 So it's Friday, March 12th, and this is a committee on agriculture. And we have Mr. Ellis and Mr. Lin with us this morning, first thing to talk in regards to hemp, I believe. And so I think we'll run around the room and introduce ourselves. I'm Bobby Starr, and I chair the committee of ag. Chris Pearson, vice chair and Senator from Chittenden County. And before I turn it over to Senator Polina, does either or either of you expecting a Kyle, somebody or other to testify? We are having Kyle Olson, the COO of the company on standby for technical questions if necessary. Okay. So we, Linda, we could let him in, yeah, morning Kyle, Anthony. I'm Anthony Polina, I represent Washington County. Ryan Collamore, Rutland County. And Corey Perron, I represent Franklin County. Yeah, and so I'd like to welcome the three of you folks in, Kevin is an old face to us. And so we've worked with him off and on over quite a few years. So Kevin, would you like to introduce your guest and we'll get started. Sure. Thank you, Mr. Chairman. Good to see you. Sorry, it's under these circumstances. Always good to be in the company of my senator from Washington County, Senator Polina. Hey. I'm here. Good, nice to see you. I'm just the introducer here and then I'm gonna get out of the way. But Pietro Lin is the, he's gonna testify about the company that he represents in Williston on a, and has a somewhat, I think interesting challenge and that we are looking for some guidance from the committee on. And it was my thought that this was the best place to come at the outset. So that's what we're doing. So with that, I'm just gonna introduce Pietro Lin. He's a Burlington attorney and he's the expert on this issue and Kyle Olson is standing by for sort of technical questions if you need to get deep into the rabbit hole of hemp slash cannabis slash everything else. So with that, I'll turn it over to Pietro. Thanks, thanks, Mr. Chairman. Good to see you. Yeah. Well, good morning to everybody, Mr. Chairman, Senators. Thank you so much for allowing me to come and talk to you today about what I consider to be a perplexing legal issue. I am a lawyer and I'm representing Vermont CBD Labs. Vermont CBD Labs is a company that's located in Williston and it's in the business of processing, drying and processing hemp into CBD oil and then selling CBD oil either as distillate which is the less purified form of it or isolate which is the more purified form of CBD. Unfortunately in 2019, we saw a collapse of the CBD oil market which of course had dramatic impact on hemp and the price of hemp, which means that Vermont farmers who are growing hemp have a difficulty selling it for a profitable sum on the open market. And as we sort of scratched our heads trying to figure out how we were going to make this business work, a process came to mind. And so that process I'll explain to you in a little greater detail in a moment. And if you wanna go below my very superficial understanding of it, you're gonna have to talk to Kyle about that. But the challenge here is this, we turn hemp included with cannabis into THC that is Delta 9 THC, which as you know is the psychoactive ingredients in cannabis. The problem that exists for hemp farmers and hemp processors is that there's this gap in the statutes. On the one hand, we have the hemp statutes which allow licensing for the cultivation and processing of hemp, but it has to be at THC levels that are below 0.3%. On the other hand, we have the statutes having to do with cannabis, which you all probably are intimately familiar with which refer to the cannabis plants and talk about a cannabis license being necessary to turn cannabis or to process cannabis and to sell cannabis and all the other things that you have in mind for it, but exclude specifically hemp and those products that are subject to the hemp licenses. And so we've got this gap between the two where if you're going to use CBD oil in connection with cannabis processing, you are potentially not covered by a license either as a cannabis licensee or a hemp licensee. And we're trying to find a way to fill that gap so that this work can be done in a way that is lawful and not subject to charges either criminally or civilly or even fearfulness on the part of the people doing the work. And it's not going to take a big change in terms of the statutes that already exist, but there needs to be something that contemplates if somebody wants to use CBD oil in connection with cannabis processing that their cannabis license will cover them for it. We're not suggesting hemp producers where the standards are lower potentially to become a licensee ought to be able to pursue and engage in that process. What we're saying is that we hope that we can find a way for the existing statute to be amended so that cannabis licensees who are processing cannabis can include hemp in the process where it has turned into THC. So that, I mean, it's not a complicated problem, but it's a problem that exists under the current statutes. Bobby, you're muted. Kress, you had a question? Yeah, thank you. First of all, have you talked to the Ag Agency, the folks that regulate hemp on this? So let me defer that to Kevin because I think he has spoken to those people. Yeah, I spoke to them and they acknowledged the gap. Corey acknowledged the gap and says we're gonna have to deal with this down the line in some way, but I wanted to come to you first to get to a discussion going so that I could then take some more knowledge back to Corey and the secretary. I think you mean Carrie. Carrie, sorry. So, Pietro, it strikes me, when I first heard about this, I thought to myself, okay, a cannabis processor making chocolates, the state's not gonna care about the chocolate, right? We're not going to, I mean, I don't think we have set up a structure where the additional ingredients are regulated in that sense, although I suppose if they're edible, then there's a food dynamic, but why isn't it just handled in that sense? I know we have a hemp processor license. I think this is, I just want to better understand it. So if I process hemp legally and then somebody else is using what the oils I create in their baked goods, does that baker also have to have a license or where does the chain end in the legal setup now? Do you know what I mean? Yeah, yeah, no, so that's a great question. And so let me answer it this way. If you're the baker and you're putting CBD oil in your brownies, that's not an issue, that's fine. The problem becomes when you process the CBD oil into something else, which in this case is Delta 9 THC, right? Because you are processing the hemp products. And that's where you can't do it with a hemp license because you're creating something that exceeds the tolerances, the upper limits of THC, which is 0.3%. That's a problem. So you can't do it under your hemp license. And then the question becomes, can you under your cannabis license? And the answer is also no, because you're engaged in the processing of hemp or a hemp product, which must be under the hemp license. But it's not, once you're over that limit, it's not a hemp product. By law it's pushed into the other category, I thought. Well, it is, but by virtue of using hemp or hemp products, in this case, CBD oil, in this manufacturing process where you're turning the hemp product into something else, right? Like you are processing the CBD oil into Delta 9 THC along with the cannabis. But the problem is the cannabis statute says, you can't do that. You can't process hemp or hemp products. That's something that has to be under the hemp license. But the hemp license says, you can't turn it into this thing that exceeds the limits. I hear what you're saying, but you're seem to be focused on the process. And I guess what I'm saying is, if this is a need in the cannabis world, why don't they just accept this processed CBD and add it as if they were adding milk to their milk chocolate? Because the statute specifically identifies hemp products, processing hemp products as something that must be done under the hemp license. Are there any other products that you know of where they're related, but they're different? So that they're regulated differently within the market. I thought about milk, but you may take like Christmas and chocolate, add it to it. You've got milk and then you have chocolate milk, but you don't alter the butter fat. You don't alter the hemp product. What we're talking about doing is taking cannabis and adding some hemp to it to try to dilute it to do something with to use as a product. That's what you're talking about, right? Well, Senator, not quite, but let me explain it a little better. And then I'm gonna turn to my friend Kyle who can explain it even better than me. Look, so there is a competitive advantage in using CBD oil to create THC, right? It's cheaper, it's more plentiful. We can do it at a lower price than using cannabis to create THC. And so where we use the CBD oil with the cannabis, we are able to convert the CBD oil into THC as an ingredient with the cannabis. So it's not like chocolate milk where we put the chocolate in and it's there and it stays chocolate. We are actually converting through the process, the CBD oil into the THC. There's no more CBD oil left when the process is over. And Kyle, I'm gonna turn to you because you again know this way better than me. Sure. Well, first, thanks for having me this morning. It's a pleasure to get on here and talk to you guys about such a large topic that is very unique in its nature. So as Pietro has stated, we've worked for several years with some very, very high class chemists that have come out of mostly the pharmaceutical space that have really helped us to get the science right. So the process is all about being able to take a CBD molecule and turn it into a THC molecule in a safe and efficient manner. So there are 12 states that currently allow CBD as an ingredient into THC products. And that's along the lines of what we're looking to do. But we're able to use a very highly skilled process that's again done in a very safe manner to take the CBD and close off a bond and turn it into a THC. And what we've found is that like Pietro mentioned, we're able to bring the costs of goods down to increase access to patients and consumers alike while also stimulating the industry from the farming aspect as well. So it's kind of a win-win on both sides where we're able to get more product into the market and do it at a more affordable rate while also giving a kickback and giving these hemp farmers an outlet to use their product in a very highly valued fashion. So there are other states, I'll catch you Brian in a second. There are other states that have already done this. So we could talk with them and see what they did and how they did it and do something here in Vermont that would be similar. Is that the idea behind moving this forward or do we need to, we don't need to invent the wheel then. You don't need to invent the wheel. And in fact, I think we've already shared with the agriculture department some of the legislation that exists in other states. So for example, Colorado and Michigan have addressed this issue. And in fact, we could easily address this issue in the current cannabis statute by just adding a comma and a half a sentence, right? I mean, the only issue here for us is if you're going to use CBD oil as an ingredient to create THC, then you're exempt from the hemp statute or the hemp licensing, but you must have the cannabis licensing. That for us, that can easily be done in our statute and we can model it after the Michigan or the Colorado language or we can come up with our own. Yeah. Brian. Thank you, Mr. Chair. I'm getting the idea that I'm not understanding this. So let me just ask this question. Why can't someone have both licenses? You can have both licenses. You can, there's nothing to stop you, but it still doesn't address the issue of the gap that exists, right, because hemp license doesn't allow you to create THC. Cannabis license doesn't allow you to process hemp. Okay. So if you want to take a low-grade like hemp product by hemp, you could process it in a certain way according to Kyle and you could make that into a more potent product that would have THC in it. So that's what we're attempting that you're suggesting that we attempt to do. That's right, Senator. And so the THC that's created my understanding and Kyle will tell me if I've got this wrong is 80, 90% purity. So it's a fairly potent liquid that can be used in edibles and the like. Correct. Of course, this is the first that we've heard of it other than when Kevin called us. The Ag Agency hasn't been knocking on our door asking us to do any of this. So this is our first trip around. What type of products would come out of the, if we allowed this, what would you get for products that we could get into the market with? Kyle, why don't you explain what we have in mind? So the product that's made out of this is gonna be very similar to the product that's gonna be made from traditional cannabis plants. It's all about being able to have a greater access to the supply of, to CBD. The CBD supply is very vast in this country right now whereas the cannabis supply is very restrictive. So whereas a farmer could have, you know, 50 acres of hemp fairly easily, that's not the case on the cannabis side. So it's about getting these hemp farmers the ability to then have an access point to get rid of their material and then we take that material and can put it right. I think you got froze up, Kyle. So let me jump in where he jumped out and tell you what I understand that they, oh, Kyle, you're back. So I think the focus here, Kyle, was what are we gonna make, what are we gonna use this THC Delta 9 THC for? So, sorry, I guess my connection might be a little shaky but the end product, you're looking at the identical, you put them side by side with traditional distillates and other plant oils. So you can use it for edibles, you can use it for topicals, you know, all the exact same ways that you can use traditional oil, you can use this oil. And where is this product processed at the present time? I mean, is it gonna create any jobs so you can kind of lean on economic development? Is it only gonna help the hemp growers try to get rid of their tons and tons of hemp? Is there gonna be some manufacturing jobs or could there be created from allowing something like this to happen? So let me jump in on that. What I expect is that they're, so first of all, there will be an income stream for Vermont hemp farmers that far exceeds what they're getting now, which is nothing. Then there's going to be a need to store and drive a hemp but we need people to do that work. We will obviously process the hemp and the cannabis either if we have a license, we'll do it ourselves, if not, we'll get the technology to people who will and that's going to require employees to do that work. It's going to be sold. We're going to need people to go out and sell it. You know, there will be jobs and it will create income streams, not just for the people doing this kind of work that is the processing part, but you know, essentially for the farmers who thought that hemp was going to be something that was a good source of income and it turned out instead of a great a dream it turned out to be a nightmare. So, you know, our perception is that it's going to allow the hemp industry to become revived in Vermont. It's going to create jobs for those people who are engaged in this process and it's going to be a source of income for Vermont retailers who sell this product. Yeah. And what about, you know, there's only 600,000 of us kicking around here in Vermont, but just a few hours away, there's millions of people. So are there any of these, you know, a heck of a good market I would presume? Are any of these other states that are close to us? Are they doing anything with this or is it just the Western states? Yeah, yeah. So there's nothing close by us. As I understand it, nothing in Massachusetts, nothing in New Hampshire, New York or Maine. But look, if we get to a place where federally, we're able to ship THC across state lines, this is a patented technology and we're going to be able to export from Vermont to the Northeast. And, you know, whatever jobs we get with our paltry 650,000 Vermonters, that's going to be exponentially increased by an ability to send it out to the rest of the Northeast. Yeah. Questions from many of the committee members. What I took to move forward on this, I think, I don't know if Kevin could get us that, but we ought to have a look at what Colorado and Michigan or a couple of these other states have done. What their law looks like. Review that and, you know, once we get by next week, we're going to have some time to look at stuff. We have some house bills coming over, but, you know, I think we do know that we have a lot of hemp growers that have had serious problems selling their hemp and that they need to have a market for that. And so I believe we would certainly have time to pursue this, you know, in the future, this session. I don't know, you know, where it will go, but I know judiciary committee would want to look at it. But, you know, you've got to creep before you walk. And so we've got to start somewhere. So I think we could take some time and look into this after next week and move forward. Mr. Chairman, I'd be glad to get you the statutes. And I just saw that Michelle came on. So if with your permission, we'd be glad to share those statutes with her as well. Pietro, you'll see Michelle Childs, the committee council down at the bottom of the screen there. Hi, Michelle. Yeah, she's the expert on cannabis and hemp and a lot of other issues, but good morning, Michelle. Good to see you. So are there any other questions for our witnesses at this point in time? Would you guys like us to work through Kevin and if we have questions and need to talk with either of you to work through Kevin or? Yes, please. Yeah, Kevin would be terrific. That'd be fine. I think the key conversation here would be between Michelle and Pietro. So lawyer to lawyer. Yeah, yeah, well, that. I would just point out that Michael O'Grady deals with the hemp statutes, I believe. So Michelle and he can work together, but I think we probably would be smart to start with him. Okay. Yeah, we should be able to get onto that after we do crossover and you get that stuff to us, Kevin, through Michael and Michelle and we'll work on it. That's great. Thank you. Anything else from our guests? Any questions that you have of the committee or any of the committee members have of our guests? Not for me. Thank you so much for having me this morning. It was terrific to see you all. Some of you I follow on Twitter and it's nice to see you in person. Yeah. Well, it saves you a trip to Montpelier and finding no parking spots. And no, this is work pretty, it's worked pretty good as far as these kinds of meetings go, we just miss like, you know, at noon today and normally I would bump into Senator Sears from judiciary. And, you know, we talk a little bit about what we talked about here and you miss all that inter-building conversation that really makes politics work. You know, you don't do politics without chatting with people and it's always good to look them eye to eye and not over screen. And... Mr. Chairman, before we go, one thing I just want you to know that I did talk to Senator Sears who advised us to come to you first. So that's what we did. Yeah, thanks a lot. No, that's fine. And, you know, we work well together and, you know, good guy to work with. So anyways, thanks a lot for being with us this morning and hopefully we'll get an apple growing on the tree. Thanks so much, folks. Bye. Thank you. See you later. Yeah. Thanks, Kevin. Thank you. Thank you very much.