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Vermont’s legal cannabis marketplace celebrates its second anniversary

Cannabis hangs in the dryroom at Satori.
Zoe McDonald
/
Vermont Public File
Cannabis hangs in the dryroom at Satori in February 2024.

This month marks the second anniversary of Vermont’s retail cannabis marketplace opening.

Back in October of 2023, there were fewer than a dozen pot shops in Vermont — now, there are over 80.

The state estimated sales would be roughly $85 million in fiscal year 2024. They far exceeded that, totaling almost $130 million and generating roughly $25 million in new revenue for the state.

There are solid growth projections for the next few years, but there are also some difficulties.

Vermont Public’s Bob Kinzel recently sat down with host Jenn Jarecki to share more. This interview was produced for the ear. We highly recommend listening to the audio. We’ve also provided a transcript, which has been edited for length and clarity.

Jenn Jarecki: Bob, can you give us a brief overview of where things stand now with Vermont's cannabis retail marketplace?

Bob Kinzel: Sure. Generally, I think most folks believe it's gone pretty well. At the same time, they also acknowledge there are some challenges on the horizon. James Pepper is the chairman of the Cannabis Control Board. He had several goals when the marketplace opened two years ago. One was to persuade as many of the so-called legacy growers to join the legal system and be licensed. And second, he hoped these growers would develop special products, much like the state's craft beer or cheese markets. And he says he's pleased with the way things have worked out.

James Pepper: We have also started seeing some Vermont brands that have developed over the past two years that have come from the legacy market that, in my view, could out-compete literally any cultivator in the country. This is one more example of how Vermont likes to punch above its weight class when it comes to craft products.

Bob Kinzel: Pepper says the development of these craft products will be even more important if and when the federal government legalizes the interstate sale of cannabis products. But Jenn, it's unlikely that this is going to happen anytime soon.

Jenn Jarecki: Yeah, when you said it, Bob, it struck me as a pretty big if and when. But Bob, what are some of the challenges facing the retail cannabis marketplace in Vermont?

Bob Kinzel: Well, the Vermont Growers Association, which represents cultivators, retailers, processors, and manufacturers, says there's a key element that's currently missing in this new marketplace, and that's the direct sale from growers to consumers. Jeffery Pizzutillo, who is the head of the association, says this step would allow these growers to earn more money for their crops.

Geoffrey Pizzutillo: So, you know, it is challenging, if not impossible, to have a livelihood with an agricultural product commodity and sell wholesale alone. The market affords them no opportunity to form relationships directly with consumers, the general public, as other farms and ag producers can do.

Bob Kinzel: Chairman Pepper says this is an idea worth pursuing, but he says it would have to be phased in because Vermont has roughly 400 cultivators and he doesn't have the staff to oversee this approach all at once.

James Pepper: Anyone who's making these kinds of craft or value-added products needs the opportunity to tell their own story directly, kind of write — chart their own path forward, directly to customers, and at least have the opportunity to kind of create demand for their products.

Bob Kinzel: And Jenn, just to be clear, these direct sale products would be tested and regulated by the state using the same process that the growers already go through when they sell their products to retailers.

Jenn Jarecki: I'm curious, does that mean in a town that may not have opted in?

Bob Kinzel: That's exactly correct. The limited sales might be allowed in those towns. That's yet to be determined.

Jenn Jarecki: Bob, what are some of the other key challenges facing Vermont's cannabis industry in the coming years?

Bob Kinzel: Jenn, I think the really big one is market saturation. This means trying to avoid having a large number of stores located in a dense geographical area. And here's why this is happening now. Under Vermont law, a retailer can only be located in a town if the community has voted to allow this to happen. It's known as the opt-in provision. Now, about a third of all Vermont towns have given their approval to have a retail store, but very few are in the more rural parts of the state. Now, the Cannabis Control Board has imposed a moratorium on new stores while it develops specific rules to deal with this issue. Geoffrey Pizzutillo of the Growers Association wants to change the law so retail sales can take place unless a town actually votes to opt out. And this would be a big change.

Geoffrey Pizzutillo: Our retailer can't go to South Burlington or Williston, right? Or Colchester, in the Chittenden County area. Which would which would have a drastic and significant implication on the market. So instead, we get, you know, 15 whatever retailers in Burlington.

Bob Kinzel: But Jenn, Chairman Pepper says switching from opt-in to opt-out is a very tough political sell at the Statehouse. Instead, he's got a different idea. He wants to consider creating a new limited license for grocery and convenience stores that would allow them to sell a small number of cannabis products.

James Pepper: You could see a situation where there might be limited availability of maybe prerolls or flower behind the counter, very similar to how we sell tobacco at a lot of convenience stores or general stores.

Bob Kinzel: And Pepper says it might be possible to locate these limited sales outlets in communities that have yet to give their approval to a full retail operation.

Jenn Jarecki: Bob, I understand the Growers Association is also interested in passing a law that allows public consumption of cannabis products. Can you tell us more about that?

Bob Kinzel: Sure. Executive Director Pizzutillo thinks it should be legal to use cannabis in any public space where tobacco products are now permitted. And he expects that legislation will be introduced in January to achieve this goal.

Geoffrey Pizzutillo: New York State has public consumption. Canada has public consumption. So we are sandwiched between two large areas, right where you can — in a non-stigma environment — enjoy cannabis, if you so choose, in a responsible manner. So, we think Vermont should should have that as well.

Bob Kinzel: Jenn, this proposal would be subject to legislative approval. I would anticipate a very active debate over this issue.

Have questions, comments or tips? Send us a message.

Bob Kinzel has been covering the Vermont Statehouse since 1981 — longer than any continuously serving member of the Legislature. With his wealth of institutional knowledge, he answers your questions on our series, "Ask Bob."