Vermont Wants an Equitable Cannabis Industry. Will the State Pony Up? | Business | Seven Days | Vermont's Independent Voice

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Vermont Wants an Equitable Cannabis Industry. Will the State Pony Up?


Published April 19, 2023 at 10:00 a.m.

Tiffany Johnson at Euphoria Cannabis in Burlington - DARIA BISHOP
  • Daria Bishop
  • Tiffany Johnson at Euphoria Cannabis in Burlington

Euphoria Cannabis won't open until later this month, but Tiffany Johnson's shop is already glowing up the block. For years home to a medical equipment provider, the drab building on North Avenue in Burlington recently got an unmissable purple makeover. Inside, Johnson has been working as fast as she can on a similarly glamorous transformation that will do justice to her vision for a seed-to-shelf cannabis business.

In one corner of the 2,100-square-foot retail floor, she plans to install a wall of display shelves to showcase colorful product packaging, including for her own cannabis, which she's growing off-site. One of her logos depicts a Black woman with iridescent hair exhaling a puff of iridescent smoke. "I'm a visual shopper," Johnson explained on a recent tour, between visits from an electrician, floor installer and delivery driver.

Opening a cannabis business has been Johnson's dream. She was born in Brooklyn, came of age in Burlington and attended the Community College of Vermont. A mother and Old North End resident, Johnson was running a small cleaning business when the prospect of getting a share of Vermont's new adult-use market started to seem within reach.

Still, just launching Euphoria Cannabis has been a nerve-racking slog. Without deep pockets and with no access to loans because her product is still illegal under federal law, Johnson has leaned on everyone she knows for cash or a helping hand. She's planning a soft opening on Thursday, April 20, the date — 4/20 ­­— that has become an unofficial cannabis holiday.

"I am very much broke right now," she said. "I need to open my doors ... I'm battered and bruised, but I'm here."

When launching its adult-use market, Vermont put in place some measures intended to ensure that people who were harmed by decades of cannabis prohibition have a fair chance to profit from legal sales. The state created a "social equity" designation for Black and Hispanic business owners and those who were incarcerated for a cannabis-related offense or had a family member who was. Of the 375 cannabis business licenses granted in Vermont so far, more than 50 have been issued under the social equity program — a sign that interest is high.

As a Black woman with family members who have been incarcerated for cannabis offenses, Johnson was eligible for the program, so her application fees were waived and her approval was fast-tracked. She snagged two of the first 56 social equity licenses.

But Vermont lawmakers have yet to meaningfully address the highest hurdle facing social equity applicants: the gap in capital required to start a cannabis business. Without a commitment to address it, Vermont, like every other state, is doomed to fall short in its stated aim to create a fair cannabis marketplace, advocates say.

"Money gets you in the room," said Shirelle Grant of Vermont NORML, a group that has advocated for social equity in the cannabis industry. "And that's what we're trying to do — get the people in the room."

Lawmakers responded to such views by establishing the Cannabis Business Development Fund to provide loans and grants to social equity businesses. They seeded it with $500,000 in public funds. Any existing medical dispensary that chose to open an adult-use store during a special early access window last year would have to chip in another $50,000 to the fund; just one of the corporate-owned entities did so.

The Agency of Commerce and Community Development spent $150,000 on a consulting firm that can provide technical assistance to social equity businesses on topics such as marketing, bookkeeping and website development. Starting in February, it made the remainder available in the form of $5,000 beneficiary payments, a kind of no-strings-attached grant. So far, 29 social equity business owners have applied for the payments, and 23 have received them.

Tiffany Johnson - DARIA BISHOP
  • Daria Bishop
  • Tiffany Johnson

Johnson's check came a few weeks ago. She said she appreciated the money, which she immediately used to pay down her mounting bills, but noted politely that an earlier cash infusion may have helped her launch Euphoria closer to the October 2022 market opening date, when Ceres Collaborative, a downtown Burlington store owned by a Toronto-based company, cashed in on long lines of customers.

"In the beginning, if there was that capital, I would have been way further ahead than I am now," Johnson said.

The Cannabis Business Development Fund is simply too small, with only enough money to launch one company, noted Brynn Hare, executive director of the state's Cannabis Control Board.

"There were some really grand ideas behind what this fund would be set up to do, which would be to get people in the industry that couldn't otherwise get in. And I don't think that's happening," she said.

The Cannabis Control Board and social equity advocates have asked lawmakers to earmark a portion of revenue from the state's 14 percent excise tax on adult-use weed for the business development fund. Last month, Sen. Tanya Vyhovsky (P/D-Chittenden-Central) introduced S.127, a bill that would direct 20 percent of the excise tax revenue for that purpose. The state has an ethical imperative, she said, to use legal sales of cannabis to help those who were harmed disproportionately by its earlier prohibition.

"I think it's really important to actually put money behind our words," she said.

Many states launched their adult-use markets before creating any social equity guidelines and have since tried to catch up. Others are now taking more aggressive steps as their industries have developed.

In Massachusetts, more than two-thirds of cannabis business executives and employees are white, roughly in line with the state's population, Boston-based WGBH radio reported earlier this year. That state, which legalized adult-use sales in 2018, recently created a trust fund that uses 15 percent of cannabis taxes to help social equity businesses. Some have criticized the move as too little, too late in a market that is already oversaturated and seeing declining prices, the radio station reported.

New York has the most ambitious social equity program. Its first 300 retail licenses are reserved for disadvantaged applicants as the state tries to achieve a marketplace where they make up half of all licensees. But New York's ongoing rollout has been hobbled by delays and legal challenges. Unlicensed pot shops have sprouted in the void, creating further headaches.

Vermont, which is 92 percent white and non-Hispanic, hasn't set forth specific demographic targets for cannabis licensees. Cannabis Control Board chair James Pepper declined to say whether the current proportion of social equity licensees, 15 percent, is adequate, but he and Hare noted that the rate has been increasing in recent months.

Pepper added that Vermont does appear to be succeeding in its broader goal of supporting small-scale agriculture, which tends to require lower startup costs. More than 75 percent of licensed cultivators are growing at the smallest tier.

"If that's any indication about the barrier to entry in this market, compared to almost any other market, we have cracked the code on getting people in the door," he said. "I think the real question is: Are these businesses going to survive two, three, four years out?"

The Cannabis Control Board and social equity advocates agree that the state should add other low-cost options for cannabis entrepreneurs. One is a license that would allow people to start home-delivery services, which are not legal — yet, anyway. Another is a special events license that would allow farmers market-style, direct-to-consumer sales by small growers.

Both ideas are included in the bill Vyhovsky is sponsoring. As drafted, the bill would restrict delivery service licenses to social equity applicants exclusively until as late as 2030 — a feature that Vermont NORML said is necessary to allow delivery businesses a chance to get established before corporate fleets can enter the market. Colorado enacted a similar exclusivity period when creating its cannabis delivery program, but demand for the service has been lower than anticipated, online news outlet Denverite reported last year.

Vyhovsky's bill includes a bevy of other equity-minded initiatives, including a program that would set aside another 10 percent of excise tax revenues for use as grants to community-based organizations in economically distressed areas of the state. The Cannabis Control Board expects the first year of legal sales to yield $16 million in excise tax revenues.

Only a fraction of the initiatives may stand a chance at passage this session. During a walk-through of the bill in the Senate Committee on Economic Development, Housing and General Affairs, vice chair Alison Clarkson (D-Windsor) noted that the legislature had little time left in its session to vet new policy proposals. Vyhovsky said finding an ongoing source of revenue for the Cannabis Business Development Fund was her most urgent priority.

In Burlington, Johnson of Euphoria Cannabis said the state's biggest help so far has been the $13,750 she saved in licensing fees between her cultivation and retail businesses as a social equity applicant. Without the waiver, she would have needed business partners to help front the cash, and they might not have shared her vision, Johnson said.

What Johnson lacks in capital she's made up for in resilience. Her 23-year-old son, Jibrail Williams, died of an accidental fentanyl overdose just before Christmas. He was excited about his mother's new venture, and Johnson said she hopes his spirit will live on in the shop.

Johnson said she wants Euphoria to pay homage to those who faced the consequences of cannabis prohibition and mass incarceration, including a number of her family members and friends. She let out a deep sigh as she discussed it. "I don't think that's been a fair shake."

Now her business, she hopes, can lift others up. She's set up a room in the shop as a community space and hired a mother of color as one of her budtenders.

"If I have support setting up this space," Johnson said, "I can help other people make a living for themselves."

The original print version of this article was headlined "Higher Ambitions | Vermont wants an equitable cannabis industry. But will the state pony up?"

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