The Vermont Legislative Joint Fiscal Office projected in 2022 that cannabis would likely become a roughly $86 million industry by June 2024. As the fiscal year closed in June, according to Cannabis Control Board Chair James Pepper, the retail market had already reached $128 million.

On the ground, some vendors feel crowded. Since the first three legal recreational cannabis retailers opened on October 1, 2022, the number of dispensaries statewide has grown to 77, according to the control board. As the flow of money grows, officials are weighing how to guide the industry toward a sustainable, equitable future.

Part of the reason for the quicker-than-anticipated growth is that, in reality, the industry isn’t new, said Pepper. There was, he explained, “a vibrant market pre-legalization,” the scale of which was difficult to accurately measure.

License requests for legal cultivation and retail have poured in. “People actually do want to participate above-board,” said Pepper, to be able to deposit profits, pay mortgages, and take advantage of the new economy.

Among them is Meredith Mann, owner of Magic Mann in Essex, who found her way into the broader industry through a CBD bakery and café. She was initially stymied by a provision of state law that allows towns to decide whether to allow cannabis retail within their limits.

As municipalities across the state have put the issue to a vote, not every town has been sanguine. In Castleton, where the introduction of dispensaries has narrowly failed to pass on several town meeting days, selectboard chair Richard Combs recalled concerns that shops would open “too close to the university,” with some opposing the industry entirely.

Essex did not initially move toward lifting the ban on cannabis retail within its limits, Mann said, but when it came up for a vote, she considered it an opportunity not to be wasted. “We took it upon ourselves to petition the town and get it put onto the Town Meeting Day ballot,” she said. “We really campaigned.”

On Town Meeting Day in 2022, the item passed. Since opening as a recreational dispensary later that year, business has been good, Mann said.

Magic Mann was also recently approved for cultivation and manufacturing licenses in addition to retail. The first plants, Mann said, just came in on Wednesday. This kind of “seed to sale product,” she added, is exactly what she’s been building toward.

She’s in the process of applying for a license to sell medical grade cannabis. Following concern about the health of the medical cannabis industry, a law passed earlier this year now allows recreational dispensaries to acquire a medical license. Mann’s cultivation facility, she said, helps qualify her for this provision.

The more self-reliant Vermont’s market becomes, the better, Pepper said.

The control board chair explained that when it comes to seeds and immature plants, “a lot of people are sourcing…from out of state.” This makes products more difficult to regulate, and unnecessarily outsources Vermont’s cannabis genetics, he added.

Rep. Michael McCarthy, D-St. Albans, agrees. He was involved with passing a law that created a new license type for growers to sell immature plants to other vendors, which took effect July 1. “We really want this to be a Vermont-size craft cannabis industry,” he said.

One question that’s beginning to do the rounds in legislative circles, he added, is “have we given licenses to too many growers?” The cultivation market, he said, is in real danger of overcrowding. Currently, there are 395 active cultivation licenses, per the Cannabis Control Board website.

Pepper said the retail industry often seems more cramped due to dispensaries’ concentration in densely-populated areas that permit their presence.

For business owners, it’s an increasing problem. 

“We’re in downtown Burlington,” said Kelsy Raap, director of education at Green State dispensary and its affiliated businesses. “Talk about saturation!”

Raap said she supports a free market, but predicted that there will soon be casualties as a result of the rising competition.

Pepper said even with a recent closure, roughly a dozen cannabis retailers are based in Burlington alone. In South Burlington, there are none, the municipality not having opted into allowing them.

As growth continues, legislators are beginning to eye a possible peak in the industry. In a presentation to the House Ways and Means Committee last January, state fiscal analyst Ted Barnett spoke to lawmakers about the possibility of a “leveling off” in the market.

The state is also focused on promoting inclusion in the growing industry, according to McCarthy. 

The Cannabis Control Board’s social equity project, attached to its $1.5 million business development fund, seeks to provide grants and loans to businesses run by members of marginalized communities.

Marlena Tucker-Fishman and Noah Fishman, co-owners of Zenbarn Farms dispensary in Waterbury, were social equity applicants in the first year of the program. The program covered their initial license fees, but they were cautious about its ability so far to reverse past injustice or provide broad assistance.

“It’s good to have,” said Fishman, “but these businesses are very complex and difficult.”

Zenbarn Farms has one of three vertical integration licenses in Vermont, meaning that it is permitted to take part in every legal cannabis market in the state. With three affiliated business locations and numerous employees, costs are high.

Being in a business which is federally illegal has real fiscal challenges, Fishman noted. He explained that loans from the federal Small Business Administration or Department of Agriculture are inaccessible to cannabis sellers.

“If you took that away from many industries, they would not survive,” Fishman said.

Indeed, Pepper explained, no federally chartered bank will go near cannabis money. It’s been frustrating, he said: The goal at both a federal and state level is to keep the legal cannabis trade heavily regulated where it exists. With many businesses being pushed into using cash only, that’s much harder. 

“It’s just a little crazy,” he said.

Tucker-Fishman said that earlier this year, Zenbarn Farms’ payroll provider dropped them with just 30 days notice, having decided that serving dispensaries was just too risky. 

All this uncertainty means that staying afloat can be tough, even when business is good.

“We really need the Legislature to take some action to help open up the industry more,” Fishman said. Event licenses, and looser potency caps, which have been debated in the Legislature, could funnel more traffic through the legal market, said Fishman.

And in general, he said, it will take more serious infusions of money and small-business loans to address problems of inclusivity in the industry.

“We don't have real equity in cannabis yet,” Fishman said.