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Vermont Lawmakers Approach Legal Marijuana Sales Agreement Amid Conference Negotiations

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Vermont lawmakers are another step closer to finalizing a bill to legalize marijuana sales after finishing a conference committee meeting where they discussed the economics of the proposed system and outstanding issues between the two chambers of the legislature.

While the state legalized possession of up to one ounce of cannabis and cultivation of two plants in 2018, there are currently no regulations in place that allow for retail sales. The cannabis commerce bill cleared both the House and Senate this session, albeit in different forms, and so a six-member bicameral panel is tasked with resolving those differences.

The Senate on Monday agreed to 37 of the House proposals on the legislation, while disagreeing with 12 others. On several measures, it offered compromises that the House will be able to weigh in on when it issues its response next week.

The conference met for the first time last week, with negotiators debating issues such as which regulatory body should be responsible for overseeing the state’s existing medical cannabis program, how tax revenues would be distributed, municipal decision-making on marijuana businesses and reporting requirements for regulators charged with overseeing the industry. At one point, it seemed that disagreement over an unrelated seatbelt enforcement provision could upend the entire bill.

In the week since, the Senate agreed to a number of House provisions—though they remain opposed to certain proposals like making it so individual jurisdictions would have to opt in to the market instead of simply allowing those that don’t want cannabis commerce to opt out. There’s also continuing disagreement over other policies such as House proposals to ban cannabis products containing more than 30 percent THC and allowing roadside testing of saliva for impaired driving.

The House-passed seatbelt provision, which would allow police to pull over drivers for not wearing them, also remains a point of contention.

As a compromise to disagreements on tax issues, the Senate proposed setting the excise tax on retail marijuana sales at 14 percent, with two percent earmarked for local municipalities that allow cannabis businesses to operate in their area. Separately, it also asked that health warnings for marijuana products be developed by regulators “in consultation with the Department of Health and adopted by rule.”

Monday’s meeting largely focused on cannabis tax revenue, with negotiators from both chambers discussing updated estimates about how much the state stands to take in under the House and Senate bill, and how soon. The analyses were conducted by the Joint Fiscal Office (JFO).

Watch the Vermont conference committee meeting on marijuana commerce legislation below: 

For the House version, the mid-estimate of marijuana sales is $31.4 million for fiscal year 2023, $66.8 million for 2024 and $87.6 million for 2025. Projected excise tax revenue is $4.4 million for 2023, $9.4 million for 2024 and $12.3 million for 2025. The House bill would also bring in sales tax revenue ranging from $100,000 in 2022 to $3.8 million in 2025. Those dollars would be designated for an education fund.

Sen. Dick Sears (D), the chief sponsor of the bill, S. 54, and the chair of the body’s Judiciary Committee, said during the meeting that he felt the initial JFO estimates for were too low and that they “way underestimated the income” from cannabis sales. However, those figures were revised and updated shortly after the meeting.

Under the Senate version, JFO projects that the state will see $30.1 million in marijuana purchases for the 2023 fiscal year, $66.8 million for 2024 and $87.6 for 2025. Projected excise tax revenue is $500,000 for 2022, $6.1 million for 2023, $12.7 million for 2024 and $16.4 for 2025.

JFO also created a chart that normalizes other legal cannabis states’ populations and applies that model to the House’s proposed tax rates.

Via JFO.

While the conference committee dedicated significant time to talking about economic forecasts for each chamber’s respective bills, Sen. Joe Benning (R) emphasized that tax revenue “was never the main reason for going through this system” of approving cannabis commerce legislation.

“We want a place for people to purchase a safe product that has to be monitored,” he said. “Those are the main objectives for this program, not the number of dollars that we will see.”

Sears also stressed that the reform “is more about consumer safety than it is about revenue.”

The senator also circled back to the seatbelt hangup the panel debated at last’s month meeting. He reiterated that the issue is a non-starter on the Senate side. Saliva testing components would also be a “tough sell,” he said.

“What we have done is given in many areas, we’ve agreed with the House,” he said. “There’s about eight areas where we’re apart. I won’t insult anybody that they’re not major issues, but we are actually much closer than many would believe. So we could get this done.”

Legislators are hoping to come to a resolution and finalize the bill during their next meeting on August 31, when the House will deliver its counter-offer to the Senate. If agreed upon, the panel would still have to get authorization to sign the conference report from the Joint Rules Committee. Then the unified proposal would go back to both chambers for a final vote on sending it to Gov. Phil Scott (R).

“I appreciate the Senate’s work here in agreeing to many of our positions. I do think we have covered a lot of ground and reached agreement on many things,” Rep. John Gannon (D), who chairs the House Committee on Government Operations, said. However, “there are some areas that are deeply important to the House where we’re still in disagreement,” specifically concerning highway safety.

“I think we’re all in agreement what the top priorities are. We’ve come down to six of seven issues that are outstanding,” Sears said. “Whether we can bridge those issues or not, we’ll find out next Monday.”

On a separate note, leaders from the Judiciary Committees in both chambers are moving on a bill to facilitate automatic expungements of prior cannabis convictions. While not included in the tax-and-regulate bill at this stage, it’s possible it could be adopted as lawmakers finish negotiations.

“The announcement that the Senate and House Judiciary leaders have agreed to advance Senator Pearson’s automatic expungement bill is exciting news,” Dave Silberman, an attorney and Democratic nominee for the elected office of high bailiff in Addison County, told Marijuana Moment. “Thousands of Vermonters still carry criminal records for simple possession, and suffer real harm from those records every day.”

“My experience running expungement clinics shows that automatic expungement is the only way to truly repair the harm that decades of prohibition have wrought on Vermonters,” he said.

The Senate approved a bill in June that would double the amount of marijuana that can be possessed and grown without the threat of jail time.

Meanwhile, Vermont Democratic Party insiders included planks to decriminalize drug possession and legalize marijuana sales in a draft platform for 2020. The document is still subject to change based on comments from county committees and delegates at the party’s September 12 convention.

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