it in the bill, but I also if we are going to have it in the bill, I do think a $100 is a pretty low fee for it. So I'd rather see a higher fee, $2.50 or something at least.

[Kirby Keith (Office of Legislative Counsel)]: So I'm not opposed to raising that fee while you're here, and so I can just honor the comment, the question I had, and it's late in the day, and seems to be the theme of the day to drag things out. Can you speak to what the lieutenant governor's office is asking about this this senate finance committee's meeting center?

[James Pepper (Chair, Cannabis Control Board)]: Yes. If you recall last year, there was a proposal to cut outdoor cultivation fees in half, and in order to offset the cost of that to raise certain other fees. There's some discussion here. It was late in the session. The budget had already passed that point. So, it was almost a not starter at that point because it was gonna cost.

[Sen. Ann Cummings (Chair)]: Yeah. Don't think that even hit this committee. It may have.

[James Pepper (Chair, Cannabis Control Board)]: It did very briefly at the end of the session. Yeah. Very end of the session. And

[Unidentified Committee Member]: you took that proposal out of

[James Pepper (Chair, Cannabis Control Board)]: the bill and replace it with the study committee about reducing fees. I had it posted under my name today, the report that we did, Act 56. One of the recommendations, we took a lot of stakeholder input about should fees be adjusted to better reflect the intent of the legislature to support small local farmers and people who have been historically harmed by cannabis prohibition. So we do have a report, it goes into the ration, the proposal that has been, that I've learned is just cut all the outdoor cultivation fees in half, and instead of, and just don't offset the cost, and I raise another fees, should I? Yeah. If you needed the kind of rationale for why you may want to do that, it's in the report, and that's based upon just a

[Kirby Keith (Office of Legislative Counsel)]: number Who of

[James Pepper (Chair, Cannabis Control Board)]: are recommending that? You know, our fee revenue doesn't come close to meeting our budgetary needs already. And that was a conscious decision by the legislature to make this an accessible market that wasn't dominated by just a few very wealthy corporations, because there is no lending in this industry. Banks are not lending to start a candidate, is no small business support. So you intentionally set the fees, you structured the fee schedule to try to encourage outdoor cultivation. You structured them to try and make them more accessible for small businesses, you scale them up in a way that they're very unattractive to larger businesses.

[Unidentified Committee Member]: Yeah.

[James Pepper (Chair, Cannabis Control Board)]: So this is once again comes down to how do you wanna structure the fee schedule, knowing that anything you do will just further that delta between what our actual operating expenses are and

[Sen. Ann Cummings (Chair)]: And what the fee is bringing this is 06:00 on Wednesday of our crossover week. Barring a recommendation from the cannabis board, I don't this is going through the other body where hopefully now that that reports out they will have more time to look at it, but I don't

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: think Can we just at least do the delivery fee? Increase that.

[Unidentified Committee Member]: We wanna put 2.

[Sen. Ann Cummings (Chair)]: $2.50? I was thinking 2, but

[Kirby Keith (Office of Legislative Counsel)]: I was thinking a thousand.

[Sen. Ann Cummings (Chair)]: Do wanna hear 2?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I I mean, you already said that you don't have enough fee revenue to cover your costs, and this one seems like it's gonna be a tricky one to deal with. So at the very least, gave a little bit more revenue, but I also just it's concerning to me, so I'd rather have it be a higher fee. Yeah. I

[James Pepper (Chair, Cannabis Control Board)]: I was

[Sen. Ann Cummings (Chair)]: Can we agree on about $2.50?

[Kirby Keith (Office of Legislative Counsel)]: Leave it all then if we're not gonna look further into the outdoor recommendations that are on here. Do you wanna look further into the outdoor recommendations? I mean, like you said, if it's gonna go to the other side,

[Sen. Ann Cummings (Chair)]: it's gonna go to

[Kirby Keith (Office of Legislative Counsel)]: the other side.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Well this is a new thing that's being

[Tim Barnett (Interim Fiscal Office)]: proposed. No, I know.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Those are services and that's why I was, if we're going start a new thing that's got more risk associated with it, then. Well, the candidate cohort has, but brings up, can't change the fees. Yeah, they can't change fees, that's all we do.

[Kirby Keith (Office of Legislative Counsel)]: No I'm aware of that but.

[Sen. Ann Cummings (Chair)]: Okay. Sender Beck how do you feel about raising that fully licensed fee?

[Kirby Keith (Office of Legislative Counsel)]: It's not raising a fee, it's a new fee so we're setting.

[James Pepper (Chair, Cannabis Control Board)]: And then we can determine by this how much is allowed to be in

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: the car at a single time, which is Okay.

[Unidentified Committee Member]: I'd say a 100 I mean, I think this is gonna be as, James said. I mean, this is gonna be a very expensive proposition for people to do this at all. Okay. So the price of gas mileage, two people. I mean So

[Sen. Ann Cummings (Chair)]: you don't have to we have advanced Massachusetts as to.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Can I can I just make a motion to increase the fee? You guys can all vote it down, but at least they'll be on the record, and then I can vote for the bill. Is that

[Sen. Ann Cummings (Chair)]: To go.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: If okay. I I I moved it. I just because I just I just feel uncomfortable with that program. I wanna have something to I move that we increase the or that we set the fee. Thank you. Set the fee for the delivery pilot program of 850 per per licensee. Is that what it is?

[Unidentified Committee Member]: What are we doing?

[Sen. Ann Cummings (Chair)]: That's an official motion. We're going to officially vote. I have a feeling

[Unidentified Committee Member]: I have one thing to

[Sen. Randy Brock (Member)]: say here in the program,

[Sen. Ann Cummings (Chair)]: yes. My

[Unidentified Committee Member]: understanding is that at this moment, stores can't deliver tobacco.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Right. They can deliver alcohol though.

[Unidentified Committee Member]: Yes. Mic breaking drinks. Yeah. Picked up. But I don't think they can lend.

[Kirby Keith (Office of Legislative Counsel)]: Okay. Counterpoint. Farmers can sell at farmer's market

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: direct company. Wait, we have our lawyer who just popped up here.

[Kirby Keith (Office of Legislative Counsel)]: This is in a way allowing you to come to their own to sell directs under certain conditions because they can't.

[Sen. Ann Cummings (Chair)]: You would have your own little buying circle and never sell to

[Unidentified Committee Member]: the meat. So this would so are you saying so this would be open to the farmer Yeah. That just Correct. No. We don't have to have that old special.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: What were you gonna say, Tucker?

[Tucker Anderson (Office of Legislative Counsel)]: I was gonna say that, this delivery permit is based off of just one very specific type of alcoholic beverage delivery permit. So the to go cocktail delivery stuff that happened during COVID is completely separate model. It's a permit model that actually doesn't have its own fee. It just allows first, second, and third class licensees to sell certain types of alcoholic beverages for off premises consumption. This is based off the retail delivery permit, which in alcoholic beverages is just available to second class licensees, which are your retail locations. It has a $100 fee. It uses all of the same criteria that you see in this bill as far as the licensee obligations. And it only allows those retailers to sell from their retail location and deliver using an employee and a retail business owned vehicle their products from their location to the end user. And part of what I heard earlier and most recently in your discussion relates to something totally separate, which is direct to consumer shipping of alcohol, which is a separate licensing structure. It involves out of state actors. It has a separate fee provision, and it involves third party delivery entities, common carriers like the Postal Service, FedEx, things like that.

[James Pepper (Chair, Cannabis Control Board)]: That's the one I'm almost here.

[Unidentified Committee Member]: What I was referring to, Tucker, was the ability of, let's say, a convenience store owner that sells tobacco or vape or anything else. They can't deliver that product right now. Is that true?

[Tucker Anderson (Office of Legislative Counsel)]: Or tobacco, but those convenience stores, if they sell alcoholic beverages, are second class locations and technically they can get a retail delivery permit from the Department of Liquor and Lottery to deliver malt beverages, vinous beverages, and ready to drink spirits beverages to consumers in Vermont.

[Unidentified Committee Member]: But not tobacco. Now Okay. To be clear, would this allow a farmer?

[Sen. Ann Cummings (Chair)]: That's That's what I thought, but Tucker said, no. It would have to be a retail staffer.

[Tucker Anderson (Office of Legislative Counsel)]: In the alcoholic beverages space, but in this bill, you have limited the cannabis licensees that can get this delivery permit, and you have specifically pulled in tier one and tier two cultivators and tier one and tier two manufacturers. So you interestingly for the delivery permit have excluded the retail establishments under the cannabis statutes.

[Unidentified Committee Member]: But there are some retailers that

[Kirby Keith (Office of Legislative Counsel)]: are also cultivators and manufacturers, right? So so they can still do it if they ask me.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Yeah. I mean, that's actually weird because the cultivators and the processors are not as familiar with all the the the regulations you have to do to they

[Unidentified Committee Member]: don't

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: have the setup to to do the sales in the same way.

[Kirby Keith (Office of Legislative Counsel)]: They also just because of that, they feel like they and I just wanna pair a price for them. They can make converts in the room, but they are not getting a huge markup or they're selling wholesale. Yeah. They're selling wholesale. So the retailers are getting a large part of the profit. This would allow them to sell direct. As long as they do it. As long as they conform to all the rules that I trust to to to enforce that I I don't think it's gonna serve the benefits.

[Sen. Ann Cummings (Chair)]: So this would be what? The farmer that's throwing it.

[Unidentified Committee Member]: It's late in the day. So I definitely wanna do this a $100. There's no spikes. I I

[Sen. Ann Cummings (Chair)]: need Alright. I I have a motion on the floor. Is there any more discussion on the motion? We now know that there are regulations. The cannabis board has the ability to put in some guardrails, but this basically would allow a cultivator who is now selling wholesale to a retailer or to a processor, but it would also allow the maker of the brownies to deliver to your house? Process. To process. Yes. To make more brownies. So the motion is that we set the license fee, delivery fee at $250. Further discussion? If not, I'm just going to say all those in favor say aye. Aye. Opposed say no. That's what I thought. It's $3.03. You're welcome to try again tomorrow. See you. That's the whole. We're not moving at tonight. I was gonna try and get it out tonight. We can. That's okay.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I just wanted to I just I just I gave it a shot. I'm I'm concerned about the section. I'm now on record. Oh, I'm fine if you wanna vote on the bill. Alright.

[Sen. Ann Cummings (Chair)]: We still need to hear from Ted to know what the fiscal impact

[Tim Barnett (Interim Fiscal Office)]: Oh, right. I I don't have anything more. I know that think a lot

[James Pepper (Chair, Cannabis Control Board)]: of your concerns will be heard, at least at the senate Yeah.

[Sen. Ann Cummings (Chair)]: You gotta give us a fiscal update. I hate quoting this out now because I don't know if the office is still there. Can we can you text upstairs and see if they're still there? If not, we can meet in here at five minutes at nine tomorrow.

[Tim Barnett (Interim Fiscal Office)]: I will not be there.

[Sen. Ann Cummings (Chair)]: I will not be here. Alright. Do you have most I don't think

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: I don't think be sad to miss it. She's gonna get

[Sen. Ann Cummings (Chair)]: a second shot. Well, that'll yeah. That'll be Probes

[Kirby Keith (Office of Legislative Counsel)]: asked me if we're gonna vote this out today. Don't know if that's pressure

[Unidentified Committee Member]: if we can get it to a Probes or

[Sen. Ann Cummings (Chair)]: call Andrew. Were trying to get it out and tell him yes. He's not supposed to be text during meetings.

[Tim Barnett (Interim Fiscal Office)]: Tim Barnett, Interim Fiscal Office.

[Sen. Randy Brock (Member)]: Chair

[Tim Barnett (Interim Fiscal Office)]: Pepper covered most of the fiscal impacts in the bill, particularly those that pertain to this committee, So I will gloss over a lot of them. They're also evident by doing the math in the bill, if you have 20 permits and the final age, right, then doesn't change. Exactly. So I will spare you all at this time of day a full review of that. I will note, however, there are

[Kirby Keith (Office of Legislative Counsel)]: two pieces that weren't covered,

[Tim Barnett (Interim Fiscal Office)]: or I would like to provide a little additional context on. In section 24

[Sen. Ann Cummings (Chair)]: In a minute?

[Tim Barnett (Interim Fiscal Office)]: I'll be speaking. In section 24 Just a that section would change the calculation of household income that is used to calculate property tax credits. And so it would allow folks who have cannabis businesses to deduct business expenses from their definition of income for the property tax credit only.

[Kirby Keith (Office of Legislative Counsel)]: This is separate from personal and corporate income.

[Tim Barnett (Interim Fiscal Office)]: We conferred with the Department of Taxes, and they did the initial number crunching, we reviewed it, and it seems like there's a very minimal impact to, there would be a minimal impact to the education, de minimis, certainly de minimis.

[Sen. Ann Cummings (Chair)]: I love the word de minimis.

[Tim Barnett (Interim Fiscal Office)]: Within the Education and General Fund, and within But

[Sen. Ann Cummings (Chair)]: we see a huge influx of, yeah.

[Tim Barnett (Interim Fiscal Office)]: Yes, and this is, you know

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Why is this? Is there another kind of business against you do this?

[Tim Barnett (Interim Fiscal Office)]: All businesses,

[Kirby Keith (Office of Legislative Counsel)]: if you have a passive business, for example, so you're receiving income from that business,

[Tim Barnett (Interim Fiscal Office)]: and your household income is dependent on that business, you're allowed to deduct your cost of goods and services, right, can be deducted from household income. The idea here

[Kirby Keith (Office of Legislative Counsel)]: is to provide parity with all

[Sen. Ann Cummings (Chair)]: of the It's the profit that is the income. The base income. It's gross in net income.

[Tim Barnett (Interim Fiscal Office)]: And standard caveat, since we are talking about the Education Fund, while this is a de minimis impact, absent other changes to policy, the Homestead Education Property Yield, for statewide Homestead Education Property Tax, be, may need to be adjusted to account for foregone revenue. Another very tiny, minute piece when it pertains to fees is there was language that would allow folks to form Canvas cooperatives under title 11 chapter nine.

[Kirby Keith (Office of Legislative Counsel)]: Folks who organize in

[Tim Barnett (Interim Fiscal Office)]: that way pay a $20 fee. I can't imagine there would be a lot

[Kirby Keith (Office of Legislative Counsel)]: of revenue from that, but wanted

[Tim Barnett (Interim Fiscal Office)]: to flag that that is involved here as well. Okay. But if they

[Sen. Ann Cummings (Chair)]: if follow on, we'll make $20 and earlier in the day next year, we can adjust it if anyone wants.

[Tim Barnett (Interim Fiscal Office)]: Totally. And I just yes. This is dotting ice crossing t's even though we're late in the day. Yes.

[Sen. Ann Cummings (Chair)]: Yeah. Appreciate. Okay. Questions for Ted. Alright, committee. What would you like to do with this?

[Unidentified Committee Member]: I would

[Sen. Ann Cummings (Chair)]: Burning is not a lot.

[Unidentified Committee Member]: I would move favorably draft 3.2 of s two seventy eight as presented to us from Senate Committee of Economic Affairs. K.

[Sen. Ann Cummings (Chair)]: Chittenden has moved favorably. And what version is that? 3.2. 3.2 of S 78 as it came to us from Vermont Housing Economic Development and General Affairs. Is there further discussion, amendments? If not, the clerk will call a roll on this one.

[Kirby Keith (Office of Legislative Counsel)]: Senator Chittenden? Yep. Senator Beck? Yes. Senator Hardy?

[Christopher Mattos (Clerk)]: Yes. Senator Brock?

[Sen. Randy Brock (Member)]: I guess so.

[Sen. Ann Cummings (Chair)]: That means

[Christopher Mattos (Clerk)]: Senator Gulick? Senator Mattos, yes. Senator Cummings?

[Sen. Ann Cummings (Chair)]: Yes.

[Kirby Keith (Office of Legislative Counsel)]: Six zero one.

[Sen. Ann Cummings (Chair)]: Okay. You report that to try to Okay, committee. That is it. Thank you.