BRATTLEBORO — Towns and cities don’t know exactly what their slice of the retail cannabis revenue in Vermont will be yet, but a couple of proposals would make the prospect more appealing.
The topic came up in recent editorials and an episode of “The Montpelier Happy Hour” in which host Olga Peters interviewed James Pepper, chairman of the Cannabis Control Board (CCB), and State Rep. Emilie Kornheiser, D-Windham-2, who is vice chairwoman of the House Ways and Means Committee. Kornheiser said towns have to opt-in via community votes to host retail cannabis shops, and incentivizing the prospect with more revenue would help bring more shops into the fold.
“This was hotly debated in the conference committee,” Pepper said. “This was the main sticking point between the House and the Senate.”
Pepper said the House felt that fees were enough to entice towns to host shops, but the Senate wanted to give towns some of the tax revenue. He described the board discussing if roads would need to be repaved more often or law enforcement would need to respond to more incidents.
The board was established through Act 164 for “the purpose of safely, equitably implementing and administering the laws and rules regulating adult-use cannabis in Vermont,” according to ccb.vermont.gov. Retail cannabis sales are anticipated to begin in Vermont starting in October 2022.
Pepper said the CCB ultimately decided to recommend having a $100 maximum local administration fee or charge a set fee based on time spent on reviewing the application for a retailer. The CCB also suggests the Legislature direct 1 to 2 percent of the state excise tax on retails sales to the municipalities where the retail sales occurred.
Sales tax applies to nearly anything purchased and excise tax applies to specific goods and services. Some communities, including Brattleboro, have a 1 percent local option sales tax on top of state taxes.
State Sen. Jeanette White, D-Windham, doesn’t feel the CCB’s proposed revenue share with municipalities goes far enough.
“But at least they’ve mentioned it somewhat,” she said.
White is working to introduce a bill that has 10 percent of the excise taxes from cannabis sales going to the state and 4 percent going to municipalities.
“We’re seeing towns are the ones that are going to have to deal with the issues, not the state,” she said. “It’s the towns that need the revenue and we should be doing more for towns with revenue sharing. This is a new revenue source so this is the perfect time to do something because we won’t have a new revenue source for a long time.”
White anticipates the bill will get held up in the House Ways and Means Committee, which she said is “all about keeping the money for the state.” She questioned why a town would agree to take on cannabis retail establishments without getting much.
Thirteen municipalities have a 1 percent local option sales tax but “other towns won’t get anything,” White said.
“I’m working with the League [of Cities and Towns] to see if they can make a difference this year because if we don’t do this now, it won’t happen,” she said. “The towns are the ones who have to deal with the zoning and bylaws and water extensions and sewer treatment stuff.”
Sen. Dick Sears, D-Bennington, said he fully supports White’s proposal.
“I absolutely support sharing some of the revenue with the communities, particularly through a sales tax,” Sears said. “I’m all in on that.”
Sears said the Legislature should keep trying to create revenue for towns.
Tim Wessel, a Brattleboro Select Board member appointed to the Cannabis Advisory Committee where he represented the interests of municipalities while working with the CCB to create a successful marketplace, said the CCB listened to him and the Vermont League of Cities and Towns when they recommended asking the Legislature to reconsider giving a portion of the excise tax to municipalities.
“I think it’s a fairly big deal that it’s all back on the table if Jeanette reintroduces that idea and will the House be able to ignore it now?” he said.
Wessel counted only about 30 municipalities out of 257 in Vermont that have opted in for cannabis retail sales via community votes.
“That’s kind of a problem because all of that state revenue money is under the assumption that there’s going to be a lot of towns who have cannabis sales,” he said, noting that he’s not making the arguments on behalf of Brattleboro because that’s not his job as a committee member. “I think Brattleboro is going to be OK no matter what happens because we have the local option sales tax, which I fought for.”
Wessel said the board’s recommendation for the revenue share with municipalities is lower than any other state or other states have it just as low but with better fees.
Kornheiser said to support small businesses, “we need to really be focused on low fees [and] decently low excise taxes.”
“We need to be supporting those businesses with a really positive regulatory structure, so I really appreciate how the board came forward with recommendations that were in keeping with those policy goals,” she said on the radio show.
Pepper told Peters he thinks if retail cannabis in Vermont has a craft market similar to the ones it has for beer, maple syrup and cheese “then we’ll hit some very interesting revenue goals.” He anticipates annual state tax revenue to be about $40 million until nearby states adopt markets.
The board recommends all of the 6 percent sales tax collected on cannabis sales go to Vermont Afterschool programming and 30 percent of the excise tax revenue go to prevention programming.
Greg Sukiennik contributed to this report.