Hopeful cannabis entrepreneurs prepare for Vermont’s new legal market

One day soon, Tito Bern hopes to be growing cannabis on a property he recently purchased in Addison County. And he’d like to sell his product at a storefront somewhere in Burlington. 

He’s already talking to building owners in the city about spaces for his potential cannabis shop, and is considering buying a retail space of his own. 

Bern, who owns the Bern Gallery, a smoke shop and glass blowing business in Burlington, said his “whole world just revolves around cannabis.”  For years, he has grown the plant for himself and others as a patient in Vermont’s medical marijuana market. 

“Being an entrepreneur is definitely my number one inspiration, so naturally being an entrepreneur in this new taxed and regulated market is super super exciting to me,” Bern said. 

“I can’t wait to bring real organic cannabis to the world,” he added. 

Bern is one of many entrepreneurs who are hoping to open a cannabis business next year, when Vermont’s legal marijuana marketplace is scheduled to launch.

While the earliest date that retail cannabis establishments will be able to begin selling their products to the public is still more than a year away — October 2022 — many are already preparing to apply for licenses, and set up shop. 

Tim Fair, a Burlington-based attorney who works with cannabis businesses, says his firm has been in touch with 180 people interested in opening up marijuana ventures in Vermont.

While cannabis retailers won’t be able to apply for licenses until September 2022, Fair is encouraging applicants to set up their businesses in advance so that they’re “ready to go” on the day they submit their applications. 

“We’re recommending to our clients, you better have your dispensary door-ready,” he said. 

“I mean standard operating procedures drafted, staff hired, ID badges done, trainings complete. We want to be able to submit our clients’ applications with their projects ready to run,” Fair said. 

It will be up to Vermont’s Cannabis Control Board, the newly appointed panel tasked with regulating the state’s marijuana market, to determine who gets licensed.  

The board will also be responsible for writing various industry regulations in the coming months, and recommending a system of licensing and fees for cannabis businesses that will have to be approved by the Legislature next year. 

While the board has yet to make any formal decisions about its licensing approach, it has signaled it will prioritize supporting small marijuana cultivators. 

In an interview, James Pepper, the chair of the board, noted that it’s only a matter of time before federal cannabis legalization happens. With a nationwide cannabis market on the horizon, he said Vermont’s industry will have a hard time competing with other states “from a purely volume basis.” 

Instead of relying on a few larger cannabis growers, Pepper said Vermont should focus on having “a diversified ecosystem of small and craft cultivators,” similar to its craft beer and cheese industries, which will set it apart. 

“We need to build a diversified ecosystem that will allow Vermont to thrive when our state borders are no longer barriers to movement, and you can have interstate commerce with cannabis,” he said. 

The control board and other state officials are also working to stand up a social equity program that aims to help people of color and others harmed by past marijuana laws to open businesses in the new marijuana market. 

A bill signed into law in June tasked the state with designing a system to provide loans and grants to “social equity applicants,” or people who were disproportionately hurt by marijuana criminalization and want to enter the new market. The loans and grants will be funded by a new “Cannabis Business Development” fund created by the legislation. 

While the state has yet to determine who will qualify for the social equity program, it may include those who have received past convictions for marijuana-related crimes. 

Jimi Smith, of Colchester, who has prior experience growing cannabis on the black market, is hoping to open a cannabis dispensary and cultivation business in Chittenden County. He’s working with Fair, and said he’d like his business to cater to low-income people with health conditions. 

Smith said he has prior convictions for cannabis cultivation, manufacturing and possession. 

He said he has struggled to find employment as a Black person with a criminal record, and that he’d like to hire members of the BIPOC community at his new business. 

“I want to give an opportunity for people that look like me,” Smith said. 

Before any retail pot shops open up in Vermont, the state’s existing medical marijuana dispensaries will be able to begin selling their products to the public. 

There are currently five medical marijuana dispensaries in the state, and as of last month, all of them are owned by out-of-state corporations. 

In late June, CeresMED, which owns two of Vermont’s medical dispensaries — Champlain Valley Dispensary and Southern Vermont Wellness — merged with SLANG Worldwide, a Canadian company, in a $25 million deal. 

CeresMED says that the merger will allow it to expand its facilities, and hire up to 50 more employees as it plans to enter in the new recreational cannabis market. SLANG Worldwide, a publicly traded company that specializes in consumer cannabis packaged goods, owns cannabis brands and product lines that are distributed in 12 states. 

“It’s not just capital that we’re getting in order to finance our expansion plans, but we’re getting that experience and other team members to help us,” Bridget Conry, the director of brand experience at CeresMED, said of the merger. 

Small cannabis cultivators have expressed concerns about the deal, and the advantage that the medical dispensaries have in the new market. 

Geoffrey Pizzutillo, executive director of the Vermont Growers Association, pointed out that there are no limits on the amount of cannabis the dispensaries will be able to grow. 

Giving the medical dispensaries the ability to produce “exponential amounts” of product will make it hard for small businesses to compete in the new market, he says. 

Pizzutillo and small growers are advocating for the Legislature to approve caps on the amount of cannabis that big cultivators can produce.

“If that were to become enacted, immediately, these three businesses would be on a little bit more of an even playing field as everyday Vermonters,” Pizzutillo said, referring to the three companies that hold Vermont’s five medical dispensary licenses: SLANG Worldwide, iAnthus Capital Holdings and Curalead. 

Conry says that her dispensaries plan on supporting and buying products from small growers. Last month, CeresMED announced a “cultivation agreement” with a craft cannabis grower Addison County.  She said the company is actively looking for more purchasing agreements with small growers because it anticipates the dispensaries won’t have enough product to meet demand when the legal market opens up next year. 

This happened when Massachusetts’ legal marijuana market launched in 2018. 

“We need all those legacy growers to be in the marketplace to have the variety that people are going to want,” Conry said. 

Conry said that she would support caps on cannabis production to help prevent oversupply in the market in the long term. But she said the conversation about the issue needs to be “a lot more detailed” before the company could determine what a “reasonable” cap would be. 

Shawn Lenihan, the farm manager at Kismet Farm in Rochester, currently grows organic hemp and flowers. But he wants to start producing cannabis as a craft cultivator when the legal market opens up.