 Welcome, everybody. Welcome, Michelle. It's one of those events in our committee where we're like, wow, all new people. Including, Michelle, I can't remember 10 years I've been here that you've tested on. I don't think I have. Actually, what I'm embarrassed to say is I'm on the way up here, so Ron called. We just had a little bit of room. And I have to ask. I apologize, and I'm sorry for the mix up, but Ron said something to me about see you tomorrow. And it was on my, we had a meeting notice for Thursday, so I wasn't expecting to be here this morning. Sure. Well, I appreciate you having a free schedule. Sure. We don't seem to get that kind of freedom from our, from getting in these days. No, it's a fluke. It's a, it's a, so it's a great. So the first thing, just committee, we invited Michelle and Michelle is the lead attorney on S54. And he's working on cannabis in this building probably for the last six or eight years in any way from medical marijuana on. More than 20. More than 20. So primarily with judiciary, right? Am I right? Yeah. And so she's the lead attorney on S54. There are control. There are, there are parts of the bill that have to do with control, which is again in our realm of our sphere of knowledge or, or, you know, portfolio. So I asked Michelle to come up and to talk about the aspects of S54 that fit into that. We won't own, we don't own the bill. This is essentially courtesy call to let us know what's, what's going on in the cannabis bill. Michelle, and then for folks around the room, because I don't know many of you, let's just introduce ourselves. So we know who's here. I'm representative Tom Stevens from Waterbury. Representative Gonzalez is not here for the new scheme. Representative Matt Byron. Byron Grigens. Randall Zodd Barnard. Representative Lisa Hager for Berkshire. Mariana Dimash from Swanton. John Colackey, South Burlington. Tommy Walts, Ferry City. Mary Howard, Redmond City. Jim Pryanov, Standard. I'm Katie. I'm an intern with Saffz and Renfrew, and we represent a few medical marijuana dispensaries. I'm Stephanie Mendes from the Vermont Medical Society and the American Academy of Pediatrics Vermont chapter. Hi, I'm Matt McMahon with MMR. We're working with NCS and Maximus 2 IT companies on this. Worth Allen with Down Dracula Martin representing Breastridge, Vermont. Dylan Zwicky, Lee and I'm public affairs here on that trace IT company. Marie Hormar with the Department of Public Safety. I'm Laura Souven. I direct the Vermont Coalition to Regulate Marijuana. Gary Kessler from the Department of Liquor and Lottery. Great, and we do have on our document page for today, we do have a letter from Representative Coppola Hansis that does ask us to take a look at this information. We can look at that letter a little bit later. You don't need to see it today, but just as it's one of those formal requests, or not on letterhead requests. Did it not come through that way? I guess not. It's up behind you, Michelle. And so it just says basically if we could review the provisions dealing with the municipality's authority to opt in, opt out, to operate within its jurisdiction and the creation and operation of a localizing commission and send any thoughts to them. So that's where we are. So Michelle, the microphone is yours. Please take it away. So I'm thinking about how it's a really broad topic, it's a big bill, and I know you're looking at kind of a particular issue. If it works for you, let me just tell you kind of what I was thinking, which is I'll just talk to you a little bit about how marijuana is treated under Vermont law currently, what you have, and then I can just do a broad overview of the bill so you have the context. Because I think it's hard for you to kind of talk about your specific licensing or opt in or opt out issues and how it parallels, or should it parallel the way that you do with alcohol if you don't understand some of the other moving parts. But let me know if I'm either going too fast or I'm talking about too much stuff that doesn't particularly interest you. Yeah, I think it's more introductory to that, to exactly what the broad picture is, and then how it comes down to, I mean, I'm looking at a timeline, et cetera. So how far we get from the time that we have you is sufficient, and we may have you back. And we have until 10.30 this morning? Yeah. So generally the way that marijuana is dealt with under Vermont law is that you have your, it's in Title 18, so it's actually in the health title, in Chapter 84 under regulated drugs. And so within that chapter you have the criminal and civil provisions for marijuana. There is also hemp, but that's treated completely differently. And so when I'm talking about marijuana, or as the bill talks about and talks about cannabis, so we're trying to switch our terminology, is I'm talking about, so marijuana cannabis, but if I'm talking about hemp I'll specifically say hemp, and that's in Title 6 in the agriculture title. And that's dealt with separately, and that's not dealt with in S54. So you're not talking about at all about the regulation of hemp. So you have in Title 84, you have the criminal and civil provisions. You also have Chapter 86 in Title 18, which is the medical marijuana program. So you have, so that is essentially exemptions from the criminal and civil penalties if you participate in the program. So with regard to the Chapter 84, the way that it's structured is you have a list of regulated drugs. You have marijuana, you have cocaine, you have heroin, you have narcotics, you have things like that. And then there are penalties for unlawful possession, dispensing and sale of those drugs. So in 2013, the Vermont legislature decriminalized possession of an ounce or less of marijuana for adults 21 years of age and older, so that was 2013. Then in 2017, the legislature passed a law essentially removing the civil penalties that have been established in 2013. They removed the civil penalties for possession of an ounce or less of marijuana by adults 21 years of older. The governor vetoed that, but then the legislature came back and it was one of the first things you did in 2018. And so last year, you passed H511. And on July 1st of last year, it became legal under state law for adults to possess an ounce or less of marijuana. It also allows adults to grow up to two mature plants and four immature plants. And anything that that person harvests from their plants, as long as they keep it in a secure location on the property where the plants were grown, that harvested marijuana doesn't count towards your ounce possession. So that's kind of where that's where things sit now. And I'll stop saying 21 and over and just, you know, anytime I talk about adult possession, it's always 21. There's never any discussion in 54 or anything else about allowing anyone under the age of 21 to possess. The exception is in the medical program where they do have patients who are under the age of 21 who are registered patients under the medical program. So in 2004, Vermont became, I think, the ninth state to adopt a medical marijuana registry program. And so it is regulated as under the Department of Public Safety, why Marie is here. And so they've had, we've had a program for 15 years almost in Vermont. And then I think it was in 2011 that the General Assembly have passed legislation allowing for medical marijuana dispensaries. And so until that time, the law was silent on where, so it said basically if you are a registered patient or you can be, you can register with DPS as a caregiver to either grow marijuana for someone or help them administer it or possess it for them. The limit is two ounces and they can have two mature plants and seven immature plants. So slightly more same with regard to the mature plants but a few more with regard to the immature plants. And essentially if you are a registered patient, then you are exempt from any penalties with regard to possessing that. And so then in 2011, there was dispensary legislation and then those got rolling after a couple of years. They currently have five licensed dispensaries in the state. They are allowed to have essentially two points of sales where they meet with patients to serve them and provide them with cannabis and cannabis products. They are also obviously regulated by the Department of Public Safety. Michelle, can you tell the folks how many states now presently, since we passed it, presently have medical cannabis? Mid-thirties. And then I think there may be a few more that have very much more limited, kind of like so for the low THC, high CBD, certain types of that. And then just a quick definition of a mature versus immature plant. How does that work in terms of will my immature plants eventually become mature after I harvest the mature plants? Yes, yes. I think there's a real art there about trying to make sure you only got too mature and what counts in the flowering. And there's definitions in Chapter 86 that talk about what constitutes the mature plants versus the immature plants. So I can have essentially having harvest. Right, so you can have too mature, you can harvest, you do whatever you do, you compost those and then you let the others grow. Without any one time. You can only have two mature plants. I just want to be clear because that's always like why would I want immature plants? Right, because you're staging them. Right, exactly. And Kari Gijer from the Agency of Agriculture is a great person to talk to about plants. I still, even after all these years, I'm still a little fuzzy on how all the botany stuff works with the... Well, there's so many changes. I mean, there's so many, even in the botany of it, there's so many different levels of it. So right now, status right now is that medical marijuana under certain circumstances... Well, marijuana in general is legal to possess in the state. DPS controls the medical side of it. And they control oversight of personal consumption right now? No, there's no control over it. It's just basically when you think about it and you think about generally the drug laws is that you're prohibiting people from possessing certain types of drugs. And then what you did with 511 last year is you just said, we're taking the penalty away. We're just going to be silent. We're just going to say there is no penalty for possession of an ounce or less of cannabis. And so there are, you know, somebody possesses more than that than law enforcement would enforce the laws that you have on the books that... So if you possess over an ounce, there's still criminal penalties. It's misdemeanor, you know, up to a certain amount and then you go into felony level. It's illegal to sell any marijuana outside of unless you're a licensed dispensary. You can, if you are an adult, you can share amongst other adults as long as you stay within your limit. So the idea is that if I'm allowed to have an ounce and you're allowed to have an ounce and we want to say, well, I have this particular strain and you have a different kind of strain, let's trade a quarter of an ounce and you can try what I grew and I can try what you grew. That's all fine, but you cannot sell it. And so part of the procession also is public consumption is still considered? Public consumption is prohibited. There's a very, very broad definition of a public place in the law. Again, this was part of H511 that was passed. And I would just say the general rule is, you know, private residences you can use, but most other places, no. No public, no places of public accommodation, no hotels, no workplaces. It's not only public accommodations, but it's also any place where it's prohibited to have a lighted tobacco product or tobacco substitute. So workplaces that might not otherwise be considered a place of public accommodation would then fall under that. You can't be walking down the street. You can't smoke in a joint. You can't be in your car doing it. And that's a ticketable offense. That's a civil violation. So that would be something like an officer, just like a moving violation that you would get. So if anybody's gotten a speeding ticket or something like that, officer writes you a ticket. There's a, you know, you can admit it and pay the waiver fee right there and then mail it in to the Judicial Bureau if you want to do that. And also quickly, I guess that marijuana federally is considered a class one drug, which means according to the federal government, there's no medical benefit to marijuana, which has prevented, which has created this realm of prohibition for 80 plus years. Well, there's an evolving body of, you know, of basically how the laws have been treated federally with regard to the cannabis, but the controlled substances act, which is passed in 1970 or early 70s, is what it falls under now. There's a schedule for the drugs and marijuana is listed as a schedule one, which means that there's no medically recognized value to it and it is illegal. So under federal law, it is illegal to possess it, to sell it, to dispense it, any of those things. And what other drugs are those? I always forget. It's always, it's, it's interesting because when you look at it, I think generally people look at it and say, oh, interesting, this is way down on number three, but this is up here and so I can get to, I can send you a copy. Yeah, I'm just trying to get a little context because states are now all being states. The federal government has, they're not quite looking the other way nor should they. Right. But say you are allowing states to try to develop these policies that are right. Right. Yeah, there's been an evolution with the new administration. It's less clear. So I will say that on the medical side, there's been a writer on the Department of the Federal Department of Justice funding that basically says that they can't do. DOJ can't use any of its funding to enforce the CSA against state medical programs. So that's been something in Congress has to renew that every year, but that's been going on for a few years now. And then under the Obama administration, the Attorney General had issued a couple of memos that essentially said with regard to states that had legal adult use commercial systems that they had a, you know, they were, they were acknowledging that they have the ability under the CSA to come down and enforce the CSA on folks. But that as long as states were had programs that were complying with a certain criteria that they were going to use their DOJ resources judiciously, and they weren't going to expend them on coming down on states that had programs that were regulated. And so they were concerned about things like organized crime. They were concerned about diversion to youth. They were concerned about diversion of cannabis from a legal state into other jurisdictions where it wasn't legal. So they had a list of that. But under the Trump administration, they, let's see, attorney that goes so fast, but Attorney General from Alabama, yeah, sessions, sessions pulled back that memo. And so what was referred to, there was cold, cold memo one and then cold memo two. He rescinded those. And so it's been a little more, you know, kind of, we don't really know how the federal government would respond to a, they wouldn't be able to use DOJ resources on the medical programs. But how would they respond to states that have a regulated commercial market? I mean, I will say that you now have 11 jurisdictions where cannabis is legal at the state level for adults, and you have the entire west coast. So when you think all the way down, so you've got Washington, Oregon, California, Nevada, so you've got a substantial, I don't know. Where there's tax and regulate. Where there's tax and regulate, right. You now have it in the Northeast as well, where you have Massachusetts, so we have a border state with Massachusetts that has a regulated commercial system. They started their first sales last November. And so they're still getting things up and running, but they have a number of retail outlets that are operating in Massachusetts and a few that are very close to the Vermont line. I think the one in Williamstown is just start just opened or is about to open. And then Maine, which passed about initiative a number of years ago, but that's been locked up in a lot of things going on. And so they haven't gotten their program online yet. But and then you also have to have Quebec because it's legal in all of Canada. And so the provincial governments run their various programs of how they do that. So I don't know if it's still true, but my understanding is that the states have had a regulating out the banks aren't willing to accept the cash because of the federal issues. And so what happened? What kind of economy is this if they can't bank the money? Or is that is that not true? I think it's a you know, it's a little too banking is certainly tough. There is legislation moving through Congress right now to provide kind of more of a safe harbor for banking institutions that do provide services to cannabis businesses because it is huge business right now. I know that the Vermont dispensaries have used credit unions. And so that has been a possibility. I mean, I would just say the banking gets a little complicated is not typically my lane. But I know that one of these letters that went to y'all also went to commerce. They're going to be looking at the banking issues this week. But there's there's not a whole lot. Obviously states can do on that. But cannabis businesses are finding a way to do that. Something that is in S54 is passed by the Senate that the tax department asked for was the ability, the authority to ban cash payments if they felt as though they needed to do that because they did not want to be handling huge amounts of. Which would then force to electronic checks or electronic. So that's a quick work. That's a that's a pretty 25,000 foot look at things right now. So so what is S54? Let's take it down. What does S54 do? And how did we get to have S54? So S54. So those of you who've been here for a few years or will remember. So I think the the real activity on looking at a commercial market was in 2015. Although I would say, you know, again, I've been here 20 plus years and I've written. TNR bills that whole time they used to be short form is when I first started them and I was thankful for that at the time. But so they has been this, you know, percolating for a while. But what you saw in 2014 was the first states doing the ballot initiatives to adopt a commercial market. So and I will just mention is that all the states that do have commercial markets now have done it through ballot initiatives. No state has done it through the legislative process to date. And also just to note is that there's two states, Vermont and then it's not a state but Washington DC were the two that have legalized cannabis but do not have a regulated market. And so that's important only because of the process. I mean, ballot initiatives are, which we generally don't allow. That's those are those states voters have a process to say, we want this, you figure it out or or there's even a structure. Yes. Because I remember Massachusetts had a very different structure that was approved versus what was eventually put into place after they went through its legislative process after the votes. Well, you have the ballot initiative and it'll lay out kind of the skeletal structure you shall have. And so so in mass it's they I would say, you know, what this is most closely 54 most closely mirrors masses structure with regard to having an independent control commission rather than it being housed in the existing state agency. And so they kind of lay those things out and then it's up for the legislative to come in and start to fill in the gaps in the agency and start to work together and develop the rules and fill in all the little details. So you don't have like a 500 page ballot initiative. But it's it's the voters being able to say. Absolutely, right. That we we make this legal. Right. Yep. And that's how they did it also in Washington DC. But because Congress has ability to yay and nay certain things with DC, basically they went and they opened it up to do to remove the penalties, but they were stopped from from moving forward on the commercial system. Right. And just to be clear, our process requires us to have that legislation in place to then vote yes or no. Yes, we don't have ballot initiatives. So essentially what I'll walk you through the timeline first and then maybe we'll take start to take a look at the bill is that so the regulatory there is a new regulatory body that is created within the bill, which would be the cannabis control board. So like I just mentioned is in other states, it may be that they take an existing department. So it might be their liquor control or in California, it's the Bureau of Consumer Justice or in Colorado, it's their Department of Revenue. So their tax department. So states, you know, have that organized differently. But this proposal in 54 creates a new regulatory body, the cannabis control board that would be independent. There would be folks appointed by the Senate and the House and the governor. And this would be the board that would control the commercial market and then eventually the medical marijuana registry and the dispensary program would shift over from the Department of Public Safety to be under the purview of the board. And so just the timeline is that the board would be created this July. They would start their terms in September. They hire an executive director and an administrative assistant and then they start the work of rulemaking for those three different programs. There's also a lot of language in here about how next January that executive director would come back to the General Assembly and report on a number of issues. I'll just mention that the rulemaking is really the heavy lift for the board that first fiscal year in their operation is that there, you know, there's a lot of work for them to do with regard to establishing the tiering for the different types of licenses and things like that. So, but that's what primarily what they'll be working on but they'll have the ED comes back to you next January with a proposal for the fees for all the different licenses. So our fees are not established in here. There's just the different types of licenses and a nod towards that there should be tiering of certain licenses. So like an example with regard to cultivators, there's a lot of interest in making sure that there are a lot of smaller tiers that have an easier price point with a goal of trying to bring some people from the illegal or as many people as you can from the illegal market into the regulated market. You know, a lot of discussion about how do you do that? You don't want to price people out. You want to try to bring people in. So they would come back to you in next January with proposals for all those tiers for the licenses for the fees. They're going to come back and recommend the build out for the second fiscal year. Do they need to add positions in order to process applications? Do they need to add a plant inspector? Do they can, you know, should they be relying on other agencies to assist them with these things? So that would be next January. Then in the following July, the fee structure would take place. But again, it's you setting the fees. It's not the board. And then there's a rolling application period for the different types of licenses. There's five licenses. There's cultivators. There's product manufacturers. There are testing labs, wholesalers, and retailers. People can apply for one of each. And so that's something that's different from the medical program. The medical program is vertically integrated. So under one license, they do all of those things so they can grow the cannabis. They can turn it into oils or lozenges. And then they do everything up into the point of sale to the patients. But under this proposal, you would have, you wanted to do all of that. You'd have to get one of each or you might get a cultivator license and a wholesaler. However, you wanted to make some match, but no more than one type of license. So you couldn't have a big company, you know, that you see out west. Med men or something like that come in and have like five retail stores. It's not going to be like Domino's. That's precluded in this bill. So it's contemplated that a cultivator will need to use a wholesaler to get it to the retail market. It doesn't have to. It doesn't have to be. And again, those are things that there should be a lot of rulemaking. It's just more that they wanted to create an option for a wholesaler. Again, trying to think about small growers. So if you have a lot of, let's say, little grow operations. Maybe you have a farm that they normally grow, I don't know, broccoli. But they say, well, we want to supplement it and we want to grow a little bit of cannabis on the side. But they don't want to go through and trim it and do all the stuff that you have to do to then take it all the stalks. All of that kind of stuff is maybe you have a wholesaler who comes by and goes and visits the little farmers who have that. And then they take it and they process it into something. And then the wholesaler then takes that and sells that to the retailers. So that's an option. But the cultivator has the ability to sell directly to the retailer or product manufacturer. They're just separate licenses. Different licenses. And would the cultivator sell to the wholesaler by weight? Is that what's contemplated? You just, you know, take your bail and... There's not that level of specificity in the bill. And I think those are things that are going to be done by rulemaking. Very good. Yeah, very good. Yeah, thanks. Representative Walson. Yeah, I think you probably just answered my question. It's coming in rulemaking. I'm just picturing farm stands. Nope. Well, hard to imagine under the structure. If you had a farm stand, you couldn't have a farm stand. Because I think that there are certain things that are around with regard to the retail sales. But that concept, if you had a farmer who wanted to do direct sales, that farmer would have to have a cultivator license and a retail license. And then they would have to comply with all the regulatory provisions for those. So like if you're going to be a retailer, you've got a card everybody. You're going to have to have certain kind of requirements. Like one of the things in here is that you have to have products where the customers are not allowed to have access to the products. Like it has to be through a counter purchase. So it's not like when you go to the farm stand and you get to squeeze the melons. You don't get to do any of that. You would have to. There's going to be a person in between who's going to have the product. Usually it's between glass cases. And if somebody says, could I see that product, please? And the person takes it out and shows it to you. And they've got cameras everywhere to make sure nobody's pinching anything of the product, that kind of style. One more point of clarity on the licensing. Could one organization be a grower or wholesaler and a retailer? Yes. Okay. So they can do that but they can't have multiple. Exactly. So they can do the whole line. Okay. So they can have the existing chain. They just have to break it up. So one organization. So like one S-4 or L-C or whatever. Yes. They don't have to like part it out. Right. Yeah. So it could be modeled initially, anyway, after the way dispenser growers. Dispensaries? Dispensaries. Dispensaries can also grow. Yes. There are very specific. So in terms of retailing, producing, cultivating, wholesaling it and retailing it, it could be, it could work under that model. Yes. Yes. They could be vertically integrated but instead of one permit, they would have to get these all five. Yep. And so it's trying to provide again, I think, a lot of economic opportunity for people to participate in the market in a lot of different ways. And so that if somebody just wants to do one thing or have a small business or they want to kind of pull, you know, a few different things together. You know, one of the centers was talking about a constituent who's interested in just doing a little small grow but doing some product. You know, she does stuff right now with growing hemp and turning it into CBD cream and things like that. And is interested in doing something like that with cannabis. So they're trying to provide a lot of options and tiers within licensing again to kind of bring the illegal market into the regulated market. And so is this, I mean, it sounds like a lot will rely on the rulemaking to really come down on something. But this, because this sounds like it's not quite the same as, it's definitely not the same as how we control alcohol. Right. And it's not quite the same as how we control beer and wine. It's a different. It is definitely its own. It's a different tier system. One thing, I mean, obviously the biggest difference is the state is not going to be in possession of the cannabis. We're going to be strictly the regulator. And I think the reasons for that are because it's a schedule one drug. So if you look at Canada, Canada does a difference. If you look at Quebec and you go to Quebec, Quebec has they their alcohol and cannabis is dealt with very similarly in that they have more of a model like what we do, because they are not the producers, but they sell the product and so they have a control model there. But that's not really being considered here because I think while you have all these other, you know, much bigger states that are doing, they're participating in a regulated market by the rulemaking, all that is that nobody's probably going to pay that much attention at the federal level to Little Vermont. We had a commercial market, but if all of a sudden Vermont is the distributor of cannabis, you probably bump us right up to the top of the list. So that's an important fact because that's so what you're saying is that what I heard was that Canada shares a similar model to us with alcohol. Right. Where the manufacturers provide us with the product and we ship it out to the consumers essentially. We're the middle man and that's how we control it. Right. And what you're saying is that the federal because it's still a schedule one drug that not only would it look bad, it would be highly illegal if we were pushers. The state would be in violation of the CSA whereas right now because the there's federal and state overlap when it comes to drugs. And the question is, is can Vermont regulate cannabis for important state interests and can it regulate it without creating an impermissible obstacle for the feds to enforce the CSA if they wanted to. So can the two coexist? And I think that if you then have the state actually being in possession and distributing cannabis, you run into some CSA problems there. Right now as just looking at it and again, you know, one of the stated purposes of the bill and it's in here and it's been talked a lot about in the Senate and House of Ops is the idea is that, you know, because cannabis is legal to possess is that, again, having a regulated market is in the best interest of the state in Vermont hers because of issues around consumer safety and trying to keep it out of the hands of kids and things like that. And that you can do that better through a regulated market than to just leave it open. I know there was a discussion in the House version of a bill, not this bill, but I wonder if the Senate looked at this would be having the five licensed dispensaries begin to sell marijuana sooner than this. Right. House of Ops is talking about that that isn't a representative young and there's a number of other co-sponsors on that. That does contemplate allowing dispensaries to apply for a temporary license to sell early to the public as they would pay a $75,000 fee for a temporary license. They would still have be required to meet all their obligations in terms of serving patients and caregivers under the medical program, but they would be allowed to gear up and cultivate and develop products to be able to sell to the public for under $196, each $196 sits for 18 months, but now the discussion now is more that it would only be for a year period. And so they would, and that money would go into the Davis Regulation Fund, which would help on the board's work because right now it's just borrowing and anticipation of receipts because you don't have any money coming into the fund until you start collecting application fees, which is in the fall of next year. And so that is being discussed up in House government operations. What is the practical effect on medical marijuana when all marijuana is legal? Great. I think people probably differ in their opinion on that. There is language in S-54 that I'll show you that talks about the importance of continuing the medical program in order to provide goods and services to patients that would not otherwise be available. Through the commercial regulated market. And so there's a list of things. So, you know, one of the things right now is that dispensaries can deliver to patients. Delivery is as right now as it came out from the Senate is not allowed in the commercial system. Patients are allowed to purchase more than one ounce until they're allowed to purchase higher amounts. Also, they would be allowed to potentially purchase products that have a higher THC content than would be allowed on the commercial market. They would also, cannabis and cannabis products that are sold by dispensaries are not taxed. Cannabis that would be sold on the commercial market would be taxed at, there's a, under the Senate proposal, it's a 16% retail tax plus a potential 2% local option. So, if you're buying commercial, you have to pay the tax. If you're buying medical, you don't pay the tax. There are certain benefits to that, but I think that's up for debate. I think people would, some people would view and say, well, if you can, if you have dispensaries there, maybe we don't need a medical program at all. So just on the timeline is, I just want to note there's like a rolling application period. And that's something that we learned a few years ago from Washington State was the idea that to make sure that you start out issuing people cultivator licenses, you don't just like say everybody come and apply for all these licenses because then what you wind up with is stores with no product. And so you start out with the cultivators, get them geared up, growing the products, so you start out with cultivators and testing labs, and you open that up for a 30 day window. They can always open up that application period after that. But the thing that we heard from regulators in other states is that at first, when you're first gearing up to kind of moderate it a little bit so that you just don't get completely overwhelmed by all the applications and doing the processing. So there's a rolling application period. And then you'll see basically, April 1 2021, they begin issuing licenses for retailers and they could start selling to the public in April of 2021. So if it's okay with you, I'll just start kind of walking through the bill a little bit. Yeah. And just, I think of Deputy Commissioner Kessler's here as well from DLL who has the presentation, you just want to get to him as well. So just be conscious of the time, say till 25 past. Sure. Definitely. Okay. So something that we'll look familiar to you here at the beginning is it's in Title VII and so that is a shift and an intentional shift to, so because cannabis has been treated primarily in a criminal context and that's why I'm working on it. I've worked on it for so long on the drug laws and now it doesn't really have much of anything to do with the stuff that I've traditionally worked on any longer but I'm the marijuana attorney in the office so I'm still working on this. And it's great because I'm always learning new things but the idea is to kind of shift it over from something that is illegal, cannot be possessed, you're going to jail for it to now it's a regulated commodity. And so taking it out of Title XVIII, you know people are already like, wait, where do you find the marijuana? Everybody's looking under Title XIII under the criminal laws so they can't find it in XVIII now. So the idea is to shift it over to VII and put it in with alcoholic beverages, cannabis and tobacco and again the medical program would be shifting under with the board as well eventually. So the Section II is just setting up the new cannabis chapter so you have a lot of the definitions, the definitions for cannabis doesn't change. Again it's everything under current law, it refers to marijuana, there's a section at the end of the bill that directs legislative council this summer to go through all of the titles and to make the terminology change everywhere that's appropriate from marijuana to cannabis. So you see cannabis is through this draft, the definition of cannabis in marijuana does not change though. Again just clarifying that when we're talking about cannabis we're not talking about hemp. Cannabis products, again those are something that would be anything from oils that somebody might bake to a lozenge or any type of product that contains cannabis. Yeah I just noticed that in the definition it defines cannabis sativa and there are other strains of cannabis like indigo. Right. So is that included automatically? Yeah this comes up every year and I always get my answer. But my understanding is that this is correct and this is very closely models the federal definition in talking with agency of agriculture. So this is the correct one and it encompasses everything we need to enforce. Okay thank you. There's your definition of public place if anybody wants to go back and take a look at that. So sub chapter two in here is the cannabis control board as I mentioned they be in charge of all three programs. The membership is one member who is appointed by the governor who serves as chair and has to have a background in business management or regulatory compliance. One member senate committee on committees who has a background in plant science or horticulture and one member who is appointed by the speaker who has a background in systemic social justice and equity issues. I will say that's definitely something GovOps is talking about there. There's concern that the board maybe is a little too small and that maybe those specific things for those particular offices maybe makes it a little too narrow so that's being debated upstairs. And then just a lot about how you fill vacancies, how you remove someone you can't have conflicts of interest so I can't be on the board and my husband working for a cannabis company that sort of thing. Salaries, they're full time positions. The chair receives compensation equal to two thirds of a superior court judge which I think puts it at around 105 right now and other members receive compensation equal to one half of that. So like 80 or so would be for the chair 105 and 80. Then the executive director. Does that match what the public utilities commission other paid as well or is that a different scale? I do not know. I think they are, aren't they tracked more with a judge's salary? That's what I'm asking. I know that there's a difference. I know the formula is kind of like looking at like Green Mountain Care Board. By Green Mountain Care Board the chair is the same as a peer court judge and then the other members are two thirds. So it's kind of like that. You're just using that salary level as a benchmark. Yes, exactly. The executive director is to be an attorney with experience in legislative or regulatory matters. This was an issue that came up again like in Senate appropriations they were concerned that there just wasn't going to be enough to be able to pull off this Herculean task they have to do in the first couple years. And so they said, well, maybe we can kind of combine the idea of a general counsel and executive director in one. And so you have the executive director needs to be an attorney. They're allowed to hire consultants, gives them authority for criminal background checks. So throughout the system, whether you're talking about a cannabis establishment in the commercial system or a dispensary, anyone who isn't either an applicant or an employee of those places has to have fingerprint supported criminal background checks. And so this gives the board the authority to be working with VCIC within DPS to be doing those background checks. The Cannabis Regulation Fund. This is where all of the fees go. So all the fees for all three programs go there. So you have the application fees and the annual fees and the annual fees for under the commercial system. The fees support the work of the board. The tax money goes to general funds. So this is the Senate proposal is that none of the tax money goes into this fund. And the fund is only used for supporting the regulatory work. Section three is just implementation. This just talks about the initial kind of startup terms so that you don't have everybody roll off the board at the same time and lose all that institutional knowledge. Section four has them initiate rulemaking by October 15th of this year again because it's such a heavy lift and it's going to be at a minimum of 10 to 12 months. And that's with a lot of fingers crossed that they can get all these rules up and done. By then it just directs them to get on the stick. Is there any startup cost figures being discussed? There is an appropriation. There's borrowing and anticipation or receipts for $810,000 that's in the bill in appropriation. So section five already mentioned this a little bit. Executive director comes back with a proposal for all the different fees because again the general assembly has to establish the fees. It's not going to be the board. Subsection B is a list of other things that they would be coming back on. As I mentioned resources necessary for implementation of the second year rollout and how they might be able to work with existing agencies and coupling with them on some particular things where there may be expertise overlap. They have to come back with a proposal to work with various agencies on developing outreach training and employment programs focused on providing economic opportunities for individuals who have been historically disproportionately impacted by cannabis prohibition. They have to look at the delivery issues and how is that going in other states. And they have to look at whether monies expected to be generated by the fees are actually enough to kind of support the work of the board and the whole regulatory structure. Whether or not there's going to have to be some shift and change for some of the tax money to go to support it. Who in Vermont would be the populations they can scroll up again? They're going to have to figure that out. This is something in, you know, it is definitely the growing trend in the other regulated states and I think it might be more easily identifiable to particular communities and communities of color and actual geographic communities and things like that. In other states, it's maybe a little less clear, but that's for the board to identify. And then when you said the money goes to the general fund? The tax money. The tax money, yes. So will we then get the education dollars out of the general fund to help do all the work around the issues around marijuana for young people, all the education? Right. Is that going on the general fund? That was the intention for the senators was that the idea is that the legislature makes the determination every year about, you know, out of this pot of money, how much are we going to spend on preventing education? How much will we spend on law enforcement? How do that? And the idea was that habitats when you go there and then the general assembly will decide how much to funnel into the different programs rather than ear markings of previous proposals. And some of the bills that have passed the Senate and earlier bienniums earmarked and said, here's a fund that goes into this fund. This amount goes here. This amount goes there. This bill does not do that. Thank you. So page 12, section 6a, there's just something there for VGS has to make sure that they're spaced and everything they need to get going. There's the appropriation for 810,000 appropriated to the fund and then to the board and it's made in anticipation of receipts. So you're borrowing. There's a section here on if there is a deficit at the end of fiscal year 2022, then however much is in there in the red, that money from the tax gets shifted over. To fill that hole in the fund. Section D is a report back from the auditor of accounts looking at whether or not the structure of the board that's initially geared towards getting it started. Does that still make sense, you know, a few years down the road once the program is running? Does it still make sense to have that three member board and or is there should there be a restructuring? Should it look somehow different? So section seven is really the heart of it around the regulation of the cannabis establishments. I've already talked, I'll just scan through the definitions. So here for regulation by local governments is where I think the box committee wanted some input specifically from y'all. So right now the proposal is that if a municipality does not want to host a cannabis establishment that they would opt out and they would do that through voting at either the annual or special meeting. And they can prohibit either all cannabis establishments in the municipality or they could just prohibit a particular type. So maybe they're okay with having a cultivator, but they don't want to retail outlets in there in the sources. They could put that specifically there and they could gear it towards that. And that that remains in effect unless it's until it's rescinded by majority of the voters. They also, if there is one, they don't opt out and they have one operating that gets licensed and is operating the municipality, they can't then put it on the ballot vote and then say you got to pack up and we can get out. So it doesn't mean necessarily that I mean that that operation will still have to go through and get its annual license renewal at the state level. And if they have been requiring a permit or license at the local level, they'll still have to go through and comply being compliance. They're otherwise in compliance, you can't vote and then put them out. They can let you license for being bad business people but not. Right, right. Representative Zahn and Charlie. I just had a question about whether the bill addresses retail operations. Does it anticipate that they are at a fixed location? In other words, could you have a mobile retail operation? No, I don't think that that's been contemplated in this. You mean like they would just be at a different location? As we were discussing the farm stand model, the free truck model, where you've got a controlled space with access that you control. But you're not at fixed address and so any municipality that hasn't opted out, would you have to get licenses in each of those spots? I would say that that kind of has not, that's not addressed in this but it doesn't really seem to fit with the other, it's not specifically prohibited or contemplated but I think the intention is that this would be a fixed location. So you wouldn't be able to do anything like an offsite caring license for like a wedding or a special event? No, there was some discussion in the Senate about perhaps having a... Like alcohol? Well, one of the things I was talking about specifically around alcohol was whether or not you could have something like that license or you could have a special event license. So let's say if it's having a big party at top notch or some resort, they're a public accommodation, they're not allowed to allow consumption of cannabis on the property, right? Could they either die as the person who is having the event or could top notch as the place that is hosting the event? Could they apply for some type of license that would allow them an exemption from the public consumption law for particular events? So there was some interest in the Senate on that but not enough and so they did not include that but that has been part of the discussion because certainly with Vermont being a tourist based economy and the complete ban on public consumption and there are certainly some businesses that are interested in allowing their customers to be able to consume on the premises. Yeah, because consumption of cannabis had an event where they're serving alcohol with a license, what's that license in jeopardy? Right, right, right. And there's also been talked about the idea that let's say if you had a hotelist where you had like sugarbush, or a resort or something and they wanted to actually provide or provide product or like kind of like a combination allowing for consumption on premises. So the idea, so Massachusetts has the ability and the authority to issue, you can remember what they're calling it but people call it like cannabis cafes or cannabis lounges, some place where you could purchase and consume on site because at these retail facilities you can't consume on site. But some place where you could go purchase like a you know just like a bar a wine bar or something like that. And again that's part of the discussion but it didn't it didn't make it into this version but there has been interest in it. Yeah, I'm looking through this highlight section. Is there a provision for local taxes by communities on retailers? Yes, that's later on and so there's a local option of 2%. So if you're going to have a retailer, you can have a 2% local option tax. Thank you. Yep. And the five dispensaries now, the cities to vote to allow them in, did they? They, it's not an opt-in but they can, they could, they do have authority to not have them in their town. And so they've gone through the local zoning and processes. So I live in South Burlington and there's a dispensary there. So did South Burlington voters have to approve that? No, no. But South Burlington had to approve it for a license or? No, I don't think they had to, whatever their municipal authority is with regard to, you have to address these issues in order as any other business to work in our town as they worked with a dispensary on that. In compliance with that. It should be different then. The idea about the opt-out, right now there's not a mechanism for, for medical to, for towns to vote and say no way you can't come in. Right, okay. Thank you. So subsection B is that a municipality that decides they're going to have a cannabis establishment can have a local cannabis control commission. My understanding is that that is, you know, the intention is to mirror the local alcoholic beverages control commission. One little difference is that under liquor it says they have to be the members of the municipal legislative body. Senate go box said who may be members so they didn't require. So there's just a slight difference there. And then the local commission can administer permits for them. They can condition the issuance of the permits upon compliance with any bylaws adopted under current law or ordinances regulating signs of public nuisances under current law. They can suspend or revoke the permits for violations. It would have the board cannabis control board adopting rules relating to the municipalities issuance of local permits again. My understanding is that mirrors the way that they do it now. So it's that it's a liquor control board that has to adopt the rules with regard to the municipalities. And then the board would be adopting all the forms for those municipal licenses as well. Subsection C is just the kind of felt and suspenders language, which is just saying that essentially a municipality can't exceed its authority given to it either under this act or under existing law with regard to what it can do and what it can't do. So one thing that we've seen like after the Senate bills had gotten some traction a few years ago, there were a few towns that adopted ordinances that said, if marijuana establishments ever become legal, they're not going to be legal here. And you can't do that. But the voters can. But the voters can, yes, but you couldn't adopt an ordinance and say you have to take it to the voters. There's provisions on advertising, education, rulemaking is really, there's a ton here on rulemaking for all the different, so all the stuff that people think about in terms of labeling and testing and pesticides and carding people and all that kind of stuff. It's all under rulemaking. So you can review those. I'm happy to talk to people offline about this anytime you want. So there's rules for all of the establishments. And then it goes through and says, here's this rules with that, you know, specifically with cultivators. Here's the rules specifically with product manufacturers. Just briefly, is there a testing lab, lab testing for mold and safety of product and rules? Okay, that's as far as I could. Yeah, so, yeah, I can show you. There's process for suspension and revocation of licenses. I already mentioned the criminal background checks. Everybody that works in one of these establishments has to have an ID card that you work there that will allow you access into certain places that other people wouldn't be able to go. There's more information about the licenses, the different types of licenses. So this is all stuff that the Commission, that the control commission would use as their foundations for setting up the rules. Right. There's provisions on the license qualifications. Really, you just have to be 21 years of age and consent to the criminal records there and go through a fingerprint. There are a list of priorities you might want to take a look at in section 903. So these are not requirements, but they, you know, you get extra points with regard to your license for this, especially if there's a limited number of licenses. Things like being, having a majority of folks associated with as the applicants with being residents of Vermont. If you're an existing dispensary and good standing, there would be a preference for you. If you're fostering social justice and equity by being a minority or women owned business. So there's a list of priorities there that they will consider and adopt some rules are on. And then after they go through and they say exactly each type of license. This is what you get to do under that. So Chip, I'll just show you on the testing starts on page 35. So you can see all the different types. They might things they might be testing, you know, residual solvents, poisons, toxins, harmful chemicals, all of those types of things. And so testing laboratory is that the assumption that it's a private laboratory that someone would get a license in order to. Yes, and this would be addition. And this is separate and apart from the ag lab that would be doing, you know, my, I would anticipate that what the board is going to come back to. They're not going to say I would be shocked if they said, well, we need our own laboratory to do compliance testing. Right. So there's things in here that say, you know, you're going to have to, you can't have more than, you know, then 10 milligrams of THC and a serving that you're going to sell on their retail market. Right. And so somebody regulators are going to want to be doing compliance testing on some of those things. And I'm making sure that the labeling is correct to what they're what they're what they're selling. Right. I would anticipate that they're going to be partnering up with the agriculture laboratory that has the capacity to be able to do that kind of testing. And to compliance testing. So compliance testing is different than this individuals is that you're going to have all of these people growing and people selling is that they're going to have some testing requirements. They're going to be wanting to test their own products. They're not, you can't have everybody on the commercial market going and trying to access the ag lab to be able to have, make sure that they've, you know, they think that there's 10 milligrams in this, but they're not sure. So right now the dispensaries do their own testing to make sure that they're accurate with, with regard to what they're required to do. So this is different than, right? So this is going to be different than the labeling. Yeah. Or will it be different from say, I have to tell you that my marijuana has, my cannabis has X amount THC in it. I'm assuming that's a labeling requirement. It's a labeling requirement, but you want to make sure that you're being accurate there. So you're probably contracting with a testing lab to, you know, or maybe you have a testing, you know, the testing lab equipment is very expensive. And so the idea is that you would have these testing labs that could get licensed and then serve a lot of other licensees. Is there going to be any oversight for the private testing labs? I know of West that there's been issues with dispensaries working with less than, I guess, I don't want to say above board, but they've been manipulating TFC content to be inaccurate with what they're selling to the public. Hopefully, you know, this is intended that there's going to be the oversight of the board. And maybe, again, the board might be saying, well, maybe we will have rather than our own people, maybe we're going to partner with the Agency of Agriculture to be doing independent verification of the metrics that those labs are using. And there's legislation in S117, which is a medical marijuana bill that's up in human services now, that expands the ability for the AG lab. Right now, they have the ability to be doing all of that with regard to hemp, and it expands it to cannabis. And it also says there that the AG lab can certify local testing facilities now to be doing some of this stuff. You need to be a certain criteria. Yeah, that makes sense. So where are we, Michelle? I know. So the rulemaking, the money, mostly after this, it's just the money, which I kind of talked a little bit about the tax money, the medical and dispensary programs. It would just be kind of a scaled down adoption of those programs that would take effect in January 1st, 2021. And those programs were shipped over to the board at that time. But most of the rest part is taxation provisions. So for us, so for us, though, based on while that was just the highlighted material is simply about local licensing or the local board stuff. I think that there's also the issue that we can discuss the location of what Representative Zah was talking about. Right, certain types of licenses. I think they were just trying to think about the way that you operate and have knowledge around licensing for alcohol. And I think we should come back to this. When we do come back to this and review the seed to consumer process, that's something that is, you know, when we talk about control, again, whether it's the three tiered system or whether it's our alcohol control system, that we have an interest in just seeing how does it get from the beginning to the end. Right. So let's leave your work done. Thank you for coming up. Sure. And we may call you back if you need to. Okay. I'll stick around for the next testimony. Thank you. Thank you very much for having me. So I'll just start by saying I was fairly active on the tax and regulate committee that met over the last, I don't know, 12 or 14, 16 months, whatever it was. And this was a version of the presentation I had provided to them. I'll say from the outset that I've been very busy with running the lottery as well as working on liquor. So I have not been as engaged in the legislation that's moved on cannabis this year. So it's, you know, it was great to hear some overview. I haven't a chance to look at it a few times as it's moved its way through. You know, one of the proposals that I had for it was more of an educational opportunity for the tax and regulate committee, was just to talk about the control model because they're not as familiar with it as all of you are. Having, you know, been on this committee, there was a really diverse group of people that were on this tax and regulate group. And so this was really supposed to be educational for them. I feel at this point it seems like the ship has sailed to a large degree on the state's involvement in it. I will say, I find it, I mean, I think there's a, I propose one work around, which is that there be a separate sort of cannabis authority that would be somewhat removed from state government with the benefits going to, you know, to the state essentially, maybe even some kind of liquid lottery authority as well, that would, you know, move things away from direct state oversight and control. But members of the board would be appointed by the governor. That's one component. I do find it odd that if the state were involved, I think at some level we would have more control than these states that have more of an open market system. So I don't know whether we'd really, I heard the testimony that we might move to the top of DOJ's hit list because the state is somehow engaged in the business. But every one of the states that is involved with a tax and regulate model is taking money from this industry. So it's really hard for me to say that there's this giant separation in the end. But an authority might, you know, might be one solution if there's a solution needed at man. Maybe the viewers now there isn't. So let's see if I can. I will skip the DLC fast facts components because this committee hears from us regularly and knows something about the department and how we function. The one point I would make is that the department does do all of its duties, including all the regulation, all the oversight, all the law enforcement officers that we have. Everything is paid for by our revenue. Nothing comes from the general fund. No money is expended in our department on the liquor or the lottery side, but specifically on the liquor side from the general fund effectively. So I think in some ways that's a really nice model in that the revenue or what's paying for the operation of the department. So just I'll jump quite a ways into it here. And again, the presentation is available. I think it's pretty. To that point before you pass that by the bill contemplates that fees raised through licensing would pay for the cannabis control board. The fees that you receive are treated how differently than income that's then used to do the overhead of the department. So the fees that we receive aren't really what's paying for the department operations. They're helpful. And I like the model where people are paying a fee to get a license that corresponds to what it actually costs the department to issue that license. So much more like a business model when you see other places in state government. The majority of our revenue is coming from the benefit of the profit that we make through the sale of the product. So that's the money that's essentially paying for the departmental operations. So if we're talking just about licensing, then we have tried to get to the point where the money that we charge for a license for some particular activity should cover our costs to issue that license. And we've talked around it, but I just haven't had time to get to it, but the idea of having more of a variable license fee structure. So if someone's applying for a license the first time, we have to do a background check. We do a lot more work on that new license. But for a license that is just being renewed, that's the last work for us. So somebody who's applying for just a renewal with no change in ownership, no additional owners, that would be easier for us to issue. We could charge a smaller fee for that. Again, trying to reflect the actual costs. But most of our revenue that we're spending on our law enforcement side where we do a lot of our compliance work is paid for via the profits that we earn. So just a little bit about prohibition. There's a nice little quote that predicted very wrongly that all the problems in the United States would be over if we just had prohibition. In fact, some jurisdictions did sell their correctional facilities. They just didn't believe they'd be needed anymore after alcohol was prohibited. And then again, maybe a bit naive, but the promises were out there as they're often made. I thought this quote was also quite helpful. It shows that really things were worse at the end as a result of prohibition, not really better. And that ending prohibition would put things on a better track. And you all have seen the book towards the model towards control, which I know you have in your bookshelf here somewhere. In any event, I think there was the realization at the time that we were going to get back to a legalized marketplace for alcohol. So the effort was on to come up with a model that might work. I think one of the fears with the open market model is that there's just a component of pushing the product on people. And one thing I think is true in Vermont and I think is true in all the control states is what we do is some advertising. We don't have these price wars. I don't feel like we're in the same range as work the same ways. If you go down to Massachusetts and there's a liquor store on most corners in downtown Boston because it's very competitive industry. Here, whether you're in Brattleboro or Burlington, you pay exactly the same price for alcohol across the board. And one of the other benefits to our model as it exists now is if you're a local producer of alcohol in Vermont, we will work to carry your product in our stores and make sure it gets highlighted. And I think that's a real plus is that we're really encouraging local producers to be involved in the market. If it's not a control model, those small producers have to fight for an inch of shelf space because it's just not really an incentive. And we talked about this in the tax and regulatory group as well, which is the idea that trying to encourage small producers in Vermont to be able to engage in the market in a meaningful way, the control state model at some level would allow for that. We would be encouraging it. While when you have more of an open market model, if I can hold a license at every tier, then I want to just primarily sell what I produce because that's what I'll make the most money on, right? I mean, I make that, I can control all the costs on that. If you come to me and say, you're a small producer, why would I want to carry your product? I mean, if it's not any different than what I'm selling or not enough different that there's demand, I'm just going to sell what I produce and that will effectively push the small producers really, I think, out to the margins or we'll have to come up with some other creative way to try to get them engaged in the market. So that's some of the, you know, there's a copy of the cover of the book. I don't know if you have it somewhere. Anyway, again, trying to go through this fairly quickly because I know your time is limited. But the goal of the three-tier system was to prevent this vertical integration that we have. And I think on the medical side that makes perfect sense because there weren't other ways to, you know, get the product produced and to the patients that needed it. But one of the things that was identified, and you've heard these terms talked about in the committee, a Tidehouse, right? That was a business that maybe I had a bar and also was the producer of the product that sold in the bar and was also the distributor. So they're occupying every single tier and of course the only product they would sell would be the product that they produced, not their competitors' product because that doesn't help them in the end. And so again, I think that was one of the fears, one of the things that I thought was a benefit of the control state model was that we wouldn't have these Tidehouses on the cannabis side. So you wouldn't have somebody who is a large producer, maybe a national producer. I mean, maybe we'll get to the point that this will be legal nationally and then will we allow, you know, product to come from California, from other parts of the country and it will just inundate our market. And as it is now in some of the states out west, they have much more production than they have capacity to sell. There aren't as many customers to buy all the product that was being overproduced. They'd love to sell it into other states obviously in the end and does that, you know, put our producers at a real large disadvantage effectively as far as access to the market goes. So again, trying to go through this fairly quickly, there was the RAN study a while back that showed how much money would, you know, could potentially be raised in the state. I don't know whether that's still really valid. One of the goals of the control state model is the idea of social responsibility, not just profitability. And so that is different than a regular open, you know, state model that we see on alcohol or that you might see on cannabis. It's about making as much money as possible. That's what business does for the most part. But on the control state model, we're happy to sell you an adult used product but we're not trying to push it on you. And I think that is very different. And you won't, you don't see, there's no price wars on spirits in Vermont because we set the price and it's the same everywhere. If you have an open market, which this will be more like, I think you're more likely to see that one store is going to offer something for less money to try to get more people to buy from them effectively. So again, I... Have any other states gone with the control market? Canada. It's not a state but it's a country. And the provinces there have gone more for the control model which you heard some testimony about. And it is just like the control model here in the United States on alcohol and Canada is also a control country and province on alcohol. Everyone's a little bit different and everyone in Canada is a little bit different too. They're not doing it exactly the same way. I would say that if we had something like a control model here, we would use an agency model like we have now for alcohol. So it wouldn't be the state doing the retailing. It would just be the state involved in the distribution making sure that local small producers were actually in the market, had access to the market and that we have uniform pricing across the board and not have these varied prices as a way to try to get people into the market and then try to win market share as a consequence. Again, I hope I hear some of the drawbacks to the open market model in general and again, selling as much as you can, encouraging people to consume, encouraging younger people to be interested in consuming which we saw on the tobacco side of things or recently on the vaping side of things. They're appealing to a younger market. We really don't see that kind of advertising in Vermont on alcohol and we just don't allow it effectively. So that's one of the benefits. One of the other big benefits of the control model is really tax collection and that was one of the reasons it came in place is because if the state is involved, it knows exactly how much is being sold and distributed and makes sure that the taxes are collected. When you have an open model and especially when you have a vertically integrated model, the ability to really know what's being sold and how much is really difficult. It's relying on honest reporting from whoever's in the industry. So I'm not really opposed to the control model that you present but to start speaking of market, I think alcohol is sold more by preference rather than quality so that when you talk about a stable pricing situation to the state, I start to think that, well, you know, a cannabis in quality is much more valid very than it is in alcohol and I think that trying to put a stable market price on everything would not particularly work in a cannabis market as opposed to alcohol because people are going to choose it as quality, as THC content. I mean, there are a number of different elements that we personally choose and buy the cannabis that they wouldn't particularly choose in an alcohol market. Well, I'm not sure I agree with that 100%. I mean, you can come to one of our stores and you can buy a 10-high bourbon which is sort of on the bottom shelf and pretty inexpensive where you can buy a bottle that costs $2,500. So there's quite a wide range and there's room in the market for both. So if you're a small sort of boutique producer and you produce something really different that you could set a higher price for it and then the price that we charge on the alcohol side is based on the wholesale price that we purchase on and then there's a markup put on top of that. So there'd still be every opportunity for someone who is a small producer who makes something really different to be able to set a different, and maybe a cost more to produce it, set a different wholesale price that then would be reflected in the retail price. So I think there's still plenty of room for that. It wouldn't be like any flower you buy is going to cost X per gram. That wouldn't be how it is. There'd be opportunity to create a brand for yourself, which I think is another goal for small producers. They want to be able to create a brand for themselves, not just I just produce something that gets turned into oil or some other product. And then I think one of the goals again of the control state model initially when prohibition ended was to end the illegal production and sale of alcohol. And that obviously worked quite successfully. I get alcohol newsletters every single day being in the alcohol industry. I get a lot of Canvas newsletters too, and it's really interesting to read them. But one thing that you see that we don't hear so much about here in the United States, and if we do hear about it, it's not because it involves American citizens. But in other parts of the world, people are regularly getting alcohol that kills them or delines them or sends hundreds of people to the hospital. I'd say every week or so there's some story, whether it's out of India or out of Russia or somewhere else, Indonesia, where people are getting alcohol that's poisonous. And so that's really one of the pluses is that we've ensured that we have safety in the market. And so I think that's one plus for the control model. And as I mentioned, when the control model first came in, they wanted to get rid of the illegal production and sale. And there's a real incentive on the state side to be sure that we end the black market because black market sellers will sell to anyone who has the money. And they'll sell whatever you want if they have it. So maybe it's cannabis today and it's something else tomorrow. They have no problem selling to young consumers who might be interested by trying to push the black market away and having more of a flexible pricing model that would make the product that is sold in the stores more desirable than what you could buy in the street corner or from a friend. Maybe there'd still be the friend transactions and I think that's fine, just like home brewing. But the idea is that there'd be enough selection in our stores in Vermont and that the price would be fair and that you know the product is safe for you to consume that people would want to buy in those locations rather than from somebody out of the back of their car or that you'd meet somewhere else. That's another plus of the control model is the elimination of the black market. I would say that an open market would love the black market to go away but whether the price at a level or have an incentive to do that is a little bit unclear. So there's that. Trying to see back again just go through this quickly. One of the benefits of the control model as we've seen is we do maximize profitability for the state. So we can deal with some of the negatives through the additional revenue that's produced through the control model that you won't have so much on the open model. So there's a list of some of the benefits. I think I mentioned most of them. Again, more about the small producers on this particular slide. Some of the efforts that we make to make sure that underage people are getting this product and the educational efforts we make as well, which I don't know if it's contemplated in the bill but one of the things that we do for alcohol is everybody who's a gatekeeper, everybody who sells alcohol, whether it's a bartender, a waitstaff, somebody at a convenience store, every one of those people has been trained to know when not to sell. And I think that's an important consideration. Again, I don't know if it's in the present bill but I think having an educational component for whoever's in the industry would be really helpful to be sure that we're not selling to the wrong customers in the end. So that was really quick. And I appreciate that. That last note up on the top just actually speaks a little bit to what we were discussing earlier about the local control model that allows for quiet towns. How does that work now? How does it work now? When Prohibition ended, a town had to positively decide that they wanted to allow alcohol sales or production. And that is still the case. So I think that town recently was a news story because there's nothing in it. There's no stores in the town now but they did approve, eliminate the prohibition. So that town is no longer a dry town. It's a wet town. We have dry towns. We have semi-dry towns. They only allow a sale of beer and wine but not spirits. So it really varies. That's in your annual report. It is in our annual report. I think that one town has changed and there was one other town that was reported as listed as a dry town. But when we went back and did some research after the report was completed, I learned that the town had changed, had voted a number of years ago and changed but we didn't know about it. So they actually have a distiller that is selling there so that's how we know that it's okay with the town. So Michelle, I didn't include you in this question. We've talked a lot about now about control and how to distribute it into the market. We've talked about regulation to a degree. What about enforcement? Does the bill as written in S54 as written contemplate enforcement or is it just simply because it's part of DLL that the existing DLL enforcement would apply? No. It's specifically that the board would handle compliance and enforcement. There is not the positions or structure set up for that. So they're going to be doing it some through rulemaking and then also with the ED coming back to the legislature next year with the build out for the positions and the resources necessary for enforcement. So it may be that their recommendation is to utilize some of what DLL has or to mirror it within the board but that's not... I would say just one of the things that we do, so everyone knows this, we do these compliance tests at retailers. And so we have underage, whether it's for tobacco under 18 or under 21 that go in and try to purchase product in an effort to make sure that the training that these people have all gotten are actually being complied with and that they're not selling to people that shouldn't have access to the product. So that's one of the things. And obviously that would be important I think on the cannabis side as well to be sure that for adult use it is being just sold to adults and not to anybody who walks in the store. So it was just... It was good to mention so there are with regard to what the board has to come up with rule regulations with regard to training for employees who are going to be working at these establishments as well as all the compliance and the enforcement pieces. And so everybody has been talking about that and it's something that is essential and that there's a lot to be looking to the liquor department with regard to how they do it. But because revenue will not be coming in at all to fund any of this until the second fiscal year of this operation the idea was not to if they're having to borrow on registration or receipts for the 800,000 that too and because you don't need those compliance positions or those training positions or you don't need any of that for the next fiscal year because it's really just going to be focused on building the structure and you don't need any of those new employees to process applications to do spot checks to do any of that stuff until FY 2021 is it's not in this but it is contemplated and so maybe if it's not as clear to people maybe that's something that needs to be kind of bulked up a little bit so that it doesn't get overlooked. Representative Walz and Collette. Maybe this is a question for you. I'm just wondering in the discussion in S54 excuse me if there was any reasoning for creating this separate control board instead of folding it into the department of equity where we have so many mechanisms already in place. I think it's because previous versions of a T&R system have looked to other existing agencies to do it so first it was the first ones bills that were being considered were to have it within DPS because DPS already has the medical program and then folks said well it doesn't really fit generally with their mission and maybe the medical program has not grown DPS and then they looked to agency of agriculture so subsequent bills were looking at agriculture because there's a lot of things that will be overlapping with agriculture and then when Massachusetts came online there was this model of an independent commission which was appealing to senators and then also to House members that introduced 146 of the idea of that you're not kind of trying to shoehorn it into an existing agency but you have a politically independent board that operates that then would be able to perhaps learn from the experiences of and utilize services of other agencies but there was concern that if you housed it within one agency and had different agencies doing different pieces that you might have a little bit of a bureaucratic octopus if you had too many hands in the pot and if you had it centralized and then had coordination and kind of maybe paralleling in some systems and that might be a more efficient way to operate it so Representative Collin Same question I had, thank you and I think that you spoke to this earlier that this language will review the need for the cannabis commission after a certain amount of time to see then if it gets merged into you know if it does its job to set up the industry and then it can be so soon to some place else if that's in the language Yes and the auditors to report back in 2023 that's kind of an answer to my question so the board would have the consideration and option to move into liquor and lottery for purposes of control and distribution When you mean we will not on their own you guys would have to do that Okay No, you guys would have to move anything like that but they can make the recommendation Yes, okay They could say the functions are so similar it would make sense that it would be housed within an existing agency rather than be independent Okay, but not an option in this room No, the board wouldn't have the authority to do that on their own But did I understand that there also is hesitancy because it's not federally allowed to have for monofia control state Did you say Well I think that's generally why people have not pursued the control model is that there are no other jurisdictions that are doing the control model and there is concern about federal interference with the state program if there was a control model God, thank you so much Again, that was the agency the idea of having the authority I mean it's sort of somewhat separated I don't know, we talked about that but I don't know whether anybody got more into it than just a suggestion on that part Right, and of the states that you mentioned the only one that rings out is still a control state is Oregon It's an alcohol control state I mean we have to see what I know that they've actually had a lot of problems with how many licenses retail like I mean there's everybody has growing pains Yes And Washington is no longer an alcohol control state so they would handle it differently than what could be contemplated here But one other thing I just add is that again as you can see on the control state model for alcohol that we have in Vermont we have a limited number of retail stores the idea is to meet the needs of our customers in a geographic area when you open things up you just end up with retail stores on multiple street corners and a lot of focus today in a big city like Burlington and less focus on more rural areas and again that sort of undercuts the idea of control substance but we really don't have control over because there are a thousand retailers so it's very very hard to do compliance testing at a thousand locations and do it at a significant intensity that you really make a difference so I don't know if there's any limits contemplated or it's just going to be more of a free market system where anybody who wants to open a retail location just has to apply if they meet the criteria they can I think that will result in a similar challenge in getting and maintaining control of the sale of the product if you have hundreds of retail locations so just something else just to be mindful as you go forward in thinking of this and I'm going to stop right here because I want to take seven minutes for a short break this has been very informative just a reminder we do not own this bill I appreciate the drive-by by the legislative council and we can talk about this in our upcoming free time and if there's more that we want to hear from either Michelle or the committee on what they're hearing just so that we can respond this is a situation where the committee of jurisdiction is asking us for an opinion on stuff that we focus on so we can write a memo based on what we've heard we can take a little bit further testimony but we don't but that's their request is to help make the bill more solid I was just going to say if anybody has questions or you want to get some more information on anything feel free to shoot me an email or drop by and see me down on the mezzanine I'm happy to talk with you all if there's things you just want to sort through that you don't want to take up too many time welcome to the third floor I'm familiar with the third floor along this year over in the box it's a pleasure to be here thank you let's take 6 minutes before we pick up on the panel in a way we have the recognition yes we are welcome back everybody we are running just a few minutes behind we started a few minutes behind so I guess we're on time we are switching gears and we are going to back to minimum wage we are here from is Colleen here hi Colleen I'm just going to introduce everybody first and we're going to go around the room Jill is here I saw Charles I saw earlier today is he still here hi Charles and that's going to be it for today and not available to testify for those of you who don't know we're just going to go around the room really quickly representing Tom Stevens from Waterbury representative Matt Beyer over James Randall Zott, Barnard representative Lisa Hago from Berkshire representative Marianne Glash from Swanton John Callacchi South Burlington Tommy Waltz from Mary City Mary Howard from Bartlett City Chip Triano from Standard and we've been visiting both earlier today now by students from BFA Fairfax so welcome they're here to see the legislative process so you're here you're here on one of the key bills of the year on minimum wage so let's just start with Colleen and if I sound like I'm talking faster at times because I'm feeling like there's four weeks left of the session or so yeah we're not trying to put your two dollars down on that that's what I said we're not trying to influence the pool exactly I can only hear you you must have inside travel I'm good I'm good I'm good okay wonderful yes I'm going to kind of do my time here alright so Colleen welcome if you could we are in the process of of taking testimony I know you've testified on this bill in the senate I did and if you could share that testimony or or better that would be great okay sounds great well first thank you I'm Colleen Condon-Cohau I'm a native Vermonter and I'm a second generation business owner I own three facilities in St. Alvin's Vermont I'm excited for BFA Fairfax Franklin County some of you may have known my late parents Phil and Trassa Condon they were pioneers in long-term care in the state of Vermont we've been caring for elderly for about 40 years so I again wanted to thank you for the opportunity to testify on increasing the minimum wage we would love to be able to pay our staff $15 an hour however long-term care is because long-term care is demanding and rewarding work and certainly should be compensated fairly Franklin County rehab center and Villa rehab center are both five-star CMS rated facilities we have been recognized nationally as well as at the state level we have had multiple deficiency free surveys from licensing and protection we were recognized all three of my buildings have been recognized nationally for the bronze quality award and in September or excuse me October of 2018 Franklin County rehab center was honored with the very prestigious silver quality award from the American Health Care Association and we are also pleased to be the recipients from the state quality award for both Franklin County and the Villa quality of care is extremely important and has been important in our work over the last 40 years I'm going to give you some general highlights and overview of our facilities as I said we have two skilled nursing facilities Franklin County rehab center and the Villa which encompasses 94 skilled nursing beds in Franklin County holiday house is a 42 residential care home we employ over 236 employees between all three of our buildings 57% our Medicaid recipients 22% are self-pay or private and 21% are Medicare recipients our labor and benefits account for about 54% of all of our costs unfortunately we do not have the ability to absorb this kind of increase in our payroll without making significant reductions elsewhere we calculated what this S23 impact to our facilities would be it's over $1.6 million I want to highlight sort of what we get for daily rates or per hour for our buildings our residential care home which is holiday house accepts ACCS which is community Medicaid the enhanced residential care Medicaid program which are very important as you look at the continuum of care and costs for facilities you want to make sure people are being served in appropriate levels of care I get $2.52 per hour for holiday house and we're open 24 hours a day staffed we're providing meals staffing, medication management obviously everything that comes with room and board my skill nursing facilities are 11 between $10.41 per bed per hour so $11.38 per bed per hour so when you put all of those costs into place and you look at increasing the minimum wage to $15 an hour that is extremely impactful because I don't I can't start at $15 an hour I can't pay an LNA which is one of your most crucial licensed nursing assistant one of your most crucial positions they're the backbone they're the direct caregivers I cannot pay them $15 an hour when they're getting $15 an hour at McDonald's or at the local store so that is and then it just cascades up because then you have licensed practical nurses your LPNs and then your RNs and I know you all know this but I am going to highlight the fact that we have an extremely difficult workforce environment right now in the state of Vermont I just got back speaking nationally I was asked to speak on a national panel about workforce we just don't have enough physical bodies plus our unemployment rate as you know is 2.2% I will tell you one of the saddest days of my life was when I had to hire a staffing agency to hire a life nurse in September I have never in the history of my family ever had to do that we have a very high retention rate for our staff I am lucky to say that we have staffed with us over 35 years we have many staff that have been with us 5 years or more I actually cried that day because staffing agencies present many difficulties and it's hard so I mean I know that we are not going to fix the workforce here but I am saying to you that healthcare in general has got a very significant as well as Vermont we have done some really great things like I am sure all of my compatriots have done we are doing strong orientation strong onboarding mentoring programs I do nurse reimbursement programs I have a lot of LNA's that are in nursing school I pay them additionally to see about the numbers of our facilities after I have even started recruiting into Canada for nurses I actually have about four nurses that travel across the border as well as New York I am able to some of the outlying areas of New York some of my nurses are coming from unlike other industries however I cannot reduce my staffing levels as dictates as they should appropriate staffing levels so I cannot raise my prices of a material good that I am giving because I am required to have minimum staffing requirements and it's also crucial for quality of care I mean and these are not only state staffing requirements by and protection but these are CMS staffing ratios the long-term care skill nursing facility also within the last two years has had an additional 800 pages of new regulations that have come into place which have added new positions that have to be like infection control preventionists and different things that are very important but that is costing my facilities another $150,000 I mentioned what our rates are and the fact that I care for about 57% of Medicaid recipients Medicaid inflation is about 1.8% per year which is well below what is needed to for the proposed 7 to 9% minimum wage increases in addition to our low Medicaid reimbursement I'm not sure if you know but most homes are also facing Medicare reductions this year we anticipate through the buildings that would be over $25,000 in decreases from Medicare they're doing I can go into details but they're doing a lot of different things and hospital re-emission rates and we're all working very hard for that but it is hitting the facilities, all of the facilities we also pay 6% villa in Franklin County Rehab towards provider taxes and we also pay property taxes as I mentioned we're in Phase 3 of an implementation of new federal regulations that increase their focus is compliance and some other major things this year we also have a brand new payment mechanism coming in which is called PDPM which they're totally how we get paid the biggest revamp of payment for Medicare in 30 years again our wages and benefits account for 54% of our facilities current costs and that would increase that impact to me is $1.6 million over that the only potential mechanism I can account for these changes would be reduce our employee benefits however this reduction is counterproductive I mean I'm having a struggle getting staff as it is and we're a good provider we're a preferred provider and I'm proud to say that but we do have an existing workforce crisis and I just can't raise my goods $5 extra per material good to cover that my facilities run on less than a 1% margin so it's not like I have multiple dollars to put towards this and this is really critically going to potentially impact me if I could run my facilities and stay a Vermont owner this is my livelihood this is my profession this is what I grew up in I grew up as a little girl in a holiday house playing checkers with Mr. Berthew and caring for the elderly and I would love to pay a wage but all I ask is if you do this you need to make sure that you are going to understand that there has to be a balance and that you're going to have to pay for it on the Medicaid side in conclusion I'm not fundamentally opposed to raising the minimum wage but if you do enact S23 we need Medicaid to pay for it these increased costs for nursing homes and residential care homes and your residential care homes there are some small mom and pop residential care homes they're maybe caring for 5 to 10 people I mean they will not have the funds to be able to care for these people other states that have enacted significant increases in minimum wages have increased funding to nursing facilities beyond a traditional inflationary increase I believe you have attached an outline of other actions that I think Toby has put in for other states have put in so I'm open for questions thank you I think I missed her yes 800 new pages of regulations yes that's what I've been doing for the last 3 years it's amazing mmhmm I'm speechless that's unusual it does have been a lot of capture and you put in a federal registry from CMS actually I had John first and then Tommy sorry well thank you for the work you do just so I understand you said that and Helen if I want to make sure I understand current status you said if the minimum wage in 5 years $15 an hour that was what McDonnell workers were getting what do you think your LPN is now how does that relate to current minimum wage yeah I mean about $17 or $18 an hour as new grants so you would have to raise I mean you would want at least at least a $5 to $6 at least and I think I I'm not sure I hit everything but that includes I just want to make sure the FICA taxes workers comp that's all in all those calculations over $1.6 million but that does not include the differential that would have to pay the other staff that's just the impact of the minimum wage you might not know the answer to this but I'm hoping somebody in the room does put the 6% provider tax where that goes sure Toby, I mean I Toby, I identify yourself Toby out of my healthcare association so your provider tax is on a number of providers but it's used to draw down Medicaid funds in the feds federal matches thank you I was just wondering what you pay your your staff hourly upon hiring them what's your starting wage $12 to $1250 depends on the I actually pay $10.75 at my residential care home okay so yeah it's different scale then yes personal care attendant does not go through formal licensure so the personal care attendant starts about $10.50 they get $0.25 increase to $10.75 okay and are these employees full time and part time combination of workers? yeah we have a lot of full time workers but we have part time workers but we pay benefits for for part time as well thank you I have a couple questions first of all thank you for your testimony and the work that you're doing what is your rate of turnover amongst your employees we're about 40% which the national average is about 50% what happens and it's mostly with your licensed nursing assistants truly they come out of allied health programs at the tech centers high school we also do to LNA classes and what I'll say to you is that not everybody is meant to be a care provider so we tend to see that turnover happen within the first six months because they've figured out that maybe it isn't the right position for them so that's where you see the biggest spread you don't see it within your nursing you know your professional nurses obviously we run full kitchens we run full laundry so you'll see a bit of that in dietary not as much in housekeeping or laundry but my second question is the nurses that you hire from Canada do you pay them a higher rate yes so the state of Vermont the Canadian nurses we do pay a higher rate from Canada so that they can actually my assistant director of nursing comes out from Bedford every day and then there is a difference with LPNs licensed practical nurses Vermont tends to pay the LPNs at a higher rate and your RNs too from New York so you know sort of over Albert Grouse's point like if they live on that sort of New York border that we've had nurses come over from Plattsburgh not recently but I had a nurse traveling from Montreal I've represented some in Toronto maybe I missed it what percentage of people that utilize your facilities paid a full sticker price 21% correct represent Toronto did you have a follow up with that one so there are only four I understand are your nurses from Canada they don't require healthcare is that to say they have it I have a couple my assistant director who does his healthcare in Canada because that's where his family is but we do offer healthcare benefits a very good package to all staff are eligible for that we offer 401k with a 5% care match you know we really have tried to be an employer that is making sure that our employees I wanted to commend you for your care of our older remarkers for one thing and also compliment you on the care that you provide for your employees I just wanted to say that and could you tell me what your private pay rate is monthly so monthly at our assisted living is about $3,800 and Franklin County and the villa were about just under $400 so about it depends we have a couple different room but oh $400 a day so sorry I'm sorry I really do have a business I shouldn't have any business being a business sorry you must be full of legislators you know what I do care for I have cared for legislators judges all kinds of people farmers, hardworking, Vermonters yeah any questions for Colleen I appreciate you coming in sharing your story there is always acknowledgement here that it is especially folks who are in your field where it's difficult and we know that care like childcare is one of the most major expenses that anyone can have especially if it's private pay and yet the people who provide that care usually amongst I don't want to say the lowest paid but certainly they deserve more compensation than what they receive and we're an aging state and we have an aging workforce which is also complicated covering birth to death now representative Dimash yes this is not a question it's a comment you mentioned having care for some legislators I believe you currently caring for a former Franklin County judge I can't I'm just saying I am aware of this and I've heard nothing but very positive very positive comments so I just wanted to give you that feedback but thank you for your work and thank you for the services you provide thank you and thank you so much for having me come in today and allowing me to testify I really appreciate it it's important for us to hear it's not this is not an easy issue no it's not especially when we're talking about CUSP what I would consider CUSP positions so but thank you for sharing your thoughts and your business with us thank you next up is Jill don't read with me good morning my name is Jill Charbonneau I live in Middlebury, Vermont like Colleen on the lifelong Vermont so I'll talk a little bit about the state of Vermont Labor Council, AFL, CIO it's the voice of unionized workers at the state level essentially we work to promote improved wages health and retirement benefits and working conditions with regard for the autonomy and integrity of affiliated unions which essentially means that when we come to the legislature to testify on a bill or to sit in committee and learn about a bill it's because a union affiliated with the AFL, CIO has asked us to do so we are not autonomous ourselves and say oh this is interesting we can say oh this is interesting and contact a labor organization and find out if it's something that they would like us to follow but we take direction from which people may or may not understand legislatively we are charged with safeguarding and promoting the principles of collective bargaining the rights of working people and consumers and the security and welfare of all people I'm a retired letter carrier and a member of the National Association of Letter Carriers, AFL, CIO I am currently president of the Vermont State Labor Council, AFL, CIO we support legislation for raising the minimum wage paid family leave and card check and enforcing current statutes concerning worker misclassification because these are issues relevant to the lives of workers many union workers have the benefit of wages higher than the current and propose $15 an hour minimum wage, sick leave and retirement plans but we believe these to be the rightful compensation of all workers the committee has the opportunity to protect many of workers in the new millennium as technology changes the face of the workplace we must continue to recognize the value of working people and their claim to a share of the wealth they make McDonald's corporation wealth exists because there is someone there to flip the burgers policy decision should we recognize the rights and protection of workers in on demand economy during my tenure at the Vermont State Labor Council AFL, CIO I made a point that I had to work overtime at minimum wage jobs I currently work predominantly with women some of the young college graduates some are young college graduates and students living with their parents some have children others are working a second job and some are elder members of the workforce like me there are a few full-time employment opportunities during the slow periods there are fewer work hours without my retirement benefits I make even if I work full-time working people deserve the dignity of being able to feed their family put a roof over their head send their kids to college and set aside funds for retirement raising the minimum wage will raise the standard of living for many working for monthers a fair day's work deserves a fair day's pay I presume that this is the kind of information that you hear under many different circumstances that I heard in the spring and I presume you had heard this past session and this session and so if you could just talk a little bit more just in general you served in a union you didn't serve in a union you worked while a member of a union you had this union council can you talk a little bit more about how unions why unions have an interest in this when they negotiate they negotiate that their power is in their ability to negotiate with their employers or the sector and so it's interesting to see where unions will be supporting in this case mostly non-union workers so we have traditionally many of the benefits that come to people whether even education public education the minimum wage to begin with the 40 hour work with and we don't just we certainly there's a layer of protectionism there but we don't just believe that members of the unions deserve these benefits we believe that workers deserve these benefits you know one of the things of working in a minimum wage job that I really did not connect the dots on is people who work in low wage jobs have a discord with low income people who do not work and they feel that they go to work and they pay taxes and sometimes they're standard of living because there is a certain faction within this group who do not accept public assistance of any sort so they feel like they're paying for someone to stay home and I even heard a fellow who works at bread loaf construction supervisor there say well today in a really cold winter's day today I'm going to work to support people who stay home essentially is what he said and the reality is we are the richest nation on earth and how we care for our elderly how we care for our children and how we care for people who suffer from even opioid addiction is telling and we need to do a better job and you have the opportunity to say that work has a value and that we recognize that senior citizens need care but we also recognize that people giving care to senior citizens deserve a livable wage and so that's just I would say unionism in a nutshell taking care of workers so how do you reconcile the type of testimony that we just heard previously where an organization would love to pay their workers more because they're providing very valuable service to the economy and to the very people who need it the elderly or the infirm with the reality that they are constrained by the reimbursements that they're given from these big organizations of Medicaid so you control the Medicaid reimbursements that's a state program correct so when you raise but I think I've heard in a couple of cases in this room is when you raise the minimum wage you have to raise the reimbursement rate and I think I have put a testimony in last year although I haven't followed this bill that closely this year that as people earn more money they will pay more money in taxes and as they earn more money they will receive less benefits from the state so there is going to be a flow of money into the state which might have the availability to use for these circumstances so thank you my knowledge of this bill although limited is unfortunately is that there is no provision to raise those Medicaid reimbursements in conjunction with this bill so I think that the woman that I heard testify yesterday asked that in fact when you pass this bill that you put those restrictions in this so is that something your organization would support? yeah we support Medicaid reimbursement it's good for the caregivers and it's also good for the patients you know many of us it is on long-term care with Medicaid so even if I don't get Medicaid there are people in my community and my family that benefit from it and I think as taxpayers and the wealthiest nation on earth we got it at some point in time saying we care enough about our population to say that there's a baseline of care that should be available to them and this bill addresses this thank you Charles Charles Martin Vermont Chamber of Commerce thank you to the chair and the committee for having me in I'm going to read a brief statement and then touch on a few additional points maybe go to the Q&A if that works for everybody the Vermont Chamber of Commerce represents nearly 1,500 members from all industries and sectors of Vermont's business community informed by routine engagement with our diverse membership the Chamber prides itself on maintaining a better understanding of the issues impacting Vermont's employees and employers after carefully considering the concerns of countless Vermont businesses all of whom are dedicated to providing their employees the best possible compensation package the Chamber continues to oppose and increase the minimum wage beyond level statutorily in place proposals to increase the minimum wage above levels mandated by current statute will is enacted disproportionately impact small businesses including those businesses current and future employees the reality stands that burning Vermont's business community with an additional costly mandate will interfere with natural growth including by limiting the ability of employers to organically expand compensation of benefits in a consistent and sustainable manner we're proud that Vermont maintains one of the nation's highest minimum wages currently but that said we have concerns about proposal to continue to raise the wage by an additional 40% over the next few years when most Vermont businesses will not see equivalent revenue increases to offset such cost structures we celebrate Vermont businesses who currently pay above the current minimum wage but caution individuals who believe that employers paying below that amount are doing so for any other reason than business survival our members also have serious concerns about tipped wage rates the tourism industry is an important part of the Vermont economy our restaurant spots are a major reason why people enjoy Vermont current law requires tipped minimum wage rates to increase at 50% of the minimum wage rate these two rates if the bill is to advance this will allow restaurants to pay their non tipped employees in the back of the house a higher minimum wage and allow tipped employees to continue to earn above the minimum wage or at the very least the new minimum wage in summary the chamber continues to support indexing the minimum wage inflation as is reflected in current law if we are to increase the minimum wage additionally we suggest extending the phase in period to 2028 and decoupling the tipped minimum wage rates if you have any questions another couple of issues I bring up we hear from virtually every one of our businesses that they're struggling to find work force this committee probably hears that more than a lot of other committees in this building and that includes businesses that are paying much higher than $15 an hour for people who are working in semi skilled labor on factory floors and jobs like that I'd also ask the committee to consider that as far as total value to employees an employer generally looks at benefits and salary as one number in a lot of cases they do anyway one portion of that is mandated, i.e. salary the other portion in order to achieve solvency in the overall price projection or cost projection for the year they're going to have to decrease one part of that number probably the unmandated portion of benefits I'd also like to say something I heard from people who are kind of on the pro side of this I've heard it from a few people it's just simply that quote and I quoted this because I found it interesting a lot of businesses will be able to sustain these increases one could deduce that that would also mean a lot of businesses will not be able to sustain these increases so I'd ask the committee to consider that heavily if moving forward with this bill I also heard that we need to do this so the whole state increases from the same sort of proponents of the bill that doing this as a state allows all gifts and services to rise and tend them across the state thereby not competitively disadvantaged in any one business I tend to agree with that rhetoric but I'd also ask people to see that that means we would be at a competitive disadvantage regionally and nationally because we'd be a state with a higher wage I'd like to kind of end with talking about whose multi-generational remuner is alive and I'm a multi-generational remuner as well I grew up in a general store so this issue hits a little close to home I know all about payroll stress I know all about treating your employees as well as possible within the fiscal needs of the business owner and I did some very quick math which is dangerous to do in the witness chair but I'll try to broadcast it accurately we had sort of the Walmart of 1870 kind of how we practically tried to frame our store you can get anything there we just had a smaller inventory than a big-box store and we did this in Roll East Corinne generally we had three employees on staff for 14 hours a day 7 days a week, 52 weeks a year if you multiply that by the projected increase to $15 an hour from now that's $4.22 it makes about 65k a year an additional payroll that my parents would have had to come up with to pay their employees now the argument is that people in Corinth or in a greater economy will start spending more because they'll be earning more I think you would have a hard time trying to convince my parents of that because generally the customers that came through are people who are buying a coffee and an egg sandwich on the way to work I don't see that they would suddenly start buying five coffees and five egg sandwiches on the way through to work and I'd add that we lost a lot of customers because general store prices are already very high and suddenly the box store that's down the road becomes a much more lucrative and financially sensible option so I'd argue that you'd hemorrhage customers from a lot of these small businesses and in that number 65k an additional unobligated profits just seems highly unlikely for most people there might be a few businesses in the state that would be able to swing that but that certainly would not have happened in our little corner for a month when I grew up in a general store and with that I'll open up to additional questions Out of the 1500 clients that you have are they all small mom and pop stores or do they include big box stores as well? They include big box stores and I'll say confidently that big box stores could probably afford this have a much easier time doing this than small businesses thus it's usually the nature of any sort of mandated business policy or regulation but the vast majority of the chamber's businesses are somewhere around 20 or less employees vast majority by I just have a statistic question on my mind but it's about 80% so only a small margin of our businesses are sort of thousands of employees spread around the nation we don't not that there's anything wrong with Walmart but we don't represent Walmart so the biggest we have are kind of our Vermont businesses and kind of I keep saying philosophical note in my head but and I realize that the chamber represents the businesses in Vermont but what do you say one of the things that makes this difficult is that we hear we hear this story and then we hear the stories from an employee's perspective that says it's really difficult for me to make ends meet on this current minimum wage and on the other hand we can say oh look we're just talking about the minimum wage not everybody makes the minimum wage but we know from our Vermont income tax filings that 144,000 Vermonters make less than $27,000 a year they make an average of about $15,000 a year how do we in our work and again I totally appreciate that you work for an organization that advocates for businesses businesses need employees to work and yet employees are saying or the statistics show that many employees who work in these service industries are making less than $27,000 a year where do we where do the scales of justice fall and that might be an unfair question to you it's a tricky question that I could probably get myself into trouble with but I would probably argue something along the lines of natural economic growth I would say that with the case of the small business in the rural town if that general store folds wages which I won't argue aren't high enough to have a joyful, carefree life will be non-existent so I'm not sure the answer to that question entirely but I know for the majority of our members it's not an increase to the minimum wage beyond those already in statute so it's kind of a follow up to your question because we have this like oscillating frame of reference where on one hand we have someone who says like look at the workers and we have someone else who comes in and says look at the small businesses and so we're, as the chair was referencing we're trying to weigh this scale like where do we find this balance or we just had testimony from someone yesterday whose business was largely predicated on taxpayer subsidies and we had someone just a moment ago predicated on taxpayer subsidies and I guess my question such as it is is we're asked to sort of have sympathy for the small business that might go under based on market forces right but many of the same entities that want us to have sympathy for them don't mind necessarily the repercussions for the workers based on market forces why not? or like the displacement of industry or something right? so we say oh well the economy is evolving automation is coming and so we just sort of accept that this is a result of in your language maybe organic expansion of the economy or something so it becomes this question for me I'm not entirely sure who the free market advocates are that come in here you know what I mean? because it's always that whenever it's to your financial benefits we should let the free market work but then when it begins to jeopardize something to you then it's like well maybe not the free market and like I said we just had these two entities who came in who was like 79% of one of the businesses and 84% of the others are essentially keeping them afloat so the market's clearly not working because otherwise you know she said she had 21% of her people paying market rate and the other 79 didn't so if the market was allocating its resources sufficiently everybody would just be I don't think the chamber subscribes we don't have like an ideological statement that guides we wouldn't describe ourselves as passionately free market and just this year we've argued for additional regulation of the Airbnb market so like you said we kind of consider things on a case-by-case basis on what works for Vermont communities on a localized level national conversations are always relevant but we tend to just focus on the needs of our members with the issue at hand but I agree that it's a endless kind of struggle to find the right balance I know you all are tasked with doing that in the most objective way possible but I have the pleasure of being a little subjective in advocating for businesses two things one I want to thank you for bringing a personal example to us because so often we hear about a theoretical example so that was nice refreshing to hear and the others to Randall's point to almost remove the healthcare industry from this economic model because healthcare is not working on an economic model on an economic model at this point healthcare by its very nature is subsidized so I don't think that's an accurate portrayal of anything that Mr. Martin was trying to get at to represent Toronto so when I go into my community I go to a Willy's store which is in Greenbrook and this is 109 years and I talk to the owner about wages and benefits fairly often and his retention rate is amazing I mean he's had people there for 20 years working in various departments and employees are quite content but he is always in favor of increasing wages and benefit packages so I kind of listen to that and I think in terms of okay so when you get an increase in your wages productivity goes up retention rates are higher and training costs are lower so I don't hear about those types of savings oftentimes when you're from chambers and various advocates in your position so that's something that I have to add into the weight equation that we've been just talking about and consider that there are some things that work as a result of increasing these wages absolutely I really do think truly I believe on a personal level that each one of this in its own situation and its own little hamlet we're sort of an economically and geographically isolated state where there's trends that exist in one place and don't in the other I'll add that on my personal level my parent's store was run very well this legislature recognized it as one of the finest stores around 2000 when we were still operating it but this would not have made much sense for us we didn't have hardly any turnover I mean the death was probably the most common reason for somebody to leave because generally it was folks that worked 30 feet down the street on Main Street in Corinth and it was very convenient to walk to work Have you talked to any of your members in a small, medium or large businesses about what their payroll percentages were the recession and I mean we have a more robust economy right now we have concerns about an economic downturn you know I've heard year and a half, two years and then what sort of like how this proposed wage increase would apply to that if they saw say like a 20% reduction in sales that's definitely data I could track down I haven't specifically approached this from what the recession will do to businesses if they're mandated increase but I've heard that brought up by economists and this chair who are more intelligent than I when it comes to numbers but I can look at that from a chamber perspective and get back to you because when we talk to the economists it's just broad ranging like binary conversation but I think hearing it from the people who have to live in and experience it from how do we manage our payroll to sales to doors open to I mean from my perspective I've had a much different policy where I came to the chamber in October but it seems like for a month you know with the sort of local movement etc there's every little area is so unique in the way that they do business in our state and the way they keep their business going and the way they adjust that I don't know if we have quite as much luxuries of other states that do these broad maps that say everything will be better for everybody but I'm sure that there's businesses who responded in unique I'm just kind of like with businesses that were especially around previous to the downturn in 1809 like what they saw for our attraction in sales and then like sort of comparing like labor costs to that then what a 7% of your increase would look like to like an estimated attraction I'll track all that down provided to the committee for sure if I can get membership just to provide it to you alright thank you thank you go off the record thank you everybody let's go to lunch