 Welcome. You are with the Vermont House Government Operations Committee. We're relieved to see that our zoom to YouTube connection is is functional and speedy as as we have grown accustomed to it being so that folks can follow along with our committee work. We are gathered again this afternoon to do some more work on S 25. And I think the first perspective that I'd like to hear is from the Agency of Commerce and Community Development. So we have Nick Grimley with us. He's the director of entrepreneurship and tech commercialization and he is going to help us understand what what language we might need to add to the bill to to clarify a CCD's role with respect to business supports for the new cannabis industry so Welcome Nick and would love to have you fill us in on the work that you've been doing. Thank you for the record Nick Grimley director of entrepreneurship and tech commercialization with the Agency of Commerce and Community Development. Hi there members of the Governor Government Operations Committee. Thank you for allowing a CCD time to testify on S 25, which specifically calls on the agency to administer a social equity loan and grant program. Overall we're supportive of taking steps to support those who have historically been disproportionately impacted by the cannabis prohibition. We want to suggest some language changes that would help a CCD achieve the goals of this specific program and address the technical and staffing issues based by the agency. Others in the administration such as the Chief Prevention Officer will likely offer feedback on other portions of the bill as it's drafted. To frame this, a CCD does not have the technical expertise to underwrite and service loans. Typically we would work with Vita to execute a program like this. But they can't make loans to cannabis related businesses at this time I believe that has to do with some federal programs from which they draw down funds from Treasury. We want to suggest the following language that would allow us to contract with an organization capable of providing the financial assistance loans grants and outreach outlined in the bill. And we have submitted a suggested revision for the committee's consideration. Would you like me to read that language or would you like me to have the ability to call up the language from our committee page and we usually do that on a secondary device so I think if you want to just generally describe what it is you have brought to us. Okay. Sure. So we've added language to the current bill or suggested language to add that the agency may procure by contract all are part of the necessary underwriting execution and administrative services required for loans and grants to be made from the cannabis develop cannabis business development fund to eligible social equity applicants as allowed under this chapter. Should the agency be unable to do so, the program shall not move forward until the legislature appropriates the operational resources necessary for a CCD to make loans and provide financial assistance to social equity applicants. And I think I can elaborate on that a little bit more. That's based on a couple of conversations I've had with the Vermont State Employees Credit Union which is really kind of on the leading edge of working with this industry. And, and then conversations with DFR. And I would actually recommend that you may want to have both of those groups in to provide their insight on the, the banking considerations and issues that face this industry. In that respect. The SECU was, was generally, you know, they thought that this was a great idea and may in concept be able to help the agency out in a program like this but it would certainly have to better understand the details as the cannabis control board defines that program. And we'd also like to suggest that the cannabis control board work and consultation with a CCD and the executive director for racial equity and determining the eligibility requirements for this program. And I think that's I that's pretty much what I have for today I'm happy to answer any questions that you may have at this time. Here committee members any questions must be crystal clear. All right. I appreciate you submitting some recommended language and we appreciate your flagging this and helping us to work through some of the details about what we need in the bill to make this system work so thank you. Yeah we'd like to see it be successful and we think this is a good path towards that. Thank you. Thanks have a good afternoon. You're welcome to stick around and listen if you'd like I think next we're going to hear from Jordan Wellington, who's a partner at the strategies with a recommendation on on an issue with respect to the cannabis system so welcome Jordan. Thank you very much representative really honored to be here today my name is Jordan Wellington I'm a partner in the firm via strategies we are a public policy consulting firm specializing in cannabis regulation, having worked with regulators, policymakers, industry members from really all over the world, ever since being the point person and policy person that helped implement Colorado's legalization. I want to talk about the amendment that going to mention and discuss a little bit and hopefully answer some questions about I just want to mention how much of a privilege it is to be able to speak here today I actually grew up in New Jersey on the East Coast, spent a tremendous time in Vermont and have a ton of love for your state my brother, Corey actually attended the University of Vermont many moons ago unfortunately we're older than in our early 20s and my youngest brother David actually just moved back from Colorado to Vermont and is actually living in Vermont now and so absolutely love your state and thrilled anytime I get a chance to help out and answer some questions about public policy. Today I'm going to be speaking to, I believe, what's a proposed amendment. This is really just a technical change from the bill last year. In Vermont legalization bill a potency cap of 60% was imposed upon final cannabis products. I believe that, you know, unfortunately some unintended consequences of that language is that that cap is not only being applied to products that are being sold to consumers to help protect public health and safety, but also to intermediary products that would be sold business to business only not to a consumer. So basically what's going on here is that when a licensee needs to produce an infused product whether that be a topical and edible a lotion of any kind. They are going to buy a cannabis extract from another manufacturer. To comply with the law that extract would actually have to be diluted down through additives that are not necessary to the production process down to meet the 60% threshold, then transferred to another business, refined and purified to either remove those additives or just stick them in the product as well. And then a final product would be produced that would be subject to that threshold and so really the idea here is that this wouldn't alter the 60% cap for products sold to consumers. Business is to operate a little bit more efficiently on a business to business transfer by exempting only those products those intermediary business to business products from the cap. Well, whereas retaining it for any products that would be sold to a consumer. This kind of gets into the technical extraction and production process I'd be happy to answer any questions about that but figure. I'm for me to just stop talking and answer questions from y'all as opposed to just continuing to ramble about technical production aspects in the cannabis industry. Thank you so much for joining us and I'm sorry that we couldn't give you an excuse to jet to the Green Mountain State in order to share your testimony with us today but this is a little more efficient I suppose committee members any questions about the concepts that Mr Wellington has just presented representative Leclerc. Thank you madam chair. Good afternoon Mr Wellington. What is the percent of tetra hydrone cannabinole. Generally, in the concept of what you're talking about. Is it usually 100% 80% representative committee share thank you for the question. So I think that it depends on the type of extraction and refinement method. And, you know it really just depends on whether you're trying to make what's commonly referred to as distillate so you're removing all chemicals constituents of the plant other than THC, or whether you're trying to leave terpenes and other cannabinoids in there. On average you're probably talking about between 70 and 90, 90 ish percent. And again, these are not products that will be sold to consumers. It's just about an efficiency measure between operations and not needing to say something okay well it's 30 it's 90% THC. We're actually going to put 30% of God knows what in there to get it down to 60 transfer it over to the topical manufacturer who's been going to have to figure out how to get it out of there so they can put it into a bomb or a lotion or an edible or. Any, I mean the number of products kind of tend to move with time so anything else. Thank you. Other questions from committee members. All right, well you, you must have made your ask crystal clear and we will certainly take a look at the suggestion and welcome you to stick around we've got a few more witnesses with us this afternoon, but thank you for being here today. Thank you very much appreciate it. Next up we have Pietro Lynn, who is with Vermont CBD labs of Williston. Welcome Pietro and welcome you to share share your thoughts with the committee. Thank you madam chair. First of all, let me introduce myself my name is Pietro Lynn. I'm a lawyer I in Burlington and I represent Vermont CBD labs. And the reason we're here is because we're faced with a quandary. Vermont CBD labs has a proprietary technology that it's developed that will allow it to process hemp that is CBD oil hemp products into delta nine THC at about 80 or 90% period. So that that is for Vermont I think an exciting prospect because it means that those of us who have worked for companies in the hemp industry, and I've seen our clients suffer terribly because of the, the decline in the hemp market or in the CBD market have certainly hope farmers in Vermont who don't have a market for their hemp hemp processors in Vermont who don't have a market for their isolate or distillate may very soon, if we're successful have an ability to create a product that will be filling a void in the cannabis space. And so what is what is the process and then what is the problem. The process looks like this. We're very comfortable with the concept that Vermont already has a statutory scheme that governs the growing and processing of hemp into CBD oil. And there's a there's regulation that governs that and it's, we're very content with that. We're also content with a concept that Vermont has a statutory scheme that's going to govern cannabis and the processing of cannabis into THC. The, the rub, the area where there is a gap statutorily that cannot be filled by regulation is what happens when you have cannabis, and you are, I'm sorry, what happens when you have to when you have CBD oil, and you want to turn it into THC, because under the hemp regulations, you can't process your hemp product into something that has less than 0.3% THC. With cannabis statute, you cannot process something that is based on hemp that is CBD oil. And we've got this gap where we want to use as an ingredient to turn it into delta nine THC, a processed hemp isolate or distilled. And we must have a change in the statute if we're going to be able to do that. And that's why we're here. And that's why we suggested some language that would modify the present statute that would allow people who purchase CBD oil to process it as an ingredient with cannabis into delta nine THC. We're not looking to expand the reach or the scope of the hemp statutes. We're not seeking somehow to find a way to undermine the scope of the hemp statutes. What we'd like is something that specifically and statutorily contemplates taking CBD oil, using it as an ingredient in a process that chemically transforms the CBD oil into delta nine THC, something that is not presently doable under either set of statutes. And we're looking to you to create the bridge between the two. Let's see. Representative Anthony has a question. How would this thank you by the way, Madam Chair and thank you for coming to testify. Mr Lynn. How would this if at all, disturb our sort of charting a course for the cannabis market and you you can say it doesn't affect it at all. But if you think it does, I want to know now. Oh, I think it's an outstanding question. So let me let me answer it this way. If this committee isn't is focused on creating a set of rules of the road when it comes to cannabis, there is nothing about what we're asking for that would change it in any way. All we're asking for is an ability for people who have obtained the correct licenses to include CBD oil in a chemical process that includes cannabis and transforms the CBD oil as part of that process into delta nine THC. So if you're asking me is there's something about what what would be done in this process that is fundamentally different than what is contemplated by the cannabis statute. The answer is no, it isn't. It's just by cork by the way that we have drafted these two sets of statutes in the cannabis statute, we say, Oh, you can't do anything that with with what might be covered under the hemstatute. And in the hemstatute, we say, Oh, you can't do anything that might be covered by the cannabis statute. And what we're doing what we're asking for is something that specifically recognizes and contemplates a process that that takes the delta nine. I'm sorry that takes the CBD oil and turns it into delta nine THC. And that can't happen, and it can't even be part of regulations under the current statutory scheme. The reason I say that is because the current statute for cannabis says you may not process anything that fits under the hemstatute. And, and if that is so, there is never a regulation that can fix that statutory exemption. And I just because hemp folks and cannabis folks will be subject both to licensure for better or for worse by different, if you will, overseers, I just want to be sure I'm clear as to what that may introduce in terms of either complexity or policies that we hadn't or tendencies for market pressures that we had not contemplated. That's why I have. Okay, no, it's a good question. So let me see if I can answer it a little better than I did last time. What's going to happen is there's going to be a bigger market for hemp and for hemp farmers, and that market is going to be to create CBD oil that will then be used in this process. And so, yeah, you're going to increase the number of farmers or increase the number of acres that can be used to grow hemp. And that that is likely to happen. And if we ever reach a time in the United States where federally cannabis becomes legal. I think that the possibilities for a Vermont company that has proprietary technology that will be appealing nationwide is very exciting as an economic development project. And so representative, in terms of what happens in the cannabis space, you know, all we're saying is that is that somebody who is licensed to process cannabis can buy from a licensed hemp processor, the CBD oil added into the hemp or I'm sorry the cannabis product, process it, turning all of it into THC. And that so in terms of license, we're not asking you to do anything that's that's any different than what I think you conceptualize. Good. Thank you. Thank you chair. Madam chair. Thank you, Mr. Lynn. I think I mentioned this the other day and committee but I'm a little confused. There was a story on the news regarding delta eight. Is there a difference between delta eight and delta nine. So, so look, I'm not an expert when it comes to delta eight or delta nine, but this is what I understand to be the distinction delta nine has psychogenic properties meaning it affects your mind delta eight, which is technically legal right it's not against the law. It has not been federally outlawed in any way, but it has a more, you know, body based consequence right it relaxes you in a way that, as I understand it I've never used it is quite significant, but it does not affect your mind. Okay, thank you. Representative Ganon. Thank you. Have any other states regulated this process. So, the, the, the answer is that, for example, in Colorado, they have regulated the process but, but the reason representative Dan and that I'm sort of here on hands and knees, asking the committee to make statutory changes is because I don't think our statute allows you because the language in our statute specifically says that you as if you are a cannabis licensee, you may not process hemp or hemp, hemp oils and extracts, and that's where we run into problems. So, I mean, there are states that have gone that route, but, but given the current statutory scheme. I don't know that we can, because specifically hemp products are exempted from processing under the cannabis license. So, no, I understand that that's what Act 164 does. I was just trying to understand what, what if any other state, what any other state may have done as to right, how they're regulating this process, just so I can educate myself. Yeah, I know that it's a great question. So, as I understand it, there, there have been regulatory changes in Colorado, regular regulatory changes in Michigan that would reflect this process. I don't quite know the status in Illinois, but I understand there's been movement in that direction. It's not like you're the first ones to address this problem. It's just that we, you know, we have a statutory scheme in Vermont that requires legislative intervention. Can you explain the process a little more and what I'm specifically interested in is, is, you know, compared to, you know, taking cannabis and converting it into a THC concentrate. I mean, is there more energy used in converting CBD oil into a THC product? Because, you know, you know, the bill does speak to energy requirements, water requirements and things like that. So I'm just trying to figure out, is there a different environmental impact to the process you're describing versus, you know, converting cannabis flower to some other cannabis product? So let me answer it as best I can. And the disclaimer up front is that I'm not a technician. So it's not my area of expertise, but it's been explained to me. And what I've heard is this, is that it does not require any more energy. The process just is different. And what is, I think if we're considering energy related issues, one of the things we know is that hemp can be grown outside and that hemp can be grown more easily with less effort than cannabis. And so in some ways if we're looking to diminish the impact on the environment, this is one way to do it. Because of course if the product is at least in part hemp, then we are using less resources to get from point A to point B. Okay. And so I'm just trying to understand the intersection between, you know, Vermont's hemp regulation and it's cannabis regulation. So if you have the CBD oil would be regulated by the agency of agriculture, right? That's right. And then at some point you're taking it through a process that converts it to Delta 9 THC. And so I guess it's that conversion process where the cannabis regulatory realm would take over. So the issue here is going to be, we don't want to undermine the hemp regulatory scheme in any way. And the Department of Agriculture is understandably wants to make sure that whatever work I'm trying to have you do here that it doesn't undermine what it seems to be a very successful and good program. And this doesn't, right? You have to operate under a hemp license to take the dried hemp and process it into isolated soil. And what we are contemplating then is that if there is somebody with a cannabis license who wants to create a cannabis-like product that this is, and it's part of that conversion process. This isn't sprinkling CBD oil into something and saying, drink it, it's good for you. This is fundamentally changing its chemical composition. And so what we're saying is for that transition, we think, first of all, we can't do it now. But if we're going to be able to do it, we think it ought to come under the cannabis license. Understood. So have you spoken with the agency of agriculture about this process at all? We have indeed. And they were comfortable with it so long as it did not in any way diminish the effectiveness of their program. And we understand and support that. And we propose changes that leave them wholly undisturbed. And who did you speak with? Oh, forgive me. You know, it's one of those things. I'm an old man and I forgot the name, but it was the person at the department. Kevin Ellis was with me. And I know this, that it was the person who was responsible in the first instance where they have program. Carrie Jigar. That's the name. Thank you. Small state. We know Carrie. All right. Representative Bihowski. Thank you. I recognize that you might not actually know the answer to my question, but I'm hoping that if you don't, you can point me in the direction of who would in that. It's kind of a multi-parter, but the beginning part is what are the fundamental differences between this chemically created THC and naturally occurring THC? Okay, so that's that I do know the answer to. And the answer is it's indistinguishable. Okay. And so we're certain that there wouldn't be additional adverse effects. And the reason I ask is because we've kind of gone down the road before of sort of laboratory recreating something naturally occurring with sometimes catastrophic outcomes. So I want to make sure if we're going down that road, we really know what we're getting into. Absolutely. And so, yeah, the process creates a compound that is indistinguishable. You know, it is, it is THC, delta nine THC, and there are no, you cannot distinguish it from natural products. Thank you. And remember, so representative the other pieces that cannabis is part of this process, right? It's just, it's one of the other ingredients that is used in the process. Wonderful. Thank you. I just want to make sure we're not going down the road of creating something synthetic that is going to create huge problems like we've seen in other areas. Yeah, no, totally understand. Thank you for the question. Thank you. And representative look there. Thank you, Madam Chair. Good afternoon, Mr. Lynn. Hi. There's something about this that just seems a little unsettling to me. One, it sounds like we're trying to come up with a use for hemp that we hadn't intended before. And is there some sort of demand out there or need that this is trying to meet? In other words, do we have a supply side issue that now all of a sudden we're turning to hemp for the delta nine for rather than just the straight up cannabis. Well, so, so look, it is, it is less expensive to produce delta nine THC from hemp in through this process than it is to, you know, indoors grow cannabis, it takes less resources. It's something where you can rely on nature to water and for sun. And that's all to the positive. There's no, there's no market for it now in Vermont because it's not legal and we can't sell it now. But what we're trying to do, Vermont CBB Labs, as the name suggests, is a CBB company, is a hemp company. And we, this industry has suffered mightily over the last two years. And I don't know how much all of you know about, you know, sort of the fortunes or misfortunes of the hemp industry. But over the course of the last two years, we've seen a price collapse. We've seen farmers suffer because there's no market for their hemp processors have gone under and people are scrambling to try and find a market for, you know, this naturally grown important product. And this is one, forgive me, golden opportunity for Vermont farmers in the long term. So representative with Claire I don't know if that answers your question I hope it does, but that's that's the perspective of my club. Could you elaborate a little bit more on the other uses of delta nine. I've heard you talked about the what the hallucinogenic. Yeah, so it's delta nine THC is that is that part of a cannabis that has that gets people for giving me high right like that's that's what it is. And so the the the THC, the oil the distillate that's going to be made is something that would be used in, for example, you could use it in drinks or you could use it in food products, or you could use it if you were vaping like a like a jewel or something like that. Those are, you know, those are the kinds of things that cannabis processors were going to do anyway. This is just another way to fulfill that function. Very good. Okay. Thank you, sir. All right, thank you very much. Representative murwiki. Thank you madam chair. I'm curious if there's something going on with the market that I that I wasn't aware of that you might shed some light on what I saw was lots of growers got into this thinking, here's the gold in the hills. And what happened was the markets got flooded and we what we saw was a market correction supply and demand move the prices so that was there something else that was happening there that that I'm not aware of. I don't think so, although I don't know what you're aware of. I would say this it wasn't just an oversupply at the same time. What we saw was the, the federal government was starting to crack down on any claims made by retailers around health benefits with CBD, and that depressed the market also a lot of manufacturers which who intended to pick up CBD oil as part of their product declined to do it, and the market collapsed and all of it and many of these farmers who got into it. We're doing it with the assumption that these national manufacturers are actually going to go forward with their CBD based products, they didn't. So, yeah, there was an oversupply there remains an oversupply it as I'm, as I understand it, you can buy CBD oil for much less than it takes to actually grow it and process it. And it's so bad that there is virtually no market for Vermont grown him, unless you are going to process it yourself and sell it yourself online. I'm totally open to the concept that we, you know, maybe Vermont farmers need to live with the market but what I'm suggesting to you is that is that there is a market, and what I'm talking about may create a fabulous market for Vermont farmers representative Thank you. So I understand that hemp is used for the production of CBD I my understanding is that it's also a relatively environmentally low impact plant to grow that can be used in in place of other fibers cotton paper you know used for paper making and I'm wondering if there's any move to support our farmers to work in that arena as well because I don't want to take away from any way that we can lower our environmental impact. But look, I don't know what what individual farmers are doing. What I do know is that is that there's this glut of dried hemp, and it's just out there, and nobody is, you know what he's doing anything with it to the extent it's getting processed and there's no market at the same time of CBD oil isolate and distill it, and there's just no market for it. I mean the market has collapsed for for process and unprocessed hemp. And so, you know, people may still be growing hemp, but but they do it at their own peril, and it's on the, you know, sort of hope against hope that something changes. But for when I hear from the client, and nothing appears to be changing if anything, it's worsening, not getting better. Thanks. And representative look there. Thank you madam chair, Mr Lincoln, can you speak to the amount of delta nine that you would get say from a head plant versus what you would get from straight up cannabis plant, do you have any idea how you would get it for late. You got you got me there I that that's that's the you've stretched the limits of my technical knowledge I apologize. Okay, thank you. And I can get an answer for you if you like I mean I can get back to the client and get you that information I'm not trying to brush you off I don't want to provide false information. I actually would appreciate that thank you. Okay I will. Hi, thanks madam chair. Mr Lynn, I was just wondering. So, I want to make it clear that yours, you're reading current laws prohibiting a manufacturer from buying hemp, and then processing it so if a licensed manufacturer under AC one 64 bought hemp, and then processed it into THC. I think our current regulation is not allowing that. So, so let me say it back to you a little bit differently, because I want to make sure that, and this is complicated and I'm not the best communicator around complicated ideas so let me try again to make it super clear. Under the hemp statute, the hemp statutory scheme, if you're licensed, you can process dried hemp into CBD or not a problem. Under the cannabis statute, you can you can process cannabis into delta nine THC, but under the cannabis statute, you cannot process CBD oil into delta nine THC, which is what we want to do. It will be an ingredient with a cannabis product and process together to create delta nine THC by altering the chemical composition of the CBD oil. And that's the one thing that you can't do under the cannabis statute, because it says only the people with the CBD license that the hemp license can do that. If you're under the hemp license, you can create delta nine THC in excess of very low limits. That's the gap. Okay, I understand now thank you. Yep, thank you. All right. Thank you very much Mr Lynn for being with us today and being patient with us and and all of our questions. We, we appreciate you sharing your idea with us and we will certainly have some time to have committee discussion about this so. Thank you so much for having me it was great to see all of you have a good evening. Thank you. All right. I think last on our list of witnesses this afternoon is Josh to cater who is the CEO of trace Vermont. Welcome Josh, and we would love to hear your thoughts on S 25. Thank you very much. And I'm chair. Hello everyone. For the record my name is Joshua to cater I'm co founder of trace. And I am a native Vermont or I grew up in the islands. I grew up farming and working at Allen home orchard so Vermont agriculture is near and dear to my heart personally. I'm also a young entrepreneur in the state who understands, you know that the state has an aging population a lot of my friends have not been able to stay in Vermont because of economic difficulties of being a young person here looking for for work in a career. And so you know I, I understand those predicaments on an individual level that people face. And I do think that the cannabis industry can be a wonderful opportunity to create opportunities for local young for monitors and keep those people in the state. So I founded trace a little over three years ago with the goal of building compliant software track and trace software for hemp and cannabis that was set up for 50 state market. A lot of the early programs that were rolled out and I had experience interacting with them as a cultivator in Northern California. So this season, we're not set up for the success of the industry or for the protection of consumers, which, you know, we see is the main goal of tracking trace systems we currently facilitate the tracking trace system for the hemp program in Vermont through the agency of where all hemp permit holders register and this season they will actually track and trace their crop using our software and that's a national first and something that is protective to the hemp industry here in the state. Hopefully, moving forward. Given the difficulties of getting your product to market so you know our company philosophy and our goals are really tied to the industry as a whole, and we want to see these industries be successful here in the state. So I'm here also as a member of the Vermont. Cannabis equity coalition. Join the coalition as an industry participant. We do stand by those other members of the committee in their testimony of our group and their testimony and the policy that they've submitted. And what I'd like to address in my testimony today is a little bit of a high level view to underscore the impacts of the current statutes and act 164. Some of the potential difficulties that are hidden within the way the market is being formulated right now from an economic perspective. I'm also a UVM graduate with economics degree. So, you know, I understand a little bit thanks to my great education at UVM. Some of the market implications of having a few small businesses have price setting abilities in an early stage market. So, a couple notes. I like the Mr. Lynn who testified before I, we also see, you know, hemp businesses playing a big role in having a role to play in a potential market in the cannabis industry that's coming up. And those businesses do have experience track and tracing their products and with statewide track and trace systems. I just wanted to add that to the record, because I do think there's a little lack of awareness that these small farmers do have the sophistication and the abilities to meet statewide compliance for controlled substances in a number of ways. That is actually something that the in the medical program currently there is no statewide system deployed this is kind of left to each individual business so in some ways hemp farmers are even ahead of the game. So, you know, one of the key policy points that was talked about today by members of our coalition were licensing structures and licensing definitions that set production caps and also differentiate between outdoor and indoor growing. And I really want to underscore the importance of that in my testimony. There needs to be a path to a sustainable business for these early craft license holders. And right now because of how they lack definition and licenses and their lacks a definition from legislature about how exactly craft permit holders can get their product to market outside of the vertically integrated permits, you know, without that definition. There's there's a huge risk that's that's being introduced to the whole market right now within the framework of act 164. And that risk has to do with with the cannabis economy being centralized around three dispensaries that are going to have a head start in the program. So what is what does that risk look like. I mean really it can be summed up as cartel like behavior. You know it's very easy for three vertically integrated dispensaries to coordinate on price. And it's very easy for them to because they have access to retail margins while craft growers do not have access to those retail margins to be able to set prices in the wholesale market in a way where it's not viable for cannabis produce craft here cannabis producers to see a return on their investment with their goods that they're producing. And that's a huge risk. It's something that we have seen play out in other states. We have a little bit more to go on now because you know Vermont has has watched what's unfolded you know I think wisely and other states so so we understand how things have gone wrong and states like Massachusetts and a lot of it has to do with too much concentration of those early permits and too much control at the retail level to just a few centralized permit holders. You know really I think there's a, there's a undercurrent here. And I think there's a real opportunity and everyday Vermonters small farmers young people like myself, who want to be entrepreneurs in the state of Vermont in this market. I really need someone to stand up for them in the legislature. There has not really been any type of action yet and the legislation the legislation passed around the emerging cannabis industry that clearly, you know stands up and solves actually solves issues for these for small Vermont businesses, small Vermont businesses that want to join the industry. There's been minor things done like introducing the craft cultivation permits, and the like which are great starts. And I want to commend the legislature, the legislators that that did were able to include those provisions and act 164, but you can't just do a job halfway it needs to be seen through and there has to be a path for development and licensing structures that make sense and enable outdoor cultivation as, as a feasible business and I also want to thank representative again and for expressing concern about energy use with the last testimony we heard that is a key important piece of the, the licensing structure right now, you know it really does favor indoor cultivation which as we know is, you know, very environmentally intensive. We would like to see the possibility for outdoor cultivation to supply a good amount of the product in Vermont. And that's possible with the four to two to one license size ratios that were suggested by by our coalition. So, there's a key opportunity in here and we want to voice our support to use as 25 as a way to start healing the impacts of the war on drugs, and the impacts of the early days of the cannabis industry which we've seen unroll in a way where that 4% of cannabis businesses are currently owned by BIPOC business owners nationwide, which is, you know, a sorry state of affairs. So, you know it's rare I think to find an opportunity where legislation can bring together so many different groups of people from small organic farmers to young entrepreneurial Vermonters to BIPOC communities in the state. It's really weighing the interest of a few permanent companies who have all by the way been able to make decent money over the past few years there was an article recently to outline how the Vermont owned medical permit holder has been able to make $35 million of revenue since 2013. The two other permits in the state are going to be held by you know publicly traded companies, which you know I think all of us would like the primary participants, I would hope in Vermont's local cannabis economy to be Vermonters we want to try to keep that money in state, I would hope. You know, in conclusion. I think it's a wonderful opportunity. That's before the legislature here today with this bill to create a licensing structure that creates a clear path to market for craft licensees which doesn't exist right now to address some other core issues that have been cleaned up, like being able to, you know, bring hemp, you know into the cannabis supply chain. And also to adopt some of the language from H414 with respect to racial and social equity which, you know right now for a state like Vermont, that tries to be so progressive that we are sorely behind other states with respect to their social equity programs built into legislation so I think it's important that Vermont leads and doesn't follow on those issues. And, yeah, I guess I'll end there. We really have an eye towards trying to create an ecosystem and an economy that sets Vermont up for success. And from a 50 state market perspective, with a long term view towards, you know, bring economic development and opportunity and justice and equity to the cannabis market that's going to, you know, emerge and roll out in Vermont over the coming years. So, thank you all for the time. It's greatly appreciated. Thank you for being with us we have a question from representative Higley. Madam Chair and thank you Joshua. I recently read an article from Oregon seems like I've been involved with Oregon and a couple issues lately but. And this was a couple years ago maybe you're aware of it but you know you would just talked about bringing hemp into the supply chain as well. Mr Lynn was talking about it but it seems to me that the article that I read in Oregon was. It was such a oversupply of marijuana out there that folks did go to growing hemp. And then what happened was because so so many farmers were growing hemp again, the marijuana growers moved inside. You know, again, to keep that cross pollination I guess or whatever it is happening. So, isn't there a concern with that if, if, if the same sort of thing happens here and it sounds like, there would definitely be an issue if what Mr Lynn says is that temp is so much easier to grow. There is a way to extract the THC so just your thoughts on that I guess. Yeah. So, although that was a you know a side note a few things there. The production caps within the licensing structure that our coalition proposed go a long way towards addressing the oversupply issues which were really at the heart of what happened in Oregon. In their early days they did not have the correct caps on size and canopy size in place. Which, you know, caused oversupply and then complicated to all these things so I think it was much more their licensing structure than the hemp market that really created that dynamic. Now with respect to, you know, hemp and cannabis permit holders being able to do do business with each other. I think there are distinct use cases and distinct demand for different products. And, you know, hemp has a much lower total percentage of cannabinoids when compared to plants that will be grown for THC under under cannabis permits. So it's not quite so so cut and dry. I think it's really a question of, you know, do we want the ability for hemp licensee products to be able to find their way into the dispensary environment and to be available and dispensary retail outlets. And I think there's every reason to create that that opportunity in the state. And I think if you look at the constituencies. Those who hold hemp permits now those working in the hemp industry now represent a lot of diverse small Vermont businesses the type of businesses that I think should be seen as the heart of the cannabis industry. And I think there's a lot of crossover and a lot of them will end up holding both permits potentially. So thank thank you, Joshua. Representative Anthony. Thank you, Madam Chair. I'm interested in pursuing one of the references to a fear you folks have of the coalition. And it had to do with your experience in economics classes called cartelization. And notice you folks have been very good about instructing us how to make sure that there are plenty of small producers by producers I mean growers. The cropping seems to me the easy discussion for you folks and for me. However, as you well know, and you made reference to integrated licensees having an advantage that single license holders wouldn't have you linked it to that concept of cartels. My colleagues on the committee will recall I made a reference to the standard oil business model somewhat earlier in the day. What's your remedy to make sure at the other stages, not cropping, but the other stages are sufficiently atomistic small competitive to avoid cartelization. Thank you. Yeah, great, great question. Thank you representative Anthony. I think the well a great starting point would be just having a legislature defined tiers for craft permit holders at every level of the supply chain from retail to delivery to processing to distribution back up to cultivation. You know that's that's a great start, because right now the only path to market is through a vertically integrated permit and from what I can see there's no economic incentive for a vertically integrated permit holder to sell product that they have a make a smaller margin on. So, if these are you know rational economic agents. Then it's very difficult to see how craft growers right now can find a way to put the choice in the hands of the consumers, rather than put, you know be controlled by those few entities that have access to consumers. So I think that is a great starting point. Now within the specifics of you know the size and scale limitations for the other permits like processing distribution delivery retail. There's more specific language on that that was submitted by our coalition I will yield to, but I think just simply defining it and creating that opportunity on par with the vertically integrated permits will go a long way and will at least put the power in the hands of the people and the consumers, rather than in the hands of the the largest industry participants. And I think that's very important. And the way that these small businesses can compete is by being more in touch with consumer demands by having higher quality products, which is something that Vermont farmers do with everything they do. I'm confident they'll do that. And if they're able to which right now they cannot. I do think there will be elements of the free market that play out where we are able to have a viable small cannabis businesses that are locally owned, make up the bulk of the Vermont cannabis market. Thank you. I just, you've used the phrase are small growers need a path to market. And you also made reference to your hope that other license holders in the supply chain would also have access to market. What are you envisioning because, as I recall, there already are bars to the number of licenses that a single legal entity can possess. And I believe there's also a prohibition about people other than the integrator producers and you're right, they have that advantage. There's a prohibition about, let's say a distributor owning other classes of licenses so what's the remedy there because notice, be careful of what you wish for, if a distributor can own various classes of licenses created another route to cartilization. And I don't think that we're advocating for large companies to be able to buy up five different permits in parallel to the vertically integrated licenses. So really it's size sizes that is the end of the game. Okay, I understand. Thank you. Production caps are key. And also I think there's a big difference when a business is specialized and focused like when we came out of alcohol prohibition right there was a three tier system developed to prevent vertical integration because it was recognized back then that was a potential problem and something that would hurt the economy and businesses on the whole so similarly to that I think it's it's quite different when there is a price incentive for businesses to sell product produced in house versus when you have a specialized business focused solely on distribution or focus solely on processing or solely on retail that is are looking for other businesses to purchase from or to collaborate with to bring product to market so that's another key differentiator. Thank you. All right, thank you. Mr. Decatur for being with us today any other questions from committee members. All right. We appreciate your time this afternoon. And committee members that is a wrap for today. We we've got a couple more witnesses tomorrow morning and then we will have ample time for committee discussion and and getting back into the bill language that that we hope to move out so if committee members want to, you know, send send any thoughts or impressions must have can't have, you know, any feedback that you'd like to send please send them to the vice chair and myself, and we will discuss them tomorrow in committee. Have a wonderful afternoon.