 Thank you. This is the S 54 committee of conference. Today the house does not have a kind of proposal to present to the Senate. We were working on one. We've had some productive. But because a number of committees in the house worked on. S 54. We need to have a couple more conversations before we can present. A kind of proposal. But I thought it would be productive to meet today because there's a lot of, couple of issues that, that we need to address. Stephanie Barrett and Graham Campbell are here to talk about the tax provisions in S 54 and their, their impact. And Michael Grady is here to help with the agricultural section, which I know you want to have some discussion about. And I am happy to discuss the potency limits. That are, that the house put into S 54. But I thought we would start with Stephanie and Graham on the tax. Before we do that. Sure. Will they be going over both the Senate and the house versions and taxes or just the house version? I think they'll make a comparison. Nope. Janet. Well, they're going to talk about what the Senate put on the table last week. Oh, okay. An analysis of how that would work. Okay. Good. I don't know if it's the, if Stephanie and. Graham are the right people to actually talk about. In connection with the taxes. The. The fee issue. Somebody needs to explain to me the fee issue and how that's going to, what that means and what the fees are, who's going to set them and what they're going to generate and how they're going to generate. So I don't know if it's Stephanie and Graham or not, but at some point I'd like that discussion. Thank you. Okay. Thank you. Thank you. So. Andrea just posted that right, Andrea. Becky is posting the documents to the house GovOps page now from Graham. I can email those to everyone as well. Would people prefer to get them by email? Yes, I would. Okay. I will email those to you right now. And they are also posted on the house GovOps page right now. Okay. Okay. So what are we going to start with the. Conference estimates or the fund impact summary? I think you're muted, Graham. Can you hear me? Yes. I don't, I have not received the document yet. I know I'm just trying to figure out which one we'll start with. And we won't start until you have them. Okay. Thank you. Quiet. Echo. Switch to my iPad and I will be right back. I think to make this easier. Okay. Good. Good. Are we starting with the fund summary? That's what we're asking Graham and. He had to switch. Machines. She can hear me now. Yes. That's better. That's better. Okay. Good. Great. Great. Great. So I think the first document we'll be looking at is entitled. I'm not quite sure how Andrew. What type on the website, but it. I sent a document called S 54 conference revenues. I think it might be better to start with just the revenue estimates. And then you can sort of. Overview the. The impact. Sure. Yeah. Yeah. Great. So I think the first document we'll be looking at is entitled. I'm not quite sure how Andrew. I sent a document called S 54 conference revenues. August. 24th, I think is what it's entitled. I have one that says draft S 54 conference. Yeah. Yeah. That's the one. Okay. Yeah. And it still has draft on there. It should probably not this point. We were when I was working with Stephanie, I had draft on this just to. In case anything changed. I don't know. I don't know. But this is essentially the updated revenue estimates based upon what was discussed. Last Monday, what the center proposed. And just an overview of that proposal is that there was a, an excise tax, a state excise tax of 14%. Although. In reality, what it broke out to was a. A state excise tax of 12% for the state. And then. Revenue and then. 2% of that 14%. So, or 200 basis points would go to. Localities. So essentially 12% of the excise. Like 12% tax for the state. And 2% for the localities. And after. I see. I have a quick question. The taxable base hasn't really changed. Okay. Because this is the taxable base that I had last week for the house version would be the same as this one, roughly, because it's the same timeline and the same. It has the integrated licenses for medical dispensaries. So the taxable base is the same for the state. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base. The taxable base has integrated licenses for medical dispensaries. So the taxable base is the same for as the house proposal, but the rates are different. How it's different. So. Graham. Could you for the. Benefit of those people watching. Given explanation of what basis points are. Absolutely. 100 basis points means one percent. So. So 14% would actually end up being. 1400 basis points. And so to make this a little bit clear, I described this as taking 200 basis points for the locality. So what that means is that. You'll have a starting point at 14%. We'll go to localities to 200 basis points means 2% it's just a little bit. I found a little bit clear to understand when we described it this way because rather than sort of thinking about 2% of the revenue pot. You take 200 basis points off of the off of the 14% excise tax and that's what goes to localities. Confusion in the committee last week about what exactly that meant so 200 basis points means 2% of the 14%. So after those those 200 basis points are carved out of the 14% excise tax so we have the remaining 12% excise tax that all that money would go to the state. And that's those two basis 200 basis points are carved out 30% of that money would go to a substance misuse and prevention fund and 70% would be allocated to the general fund. And then this may be touches on Senator whites issue from the beginning. We have state fees still in the bill and those are determined by the cannabis control board sometime in fiscal year 21 or 22. And I believe the language is still the same that the fees should be set at a level roughly equivalent to Massachusetts level which is about $500 to $650,000 a year worth of revenue. Can you tell me what the fees are. I mean, I don't understand what it means by fees. What is it a fee on is it a added fee on the permit is it an added fee on just the establishment is what what kind of fees are we talking about here because localities already have the ability to set zoning permit fees impact fees and stuff like that so what what are we talking about here I I don't I don't understand at all. I might lean a little bit on Stephanie and Michelle here but my understanding of bills that there's the bill creates certain licenses to operate the state level. And these are state fees and so what the control board would do would be to charge fees for for someone to hold certain licenses and I can't remember how many or what all the licenses are. These are not local. Yeah, the revenue would go to the state and it would fund the cannabis control board. Right, but so what are the local fees that are going to because my understanding is that the, the proposal was that instead of the, the taking a local options tax or a 2% or however you want to call it that there would be fees generated that would go to the localities. The estimate was given to be $500 or $600,000 and I just I don't know what those fees are where they're coming from what what they what they mean and I know that in Massachusetts for example that there were what we call them bribes that people establishments would say would tell towns will give you $100,000 toward this if you give us. But anyway, so if somebody needs to explain to me what those fees are where they're going to come from and what they mean and how they're going to be raised and distributed. I think, I mean it might be helpful for Michelle to jump on here but I think we're sort of comparing the different versions of the bills here this, this version the proposal does not have any as my understanding local fees in it as there were in the house bill. Right. Is anybody to explain that. I jump in the, I think both house and versions of the bill have the state fees. And that's typical. That's not unusual at all we do that with every license so I don't think there's a disagreement between the chambers on the state fees. So in our bill, instead of having the local option, what the Senate called a local option tax had local fees and the difference, one of the differences between the fees and the tax is that the fees are paid by the entity that gets the license. The retail establishment or a cultivator or whatever it is, the tax is paid by the consumer. So they're paid by different people. The other, one of the other differences is that fees are, are sensitive to the cost of the license effectively, you know, if the, if granting a license results in higher enforcement costs, for example, or what have you and the different kinds of licenses, the fees are supposed to relate to that in sort of a general way they're not, you know, it's not like a billback or something where it's specific but they're supposed to have some connection to the cost and so in the house we felt that the local fees were a more fair way of ensuring that municipalities were not paying out of pocket for this business that they were being reimbursed for their costs of this tax and regulate system. And they can be, they can be sort of more tailored for that. In both cases, I just want to make one other point but in both cases, I think it's really important that the legislature come back to approve those fees. I don't think the board is going to set the fees. I'm going to make a recommendation to the legislature, both for the state fees and for the local fees if we do them to under this bill to approve what those fees are so they're not it's not. It's the same as the fee that, you know, there's a fee associated with the application for a zoning permit or something that may be set by the time we're not talking about that we're talking about a different kind of fee that we would we the legislature would actually adopt. They don't both for the local for the state for sure. Yeah, right. Can I just, but we would set the fees for the local. Yes, we would determine what's best for them. Absolutely. We would determine what's fair. Okay. But that leads us to why the Senate didn't do that. And part of it was at the time we were dealing with the bill a year and a half ago. The Massachusetts, many communities were setting exorbitant fees, implementation fees that were, you know, make a million dollar donations to the local YMCA will give you a license. So we wanted to avoid that. I don't have an objection to fees that are, you know, estimate the cost of, for example, police protection and in the local area when there's a crowd there and they're going to have to direct traffic or whatever. But that that was what we were trying to avoid through the use of local fees. So we wanted to avoid those impact fees. But what I'm hearing from you is that you are basically an agreement with us. You just such these. I'm sorry. You were setting fees that in the local government that would reflect the cost of to the locals of implementing whatever the cultivator the retail or whatever. We had heard some of the same testimony and had some of the same concerns that you had about not letting the municipality just set whatever fee they wanted. So we wanted, we made sure the legislature had to adopt them. Joe, you have a question. I have a suggestion for the vast majority of people watching this YouTube, who have never served on appropriations, myself included, adding the word license after state in that line. And in every other document that we use to communicate would have solved Jeanette's initial question, and probably the question of the many people who are trying to figure out what fees. Just to suggest that in future documents, saying state licensing fees makes that perfectly clear. And if we get into a discussion about local options, we can talk about what specifically those might be later on. Just a suggestion. Suggested. But I do, but I do think that it is a little naive of us to think that the costs will be there, born by the, the establishment and not by the purchaser because clearly those costs are going to be passed on to the person who's the consumer. So it doesn't, it isn't the, in, in this, this case, it's the, all the cost of all of it that's being assessed and being affected, but in the local options, it was only the, the people who are actually purchasing it that were would have that fee passed on to them. So I just wanted to make that clear. Okay, great. Yeah. So, I don't know if you'd be helpful to share the screen and all but I'm referring here to the tape the first table in the document that I sent along that I was starting to go through. If I might Graham, you know, the basis of your revenue projections is something per ounce or something per product. And I have been of the opinion, based upon other states that Vermont that the Joint Fiscal Office has repeatedly used very low figures. To me, doesn't reflect what I believe will be the true revenue from a tax and regulated system. So I want to get that on the table first I think your revenue projections. I mean, I'm willing to, you know, it is what it is. And the Joint Fiscal sets that and I obviously am not an economist, but I still think your projections given what we've seen in other states are way low terms of revenue. So I want to make clear that that, you know, from the, at least from the Senate perspective, these numbers, we feel are extremely low. Yeah, I mean, we look at other states when we do our modeling and But, you know, when I compare this to what the Rand report was talking about in terms of revenue, this is just really low. Yeah, I'm aware of the Rand report and the subsequent new report from the marijuana policy project which uses lots of research from the Rand report. And we took some of the assumptions from those reports and those are in our model. I think one of the biggest divergences in from the Rand report and what we have in our model and Sorry, the Rand report and the marijuana policy project. Or the Vincent Saderberg report is the amount of consumption happening, estimated, and we estimated, I think, in the Senate when we when I did the estimates for the Senate bill somewhere around six ounces of cannabis purchase per year. And the latest of that Vincent Saderberg report assumed, I think closer to 11 ounces of cannabis per year. And so that explains the map, most of the big difference between what you're likely seeing in those reports and what we're estimating here. We, the estimates that we're using for consumption are based upon three sources of information from other states from Oregon, from Colorado, Washington, and some Oregon and Washington's had average usage of around six ounces and then we have the report from from Vincent Saderberg which is around 11 and so that's brought into the average so right now, I think these estimates assumed somewhere around seven and a half ounces per person. And so that may be low. It's totally possible we know that Vermont has a very, very high prevalence of marijuana so the proportion of the population that uses cannabis is the highest in the country. But then the second part of that equation is how much are they going to be using and that is what's going to be driving the size of the market we comparing these revenue estimates to what have been received in other states scaling them by the size of Vermont's population and the excise tax. They put them roughly in line with what other states have received. So we, I totally will concede that these might be low. But I think if they end up being if the revenues come in much higher than I believe better situation than overestimating what is available for various purposes and then revenues coming in a lot lower which it has been the case amongst states recently Massachusetts numbers were missed their projections quite a bit in their first year California's were less than a tenth of what they estimated in their first year so in particular if there's programs can be built around the funds, the revenues from this tax it. We're trying to be more prudent with what we estimate here. Robin, then Jeanette. I don't remember the timeline here but would on the rare report in particular was tax and regulate in place in mass in Maine before or after the ran report. The run report was, was published before you either those markets came online the, the Vincent said over report which came out in August. That report had the information that Massachusetts was legal and they had a functioning market at that point, and the main was just starting. So they had that information that's built into their model as well. And they affected some of their traveler estimates. So how many people would come to Vermont and to purchase cannabis products. Our model has that too. But the big, the biggest difference between our estimates and the estimates from that from from Vincent and Sederberg are the consumption estimate that how much how much people are going to be using. That's probably 80% of the revenue difference. Thank you. Did you say janitor Jeanette. Jeanette. Okay. So, I just, I don't mean to keep beating this up but I want to go back with one more question since we started talking about revenues. So that as the revenues increase. The state benefits by increased revenue because of the excise tax and the sales tax I mean it clearly goes up. But the localities don't benefit by increased revenue at all because those fees are set once. And then if, if the revenue goes way up they, they have no ability to benefit by that additional revenue is that do I understand that right there just they do not share in the wealth. Janet. Well, the, the concern that we heard from the municipalities is that they were going to incur costs because of this new market. And so our goal was to protect them from those additional costs it wasn't intended to be a revenue bonus of some kind. The local option towns the towns that currently have a local option sales tax. That'll float with them with the retail sales obviously and those those specific towns will get some benefit but no our intention with this was to respond to the concern that we heard from the towns, which that they would incur expenses and that they should have a way to recoup that or be protected from those additional expenses. I hear that but I do have the education fund and the prevention fund and the state general fund will all benefit by increased revenues, but the municipalities won't benefit at all by increased revenues. So, anyway, that's just a point. Um, so that first table with the greening at the top is the total revenues for this for this this is the proposal that came forth out of last week's meeting so it was a 14% excise tax of that 14% 12% is the state and 2% is local localities. So it's a 6% sales tax, and then plus what we estimate to be the fee revenue so this is kind of you're all in number here. And so we estimate the revenue wouldn't currently start coming online till fiscal 22 that in five of $500,000 that's the first set of fees from the integrated licenses. And then fiscal year 23 is when the market starts to to be introduced and gets up to speed so the midpoint estimate for all in revenue is $6.9 million growing to $14 million and fiscal 24 and $18 million and fiscal 25. Again, that's all in revenue. And there are the revenues get split into into various pots here but this is sort of the big picture revenue for the proposal that came. That was put forward by the Senate last week, scrolling down a bit, the first table after that first initial table the green headline is what the general fund will receive so this is 70% of the excise tax revenue after the 2% is pulled out for the localities. So, we estimate that the revenues will will coincide with when the market when retail sales start to happen and RS miss it that will happen in fiscal year 23. So the midpoint estimate for fiscal 23 for the general fund is $2.6 million growing to 5.6 and then in fiscal 24 and then $7.4 million and fiscal 25 so this is what will be available for the general fund from this proposal. The table after that shows the education fund revenues. Again, you don't start to see revenue until there are retail sales happening. And that's not going to happen we asked me until fiscal 23. The midpoint estimate for that is $1.9 million. This is $3.4 million in fiscal 24 and 5.3 in fiscal 25 scrolling down to the next table. This is the revenues that the localities will receive from the 2% tax that is coming off of the 14% state excise tax. So, like I said, the previous two tables there's no there's no revenue until there are retail sales for the localities. And so fiscal year 23 the localities would receive about $600,000 based upon my midpoint estimate. And then fiscal year 23 is now growing to 1.3 and fiscal 1.3 million in fiscal 24, and then $1.8 million in fiscal 25. So, as was discussed previously as retail, as the retail market grows, the amount of revenue for the localities will grow because it is based upon the tax base here. And finally, the substance misuse and prevention fund is 30% of the excise tax revenue after the 2% is taken out for the localities. And so what we expect that to be is $1.1 million in fiscal 23, 2.4 in fiscal 24, and 3.2 million dollars in fiscal 25. May I ask a question. You have a question. I'm looking at specifically the substance misuse and prevention fund. I just haven't done the math in my head. What, what are those, if, if we didn't take the 2% out. What would those numbers be for say fiscal 23 and 24 on the midpoint. How much, how much money does prevention lose under this construct. And I need to, I would have to do the math. I don't think the math is too hard. It's, it's whatever. It's 30% of that if the local share. Yeah, so 30% of 600,000 is 180,000. And then in, in, in 23, and then in 24, it's 600,000. Yeah, yeah. So, so, so one of the things that I'm just, I throw it out there because it is a concern. It's a concern of mine. I don't know if it's a concern of others as well, but, but by doing the local share through part of the excise tax rather than through the local fees is basically coming at the expense of the prevention. Well, to some extent the general fund and the prevention fund, but it's prevention fund that the house has been particularly concerned about. Jack, you have a question. No, I was just going to comment on that and say that the assumption is that the municipalities wouldn't do anything that would use any of their funds to that for purposes that would increase or add to prevention. For example, additional recreation programs, boys and girls clubs that kinds of things. So the assumption is that only the state can do prevention and that those localities would not, would not invest any money into that. So, to be clear, I'm not making that assumption, I don't know how they would spend their money, but what we did in the house is that we earmarked money for prevention because we, we wanted to be sure to control our own decisions as well. The house isn't saying no to this idea, we're just trying to understand it better and raising some questions about it. I don't know when it's appropriate for me to raise a question about how it gets allocated but at some point I'd like to have a discussion about that. I'll let you decide when. No, go ahead Janet. So the, the, the, what I understand about the 2% is the 2% goes into a municipal share pot and to coin a phrase and that the, the money that gets allocated out to municipalities on the basis of some formula. The question I've gotten, I guess it's, I guess it's a concern and a question is the 2% is a fixed amount. It's not like the license fees where if there's more activity there's more fees, it's just to, it's at 2%. And if more money goes to towns that host retailers less money is available for towns that host cultivation, for example. You know, it's not, there's not a way of recognizing the additional costs, for example, of cultivators coming from towns that probably won't have a retail establishment, but might very likely have a grow facility. And, you know, I have some concern to make sure that, that those funds get allocated equitably. And it's just a concern about how that would get sorted out because it's a set amount and what's one type of establishment generates the other one is going to lose. Hi charity, how are you. Dick, we can hear your conversation. Thank you for. So, so I think Janet that the thought was that the board would come up with some kind of a formula so it would be comparable kind of to the fees maybe but it would be based on the revenue instead so they would come up with a formula so if you had retail establishments, it might be a certain amount if you had cultivators if you had testing if you had a wholesale. I think there are six different license types, or five with another one proposed. So, it would, they would come up with some kind of a formula, and it isn't that much different than coming up with a formula for setting the fees, because it would be based on the type of establishment and how many establishments you had in your town. So it isn't that different it's just that it's based on the revenue instead of a flat fee so if the revenue goes up the town's benefit. And if the revenue goes down the town's suffer as the same as the general fund would but there would be a formula set up and I believe it says in there that there's some kind of a formula that would be set by the board and proved by the legislature as part of the. So it is the concept isn't that different from the fees, except that it's based on the revenue, so that there's the potential for it to grow for the municipalities. So, that's it. Yeah, I actually think that when you get to the point of setting it. The, it's quite different from the, from the fees. Yeah, I'll just throw out an example. If we take that 2% I can what that let's say it's a million dollars just because I can do it my head. If that million dollars gets divided up based on population, for example, or does it get divided up on the basis of the number of acres you have in cultivation, or does it get divided up on the basis of the number of retail settlements or the size of a retail establishment or whatever. I can just imagine our argument because it's, it's town, you know the towns are normal, you know going to see a pot of money and they're going to each town is going to want its share. So I think that the vision arguments that I think would be will be hard to resolve about how it gets allocated, whereas the fee is clearly associated with the activity, and the activity will generate the fee. So I'm not, again, we're open to looking at it, but I think it's an issue that we should think about a little bit. I think that the thought was that it would be the formula would be by activity, it would. So it is not a solution. Yeah, no. If you have a little town that has nothing. Why would they. So it was the thought was that it would be by activity so there might be if you have this type of a license in your town. There's that much associated with it. So, I think it is a question, but I think it's resolvable. All right, let me ask you a question. I mean, based on other local fees are charged fees aren't necessarily static. I mean the cannabis control board could come back at some later date, and request an adjustment of fees. I assume that they would I mean we typically adjust fees all the time used to do them every three years, right. Yeah, we do them every three years. We should get back on that schedule by the way should. Thank you. But that's not my call. I would just like to suggest that the Senate has provided an alternative proposal, and we're kind of going around in circles here until the house has had the opportunity to provide us with a counter proposal. And at this point. As you know the Senate has generally supported local option taxes and the house has had difficulty with them, whether it be on cannabis or other ones so recognizing all that I think we're just spinning our wheels here talking further about how the local option and the fees would match and we would look forward to a counter proposal from the house. I just wanted to remind everybody that so both proposals, whether you're talking about the state fees or these local license fees the idea was that the board would be coming back to the General Assembly. Recommending a proposal and then the General Assembly specifically setting the fees. Now that we're down the road a few months from when this was originally contemplated back in early March. I provided for you last week, kind of a general estimated timeline of what things might look like. And so you have to think about the board. Now that we're down the road, probably wouldn't actually get seated and start to function until the beginning of calendar year 2021. And so there is, you know, there's some issues that we can certainly work out but around the timeline of making sure that they have enough time to get set up. And then do all of these reporting requirements and develop the proposals to come back to you next spring while the legislature is still in session so I just, it exists no matter whose proposal you go with but I just wanted to mention that as something for everybody to kind of keep in mind. Thank you, Michelle. Does anybody have any more questions for Graham, but I think Dick would like to move on so Stephanie, do you want to review the document that you prepared for. So the document I prepared is the fund summary. The numbers in this summary sheet that you should all have in front of you are going to be the midpoint range of everything that Graham just went over so anything that's grayed out is sort of older. So at the top of the sheet of grayed out the, the, this is the tax base that Graham updated. The tax base. He estimated I don't have it filled in because I didn't have time last week to go back the year and a half and fill it in yet but back in, in February. There was an estimate of the mid range of the tax base that's been updated to this August mid range. The size of the market is estimated to be the $31 million, the 66 growing to 66.8 almost $67 million and 24, and then $87 million. Once it's more mature three years out. And that's the basis against which the percentages are are lodged to generate the, the revenue and estimates. The block is the education fund it represents the 6% sales tax. So this is state education fund revenue. It does not represent, you know, the various local option taxes that would be out there. And depending on where, where establishments are whether or not it would be a little bit of additional revenue at the local level. So what we've been talking about is the, the distribution of this 14% excise tax. So what this show is just lined up together is that 2% of that 14% set aside for the local share. Then for the prevention fund 30% of the remaining 12% and for the general fund 70% of the remaining 12%. So that's what you see in the middle box. So if you go down the 23 the FY 23 column. You see the local share of $600,000 growing if you go out to the right to $1.8 million by 25 based on that growth in the market that's that's projected the prevention fund in 23 having $1.1 million in it. That's growing to $3.2 million by 25 and then the general fund 2.6 growing to 7.4. So, based on the mid range of the, of the high low medium that the RAM gave us. And then in that line below you see the total of all the 20% the 14% excise tax and the 6% sales tax in total, the caveat for the piece that I'm aware of if you scroll down a little bit further into the box that is the regulation special fund for the cannabis control board where I do have a fee revenue and as Senator Benning pointed out it would be much clear if that said state licensing fee revenue because that's what it represents is an estimate of state licensing fee revenue. That has not changed since February, although the timing of that line could change it. We haven't changed the estimate of timing just, you know, because the, the early players we assume will still come in under the wire and 22, just much closer to the end of the year and FY 22, but that could slip. Depending on how things, you know, we're further down the calendar now. But that's that $500,000 growing to about 650 a year on average is an estimate that's not based on a set a slate of fees. It's our sort of mid range estimate of the likely fees that will come up from the board but they could be different, because the board will be presenting to the legislature for the legislature to adopt. So it's a, it's a little bit of an unusual fee estimate here that we're carrying. And below that is the estimate of a three member board operating. And this same construct that we've had in the Senate and in the House, starting in a deficit position for the board in anticipation of fees and having language, and that's the bright green that is on this sheet. But what wasn't clear to me last week is how the accumulated deficit in the regulation special fund will be addressed out in 23 and 24, depending on what year, you know, we want to sort of true up the deficit that we're building in this in this So, I think Michelle might have sent something that said it is lodged against the general fund portion only is that in the Senate's proposal. That's the one thing that wasn't clear to me and I'm sorry I didn't get to circle back with the senators but this estimate shows that we'd be $1.4 million in deficit with another $300,000 in deficit and 24. So we're still looking at something in the high close to $2 million of deficit. For the board to get up and running but we need to actually address that deficit concretely from the exercise. And I don't know if that's shared between the local and prevention and general fund or if it's just lodged on the general fund. That's sort of the open question, just as long as the language that's in there to satisfy that deficit is there, then this construct of using anticipated revenue is okay to do, as long as we have the way to, to bring us into balance. Yeah, go ahead. Yeah, John, if you know I don't have any preset notion how to do that but if that were part of the house's counter proposal back to us that'd be fine. I would guess that we would use all funds. It should be, you know, coming out of the 70% to 2%. That would be my the fairest way to do it, but if you want to look at it. Because I hadn't anticipated how we pay it back to be honest with you. When the Senate made its proposal. I'm open to that and whether or not the 6% sales tax would be a part of that payback as well. Thank you. But thanks for catching that Stephanie I suppose we have an intention of paying back our bills. This fall obsession of mine in this process. Unlike the federal government. Any more questions on this job. You know as I'm sitting here thinking these estimates are all based on examining what other states have done and all of these estimates are going to depend on the existence of a town that has opted into this program. And I don't know whether we have thought about making that connection. But it seems to me a little concerning that without any town presently having agreed to opt in. We are making some really speculative statements here. And I don't know how to resolve that I'm just flagging that as an issue that I'm contemplating and hearing these numbers, because it presumes that we have an operating system. And we don't have an operating system or a mechanism to get there yet. And I guess I just want to urge us to keep that in mind going forward and further discussions. Fair point. I would remind everybody that we still have eight roughly eight that I've counted issues between the two sides and the opt in opt out clause is still what remains one of them. The version, Joe then the opt, you would opt out, not opt in, but still why that's all I'm saying is that from our perspective on the Senate side, we still believe there are eight issues. I think we agree with that dick that there are eight issues. Yes. Thank you. Well, I worry when you say at least. Okay. Okay, so the time being we finished with tax structure and revenue. I thought there would be two more issues we could discuss this morning. One is cultivation, I think you wanted discussion around farming. Michael Grady worked with us on that section of the bill. And it's, it's, it's the expert on it. And then we'll have a discussion about TAC limits, which I can discuss. Mike, can I, you want to start tonight, I can. If you don't mind, John, can I make a few comments before you. Sure, absolutely. There are a couple of concerns on the agriculture side. One is, we believe that the medical program should not stay with public safety and should be moved, either under the cannabis control board or to the agency of agriculture. Yeah, that's our position. The second concern we have is with the small cultivators. And we realize that if you call it farming that that opens it up to everything. And there's no zoning, et cetera, the right to farm. But we're concerned about small cultivators particularly losing their ability to stay in current use. So that's a second issue of Mike and address that that would be helpful to us. And those are, we see it. That being a key issue for the small cultivator, whether it be 500, I think we've agreed with your 1000. Yep. That's my understanding. Yeah. Thank you, John. Mike. I'm just going to frame out where the farming issue is in S 54 and the last proposal that I'm aware of. When S 54 was passed by the Senate, it did not specifically address whether or not cannabis cultivation was farming or not. When the house took it up in January, I was asked to address that question by house natural resources. And I said that because cannabis could be viewed as a horticultural crop, and that it is grown in a greenhouse that it would potentially qualify as farming under the definition of farming in Title six and under the required agricultural practices. That has consequence because as you know farming is exempt or receives benefits in the state under statutory law. Senator Sears reference one of those being municipalities cannot regulate farming for the most part. There are also significant environmental exemptions. There are also significant tax benefits or exemptions. And when the house was looking at that house natural resources was concerned about the environmental exemptions and the land use exemptions. And I believe and I don't want to speak for the chair of House ways and means but ways and means also had some concerns about the tax consequences of designating cannabis as farming. So, the house then included what is section 869, which provides that cannabis shall not be regulated as farming under the required agricultural practices, or other state law, and won't be considered an agricultural crop or agricultural requirement for the purposes of 32 vs a chapter 124 which is use value 32 vs a 9741 which is the sales tax exemption or other relevant state law. But the agency of agriculture was concerned that cannabis that is cultivated outside, or in general, should meet certain minimum agricultural requirements. There is a subsection in 869 that provides that cannabis cultivation and processing needs to meet some minimum requirements of the required agricultural practices, but that does not mean it is farming. So that's really where the house proposal on s 54 is the cannabis cultivation would need to meet all relevant federal state and local laws. And since that the committee lease house natural chose to do it that way they looked at Washington state and Washington state has that same regulatory framework where cannabis cultivation doesn't get that exemption as farming and then has to be regulated as any other business or industry. So looking at current use to answer Senator Sears question for a small cultivator. I think you have options. I realize that well when land no longer qualifies as for use value it is designated as development. And there's a long definition of development in the current use chapter. And there are certain things that have been designated as not development. It doesn't qualify under what is an agricultural land or managed forest land, but it still gets to remain in the program, because you've designated it as such and an example of that is ecologically sensitive areas. They're allowed to be present on managed forest land up to a certain percentage, even though they're not actually forest land. So that there are ways that that the current use program has has addressed things that don't necessarily qualify as agricultural land or managed forest land. So I think if you as this conference committee wanted to do that I think, and the Abbey and I could probably work to do that. I'm not sure what you're suggesting. Are you saying that if you're enrolled in current use and you withdraw the land, we would, we would say something in the statute to say that that's not development. You're not talking about being able to enroll it, though, you're only talking about if it's withdrawn. I think you, you have some considerations to make you could do it if it's enrolled or withdrawn. For example, agricultural land needs to certify every year that it's agricultural land. And if you look at that definition of agricultural land. And, and cannabis is not a farm crop it's not it's not an agricultural crop. I don't see how agricultural land gets certified every year. If it's growing cannabis. I jump back in. So I'm not in favor of allowing a cannabis cultivation to be enrolled in current use what I, what I, what I think we meant to do in the house is to say that if you have enrolled agricultural land, and you get some of it to cannabis, you're not, you keep your, you keep the rest of your property in current use you're only withdrawing that small piece and I think, I think that was our understanding when it left the house which, you know, these, we're not talking about acres and acres we're talking about a relatively small amount of land, I think. That, that was my understanding when it left the house. I'm talking about small land, you know, the smaller obviously if it's a huge cultivation effort, that would be different. I'm talking about the small cultivator. Okay, so point out that that in the Meadowie Valley anyway and that's the only farming area I'm really familiar with in my county. In the Meadowie Valley, many people were planting hemp last year. And this year they're not planting hemp for a variety of reasons. I hate to see them be tossed out of current use for having planted hemp on marijuana, and then, you know, decide next year not to plant it, or not to grow. And, you know, they're no longer in current use that just troubles me for the smaller plots. And I know it's true, and I've got a farmer down on the Poundall Valley growing hops for beer. I don't know if he's in current use or not, but the point is the still the same so if you're not using it for conventional farming. We just don't want to see them thrown out of current use. So, I have a couple of points on that. So, hemp is an agricultural crop under state and federal. So it was hops. And then the question is 20, what is a small parcel what you keep saying the small parcel what is a small parcel, because the threshold for one eligibility requirement for ag land is 25 acres or more. Is it more is it do you want a small parcel. I just don't have a context for what you mean by a small parcel. Well, the 1000 square foot small cultivator, and I can't, I don't have the bill in front of me because it's somewhere stuck in Montpelier. I can't get to Montpelier because it's open so I would have to look at the bill but the difference between, you know, there would be gradations of cultivators and we've already established that, and it would be the small cultivator, whether it be, you know, So, then, if it's less than 25 acres, the, the person that's applying has to be a farmer and has to meet that definition of a farmer. And it might be difficult for some cannabis people cultivators to meet that definition of farmer, some will, especially if they've been cultivating already, and they change it over I just want to put that out there. So you could say that land that was enrolled previously in current use is not considered development or is not subject to, to removal from the program. If it converts to cannabis cultivation and still meets the other requirements of chapter 124 that that's pretty much what we said. For everybody's education 1000 square feet is point zero to acres. So it's actually a very, very small portion of land. Well, isn't an acre like 43,000 and change square feet. Yeah, we're talking about a really just to jump. I mean, so just so that I'm clear about this, anybody that's under under the 25 acre threshold, you're not eligible to be to be in current use from an agricultural perspective anyway. No, you can qualify. One of the ways that you qualify is you have, you're a farmer, and you generate $2,000 of income from that in any one of the past two to three years I can't remember which it is Michelle and Michael, if you would a proposal for us. I think you've heard what we're intending. And we can talk about it during a breakout if you need more information. If you'd like to make a proposal, this is our proposal. And much of it comes from Senator Pearson the vice chair of Senate ag. So, I, you know, you could consult with him as well. And we can make a counter proposal, a proposal to the house on what exactly we're talking about then we have something to go from rather than guessing as to what we're all about that there. Yes. I just want to clarify. It's land that was already enrolled in use value. Yep, it's converted to cannabis cultivation, provided that it's still under converted cannabis cultivation. It's, it's still it's it has to be under the small cultivator threshold. I think, and it has to meet all of the other requirements of this value. If you wouldn't mind consulting with Senator Pearson on that as well, we will do a breakout later and try to, if we have time. I think it's easier to develop. I think it's easier to work proposals and trying to reinvent the wheel here in a conference committee. Michelle. I just wanted to add I think folks know but I just wanted to remind your advice so Senator Sears was right so the small cultivators is defined as about 1000 square feet, or less the Senate concurred with that house proposal amendment on that and then and you have a directive for the board to be establishing the tiers for the cultivators and I can just say, you know, who knows what those will be but historically over the last five years of this legislation, moving around. None of the versions even the ones that have passed the Senate before that had established the various tiers in there and the fees nothing's been even close to 25 acres so it was all all everything to date that's been contemplated is has been smaller. Just an FYI. Thank you. John, can we take a five minute break. Sure, do you want to break out or just break. No, just a break. Sure, that's fine. So we should all stop our audio and mute. And so I have it's 1008. We'll be back at 1015. Jenette are you back. I think you're the only one we don't have. Why don't we start. I'm here. Okay. That would get her attention. I'm here. Thank you. So, I think we finished with the, the farming aspect. I believe the Senate's going to come back with a proposal. Yeah. Good. So the, the other issue that you wanted some discussion on that I thought we could discuss today is potency limits. But I just want to give a quick overview of what we want to talk about. The next to, to first of all, to, to focus on what we already agreed to in both of our proposals is. To restrict cannabis products that contain THC. And nicotine or alcohol. In any cannabis product. That is designed to make the product more appealing. What the house added was prohibiting cannabis flower with greater than 30% THC. Solid concentrate cannabis products with greater than 60% THC. Cannabis oil products accept those sold in prepackaged form for vaping. And then flavored oils, cannabis products for vaping and cannabis flower that contain flavors that are not naturally occurring in cannabis. We also changed the product limits for edible products from the Senate's version of serving size of 10 milligrams with total product content of 100 milligrams to 5 milligram serving size and 50 milligrams total product size. So let me deal with the simplest one there with respect to flavored oils. I think we're probably all aware of the impact of jewel on tobacco vaping. I think our concern there was that adding flavors unnatural flavors to a cannabis product would lead to people 21 and younger using that product and making it more enticing to those people. So we want to make certain that flavorings could not be used in cannabis products, most typically vaping products with respect to the limitation on cannabis flower. Just, you know, so people understand. According to the Drug Enforcement Administration back in 1995. The average THC level was 4% in cannabis flower. That increased to about 12% in 2014. And potency limits in 19 have gone up to about 17.1. In the legal market in Colorado, THC limits for flower are about 30%. The proposal here is that as you can see from that sort of timeline, the potency of THC flower, the potency of flower has increased dramatically. And with it, there's more danger. And the other thing that happens when you increase the potency, the THC content, the amount of CBD in that flower goes down dramatically. CBD can be have beneficial effects to reduce potential negative impacts of THC. So what we propose is that there be a limit on flower of 30% THC. This would basically hold the market at what currently can be produced and not increase it to higher and higher levels where there are more dangers around using cannabis products. And that's, I can go more into the science of that if you want, but that was the basic reason for the 30% limit on flower. With respect to solid concentrates. Currently, there are products who have street names like wax and shatter, which are highly concentrated forms of cannabis. Basically, they are synthesized products that are melted down and can be 80 to 90% THC concentrates. We heard testimony in House GovOps that if somebody who has never smoked cannabis before was to smoke or dab as they call it, wax or shatter, they would that they would be on the floor. So these are very highly concentrated and potentially dangerous products. And so what we wanted to do is put a limit on how concentrated they could be at 60%. What we did. What we have limits as well. Not on concentrates. So what we wanted to do is just because those products can be very dangerous. It's very easy. Especially for a new user of cannabis to be overwhelmed by that type of a product. So we thought putting a cap on the concentration at 60% would be important to protecting consumers. There's a number of side effects from high, highly concentrated cannabis products with highly amounts of THC. And so we were just focusing on that and I'd be glad to share the research that's out there with respect to that. I just, I'm looking at our version on the side by side versus your version. I don't see that much difference. We have a package cannabis product may not contain more than 100 mg of THC. You have 50. We have cannabis products must we had canvas progress must be labelled in a manner which states the number of servings of delta nine in the product measured in servings of maximum of 10 milligrams. You went to five milligrams. I think that's what we should really be discussing. I don't know where all this. Again prohibited products we said contain nicotine or alcohol beverages. We put in all that. So you just added to what we did and built on it, I guess. Yes, that is exactly what we did is we put limits on the percentage of THC and flower and limits on the percentage of THC and concentrates, and we reduce the size of edible products. Well, we're all in the same range. We are. And so I just wanted to explain to you. I just, yeah, I understand that john but you act like we, we were from the fall world. Absolutely not. We had, we had our, you know, we had our discussions about this issue and the safety of the product, which is one of the reasons for having this, you know, tax and regulated system is the safety of the product. So I, I don't know what the difference is between five milligrams and 10 milligrams for serving. But I guess it's half. So, let me explain, I have not yet explained that difference and the main difference with the problem with edible products, unlike if you're smoking flower is that your response or your reaction from cannabis can take an hour or more to actually to feel the impact of the THC on your body. Which can lead people to, to continue to eat edibles and therefore potentially overdose or take more than, than is safe for them. And so we just in an abundance of caution reduce the limits so that there's less chance that people, especially children are going to get their hands on a product where they could have symptoms that are dangerous. Yeah. And we, well, we're, we're in the same photo here just that I would think that, you know, somebody might eat two servings, five milligrams and I'd be a 10 milligrams. Am I not. Am I correct. That is a possibility. I don't know what somebody eats when they buy a edible product. They may be two servings. I know the other day when I was cooking something and my wife and I were doing for servings and I thought, wow, that shop will small that if I did just two servings. Yes, but there's less chance of running into problems with lower. I was talking about, you know, still stop stuffing or want to but seriously, you know, we can't control the, we can do our best I think the important point is down below where we, we each you have health warnings developed by Department of Health and adopted by the board and we had warnings concerning the potential risk consuming consuming cannabis need to keep product away from persons under 21 as well as any other adopted through the rulemaking. Again, different ways to state the same mission. Yes, Jeanette. So, I'm looking at the, the part about the packaged cannabis products is, is the assumption that the, the way they're packaged is per serving so that a packaged. I mean you, you, you could buy five servings, but the, the, the packaged product assumes that's one serving is that what. I think the easiest way to think of this is, is your typical chocolate bar, which, as we know cannabis infused chocolate bars are sold in the regulated market. And so you would have a cannabis, you know, chocolate bar that would have five milligrams serving so little chunks that are of five milligrams and then the total bar would be 50 milligrams. The assumption is that the assumption is that the bar itself is one serving. Think of a Hershey bar, and it's got four things. So you would each one of those little chunks would be five under your perversion and arms would be 10. That's correct. So you would have, you would buy four, but you're urged to only one. I guess my, the, my difficulty here is that the packaged product is not considered one serving. So you could, you're saying that a packaged product could have no more than five servings, single servings, and the way ours said is that a packaged product could have up to 10 servings. So it could have 10. Okay, five milligrams per serving. Five. All we're arguing about is how much is in the serving. Yeah, that is correct. Yeah. And the same true of the hundred MG of THC and less topical preparation. We had a hundred they have. Yeah, that's the key difference is the serving size. Thank you. I just wanted to also to, to mention that in both versions, the maximum amount per transaction for purchasing is an ounce. So it's the same amount of product in both versions, it's just how the, the infused products are divided up with respect to the, the, the package product and then how many per servings per package product. What do other states do Michelle meet with regard to the amounts I'm not sure I can take a look. Could you, could you take a look at both the THC and Edible. Yep. And what other states who regulated do please. Sure. So I can at least tell you, based on my research, but you can rely on Michelle's is that, you know, serving sizes are limited. Most states do not limit potency. The Illinois, which I believe is the last state to regulate adult use cannabis has allowed their cannabis control board to limit potency. Yeah, we both agree on potency should be limited to question is what level. So I think those are the areas we're prepared to discuss. I mean, if there's any other questions that the senators have at this point. Yeah, we settled the advertising. We have not that's still an open issue. Have you looked at the possible constitutional issues surrounding. Yes, I have. So, while there is not a lot of case law out there with respect to cannabis advertising. There are a mix of cases, which at least one case in Montana has upheld a prohibition on cannabis advertising. There are, there's also in Colorado, which has raised questions about limiting the audience, the underage audience that that might be unconstitutional. So while there is not a lot of case law out there I think it is potential that the advertising regulations in the Senate version in the house got government operations version. Because the house passed version, which is the prohibition, all could face constitutional challenges. Well, we have offered you your version from house government ops. Yes, I know that I am just telling you my understanding the case law that's out there. I understand but I just wanted to wonder if you had made a decision to accept your version. I haven't. Janet. Well, I know you know this but I'm going to say it anyway, the house version isn't the box version. And we're here in the conference committee we're defending what the house voted for. At least this is starting. I think I understand that. I know you understand that. But I do want I do. Anyway. Probably ought to set a date for next meeting and next Monday is Labor Day so I doubt we want to meet on Labor Day. That's, that's true. So, I don't know we can't go anywhere so well but we want to meet sooner. I don't want to ask. Yeah, staff staff has a day off. Yeah, thank you for reminding us. Thank you for looking out for us in the Sears. Welcome. It's hard to put together anything. Given our schedules. I mean I hate to put it off to the 14th but I think that would be risky to put it that far off. Well, we are already it's done first. We could do it early in the morning or late afternoon. How about, you know, what time we go on the floor at 930 on Tuesday. I'm looking at the eights possibly. Okay. You know, looking at our schedule on the house side for this week, we could probably do it but I think to find a three hour block would be the challenge. We could maybe get together a shorter duration and maybe meet more than once if we needed to, but the three hour block is going to be tough. Yeah. I don't know that we need three hours. It's, it's 1030 now. Right. Well, can we meet on Tuesday, the eight at 8am. My committees has a meeting at 830 on. Okay. Well, I don't, our meeting times get assigned. I don't know. I don't know. I don't know. I don't know. This week it's a 30 so. Yeah. I'm quite sure when it's going to be. I mean, if we could meet this week, I mean, we know what our committee. Times on Friday morning. I have an 830. Committee is at 830 on Friday. The problem is I don't actually know if I can adjust it and I don't, I don't know exactly what I'm planning to do, but that's my allotted time. No, I probably should keep it. I don't know. I don't know. I don't know. I'm meeting at 930 to 1130 on Friday. And then I know I have appropriations in the afternoon. I could meet later after, you know, I could meet right three o'clock on Friday. House boards from two to four, but if we happen to get done early. I'm buying Friday afternoon. Why don't we try that? Is that okay with you, Rob? Yeah. Yeah. I don't think Michelle likes it. I have, I'm not available at that time. Well, it's the only time we're available. I guess. I can't do Thursday afternoon. I can't do. Can. Somebody fill in for you, Michelle. I can see. Or I can see whether or not I can change my schedule. Well, I guess it depends on roughly what the agenda would be. If we're going to talk, talk more about the tax structure than maybe Michelle. Well, At what point are you going to have a counter proposal to us? We can talk about farming. We can break out after we close this session and give you something. Back on. On that. If we could meet with Mike and Michelle for a few minutes. But what will you have something back for us? Cause we're kind of. Getting our wheels right now. I believe we can have a kind of proposal to you. So we're agreeing on three o'clock Friday. Yes. It's this Friday, right? The four. Yes. This Friday. Three to four. We say three to 430 just in case John. Sure. That's fine. If we get held up on the floor, we'll just have to. Yeah. Then we can go from. 30 to 430. Yeah, but we could send. It is. It is Friday, September 4th. Sounds good. So, Dick, did you want to do a breakout? I'd like to do a breakout with Michael. Grady and Michelle. If we could. Committee. Senate committee. Is there anything besides that that you want to discuss. At this point. We've got Stephanie's online. Amp is online. I don't know. I don't, there is nothing else that I want to discuss this morning. Okay. Are you looking for us to have a breakout, John or not? Yeah, I think we should have a brief break up. Okay. So, can. So Andrea, can and the, being the breakout with O Grady. And me with the senators, please. Abby's coming back as well. Oh, great. Fabulous. Somebody. Yeah. I don't know. There was nothing else that I want to discuss this morning. Okay. Are you looking for us to have a breakout John or not? Yeah, I think we should have a brief break up. Okay. Yeah. Yeah. Yeah. I can go with you. How can I go with the house then? Is that okay? Cause. You guys are going to be talking about the farming or are you going to be talking about the taxes as well? No, we're going to be talking about farming. And. My small garden. So. I feel like a chance to talk about. Taxes. Yeah. You can take the tax people too. Have you got some cannabis in your small garden deck? Not yet. Is your gardening current use? It is not. So, um, maybe Abby. Well, I don't, I don't know what to do. So the money people can decide how to divvy up. Between the two. Yeah. Yeah. Yeah. Thank you. Representative Ansel. How about I go with you guys to start and Abby goes with the current use side since she knows a lot more about that. And I can loop Abby in if there's something. Okay. Thank you. And I'll go wherever. With the house. Pardon. With the house. I think. Okay. You're going to start with the house and shell. Okay. If you. You're going to start with the house. Okay. So we need to mute and stop video, right? Oh gosh. Yeah. How long do you want the breakout rooms to last? Are we coming back? Or are we just going to go home after that? Or I am home. We're going to go. I don't know. There's any point in coming back with said our next meeting. And. I would, I agree. I think once we're done. We're done. Breakouts were done. That would be my. Okay. So we're going to mute and stop. And then we automatically get swapped over. Is that how this works? Yes, that's right. Okay.