What’s in Bill S.278 as Passed by the Senate?

On Friday, March 27, after almost three months in the Senate chamber, Bill S.278, the leading cannabis legislation this session, passed the Senate and is on its way to the House. The legislation has changed since its introduction in January, and this updated summary reflects the latest version of the bill as passed by the Senate.

A page from Bill S.278, An Act Relating to Cannabis.

“Although it is still far from the end of the session, and we still wish to implement additional changes, such as ag-related, equity-related, antitrust, and medical reforms, several important policies survived the Senate, including two direct sales proposals for producers and increased transaction and possession limits – this bill reflects tremendous potential from previous years’ legislation.”

Bill S.278, An Act Relating to Cannabis, is a market expansion bill intended to increase the economic potential of the adult-use market. Its goal is to capture a larger share of the unregulated customer base and generate increased tax revenue.

Some key proposals aimed to create a more robust, regulated cannabis market in Bill S.278 include: Establishing a pilot program permit system that allows Tier 1 and Tier 2 cultivators and manufacturers to sell directly to customers; Reforming retail opt-in procedures to simplify the process of petitioning a town for retail operation; Increasing THC package limits and expanding possession and transaction limits; Providing greater protections for non-homeowners; Introducing a direct sales event permit that allows for various licenses to hold temporary events, such as tasting events on farms with sales; Supporting the formation of cannabis producer cooperatives.

The legislation spent nearly three months in the Senate, and during the final two weeks before the scheduled vote, there was a surge of amendments. In the process, some equity-related sections got removed, including the appropriations for industry and community reinvestment, as well as the THC cap reform language. Meanwhile, we strengthened other sections, such as those on direct sales, and added protections for non-homeowners. As a result, the language in the bill has changed significantly since its introduction in January. This updated summary reflects the most recent version of the bill, which the Senate passed on Friday, March 27.

A break down of Bill S.278 As Passed by the Senate

We summarize all 32 sections of Bill S.278 as passed by the Senate, so everyone can become well-informed about this important piece of legislation as it works its way through the State House. We encourage you to read the full text of the bill alongside the summary below.

Section 1
This section proposes increasing the total package THC limit from 100 to 200 mg. Note that this does not affect the individual serving limits.

Section 2
This section proposes increasing the retailer transaction limit to 2 ounces of cannabis and equivalent in cannabis products.

Section 3
This section proposes increasing the state possession limit to 2 ounces of cannabis and 10 grams of hash, and is a companion provision to Section 2. Note that in statute, the word hash is often used in a broad context, whereas the CCB has created more narrow definitions.

Section 4
This section proposes increasing the state possession limit to 2 ounces of cannabis and 10 grams of hash, and is a companion provision to Section 2 and 3.

Section 5
This section proposes a new Event Permit pilot program available to any cannabis establishment, including cultivators, manufacturers, and retailers. The concept limits events to 24 hours or less and to locations with access control, and tasks the CCB with developing rules for the new permit, including a security plan, a safe transport plan, a product sale plan, a capacity and intent, with additional rules to be determined by the agency. Retailers who sell at the event cannot also sell at their licensed location at the same time. There are to be no more than 10 public events and 10 private events each year over the course of two years, and the permits are to be distributed equally among cultivators, manufacturers, and retailers. The permit costs $500, and consumption is optional. When the pilot ends after two years, lawmakers are to consider changes and codify the policy into law.

Section 6
This section proposes a new Delivery Permit pilot program, available to Tier 1 and 2 Cultivators and Manufacturers who do not also hold a retail license. The permit allows sales via delivery to addresses in Vermont between 9 am and 5 pm, and the licensee or an employee must make all deliveries. It tasks the CCB with developing rules for the new permit, including permit restrictions, storage and security requirements, and additional rules determined by the agency. The permit costs $100. No more than 15 permits may be issued each year over the course of two years when the pilot ends, and lawmakers are to consider changes and codify the policy into law.

Section 7
This section proposes allowing producers who hold an Event Permit or Delivery Permit to collect the cannabis excise tax. Note that there are several technical provisions throughout the bill, such as this section, which serve as companion sections to enable producers to sell directly to the public.

Section 8
This section proposes requiring Event Permit or Delivery Permit holders to maintain sales records and is another technical section to enable producers to sell directly to the public.

Section 9
This section proposes allowing Event Permit or Delivery Permit holders to collect sales tax, and is another technical section intended to enable producers to sell directly to the public.

Section 10
This section proposes that the CCB start an abbreviated rulemaking process for the Event and Delivery Permits by July 1, 2027, and submit a report to lawmakers assessing the new permit pilot programs by November 15, 2027.

Section 10a
This section proposes reducing the fees for Tier 1-5 outdoor cultivators by 50% – a Tier 1 fee would go from $750 to $375, Tier 2 from $1,875 to $925, Tier 3 from $4,000 to $2,000, Tier 4 from $8,000 to $4,000, and Tier 5 from $18,000 to $9,000. Note that this proposal does not affect the fees for Mixed Light and Indoor licenses.

Section 11
This section proposes a couple of different local control-related policies.

First, it proposes making it easier to obtain a vote on retail opt-in by allowing a petition process to compel a vote, similar to Town Meeting Day, when an issue can get added to a ballot by petitioning 5% of the registered voters in a town. This section allows a Vermonter to use that same petition process throughout the year to obtain a vote for retail opt-in.

Second, it proposes adding Tier 1 Indoor Cultivators and Tier 1 Manufacturers to an existing exemption regarding one of the conditions for local outdoor cultivators, related to the abatement of public nuisances.

Section 12
This short section proposes changing the frequency of CCB reimbursements to a town for administrative overhead related to local control from quarterly to annually.

Section 13
This section proposes changing the employee ID card duration from 1 year to 2 years and increasing the fee from $50 to $100. It also proposes allowing the CCB, through guidance, to register products for more than one year at the same cost for products it defines as low-risk and shelf-stable.

Section 14
This section, along with several others throughout the bill, proposes removing the Integrated License type from the law. Note that there are several sections with the same purpose because the policy appears in different places throughout the Vermont code.

Section 15-22
These sections propose removing the Integrated License type from law, and are companion provisions to Section 14.

Section 23
This section proposes allowing Tier 1 Cultivators, Tier 1 Manufacturers, and Economic Empowerment applicants access to the Cannabis Business Development Fund.

Section 24
This is a corrective section, at the request of the Tax Department, to make it explicit in law that licensees may deduct cannabis business expenses on state tax returns. No substantive change here.

Section 25
This is another corrective section, at the request of the Tax Department, to make explicit that cultivators of cannabis outdoors, not just initiating cultivation, under the Value Appraisal Program, are subject to the rules under the CCB. No substantive change here.

Section 26
This is the final corrective section, at the request of the Tax Department, to allow it to share tax information with the CCB for tax administration purposes. No substantive change here.

Section 27
This section proposes establishing a new corporate registration for cannabis producer cooperatives. Currently, a producer cooperative corporation registration is available to individuals engaged in the production of farm products and handmade products. This section allows cannabis cultivators to access the same corporation registration type, called a cannabis cultivation cooperative corporation.

Section 27a-27b
These sections propose a mechanism to establish a regional compact with neighboring adult-use states should the federal government legalize cannabis.

The proposal provides flexibility dependent on the governor to enter into a compact in the future, with the intention to establish requirements for compatibility between state laws as members of the compact, such as packaging and licensing, and to what extent other state licensees may operate in the state, and allows the CCB to be the authority over such matters.

Section 28
This section included proposals for appropriations for the Cannabis Business Development Fund and the Land Access and Opportunity Board, which the Senate Committee for Appropriations removed.

Section 29
This section proposes sunset dates for the Event Permit and Delivery Permit pilot programs, as well as the end date for the Integrated License, which removes a section of law preventing the CCB from regulating hemp or medical cannabis.

Section 30
This section proposes explicit protections for non-homeowners by preventing property owners from prohibiting non-lighted consumption, and places the burden on them to prohibit smoking.

Section 31
This section proposes explicit protections for non-homeowners by preventing property owners from possession.

Section 32
This final section proposes the enactment dates for different proposals in the legislation, and allows the fee reduction for outdoor cultivators to take effect should the Cannabis Regulation Fund have $105,000 to reimburse the agency for funds lost to the fee reduction.

Conclusion and A Look Ahead

Although it is still far from the end of the session, and we still wish to implement additional changes, such as ag-related, equity-related, antitrust, and medical reforms, several important policies survived the Senate, including two direct sales proposals for producers and increased transaction and possession limits – this bill reflects tremendous potential from previous years' legislation.

As we move forward, it is important to recognize that the bill will continue to change, and that the House chamber has historically been less willing to engage with cannabis at the level of discourse we feel the industry warrants. We anticipate challenges as we continue to strengthen the bill's proposals and work to include necessary reforms. It will take the community, all license types, patrons, and allies of the plant to engage the House and rally to see this important market expansion bill through. Anticipate action alerts and calls to meet in the State House in the coming weeks.

Lastly, although we are still in the midst of the session, we want to take a moment to thank everyone who reached out to legislators, shared our Coalition's action alert, joined us at the State House over the past months, and supported the improvement of the bill in the Senate. Now, on to the House!