A conversation with a Vermont cannabis regulator: ‘Ask me anything’ about NY cannabis with Jeffrey Hoffman

Jeffrey Hoffman is a New York City-based attorney who hosts “Ask Me Anything about Cannabis Legalization in New York” each week on LinkedIn. Hoffman and NY Cannabis Insider have partnered to bring those sessions into print in a Q&A format.

Hoffman’s practice focuses on cannabis industry clients, including licensees in the adult-use market, practitioners in the medical cannabis space, and cannabis adjacent product and service providers. He has a particular interest in social and economic equity cannabis license applicants, and he also informs and assists those convicted of cannabis offenses in getting such convictions expunged from their record. He can be reached at info@420jurist.com.

The following AMA from Jan. 11 has been edited for length and clarity. Hoffman’s next AMA is on Jan. 11 at 4:20 p.m.

Jeffrey Hoffman: Today’s guest is Julie Hulburd. Julie is a commissioner at the Vermont Cannabis Control Board, and what a better way to see what’s in store for New York’s future from a state that is also doing adult-use cannabis, and perhaps learn a thing or two from Julie about what has worked, what hasn’t worked, and what he thinks is the future both for Vermont, and perhaps for New York.

Julie, how are you today?

Julie Hulburd: I’m good, how are you?

Hoffman: We are outstanding, and we are thrilled. thrilled to have you here today. So let’s start. Tell us a little bit about your role, about how you came to be on the Vermont Cannabis Control Board and what your role is there. I imagine it’s a lot like Tremain Wright, and the other folks on the board here in New York, but please tell us about your role.

Hulburd: There are three of us in Vermont on our board, we have a staff of almost 19 – we’re almost fully staffed at this point, but it started off with just the three of us. We were appointed by the governor – just like in many other states and in New York – through a process we came through the legislature and we’re ultimately confirmed by the legislature.

Our role on the board has been the strategic leadership of the operation and the rollout. We spent a lot of time early on taking public comment, meeting with local operators – people in the legacy market, people who are interested in coming into the Vermont market – and then developing the rules with the help of our general counsel.

Since the rollout has happened, our role continues to be sort of the strategic leadership of the program and supporting our staff. I do not have anything close to a circuitous path in life; if you had asked me if this is where I thought it was going to be 20 years ago, I would have said I didn’t know this was possible. I went to Northern Vermont University Johnson, which is a state college here in Vermont, I graduated with a hospitality degree. I worked in a hotel my senior year, and that was the first time I had ever worked in a hotel and that was the last time – I hope – I ever have to work in a hotel. I did not enjoy it. But what I did enjoy about that degree was that it was heavy in people-management and organizational development. I found myself very quickly shifting into human resources, which is where I was for about 20 years.

In those roles, I was mainly in local government human resources, so I spent a lot of time translating rules and regulations into language that everyone could understand and continuing with organizational development, training and things like that. So through that role, I was appointed to the state Ethics Commission, I was the second chair ever of the state Ethics Commission – which started back in 2017 – in the state of Vermont. And that is kind of my beginning foray into state government and regulation was was working on that commission: developing the first ethics code for the state of Vermont, and then beginning to work on a bill that just passed this last year, after I left the Ethics Commission, on a solidified codified into law ethics code. So that is how I got where I am now.

Hoffman: Outstanding. I think that’s a great background. You know, here in New York, we have Reuben McDaniel – who is part of DASNY – Tremaine Wright – who was an elected official –so, very different backgrounds that all kinds of different people have on the boards. How would you say the board is functioning currently in Vermont? I know here in New York, people have lots of comments. I think we just lost one of the board members, and I believe Ms. Peoples-Stokes in the assembly just appointed a replacement for the person that resigned. How do you think things are working with the board up in Vermont?

Hulburd: In terms of our operation as a team, I think we’re very lucky. We started off with the three of us, we each have a particular sort of focus. For example, James Pepper, who’s our chair, has been focused on sort of the overall market, and sort of the criminal justice pieces. Kyle Harris, who came to us from the board from the Agriculture department, has been focused on sustainability and energy, and a lot of the cultivation and agricultural pieces. And then, because I came through human resources and organizational development – and having spent a lot of time doing social equity work in those organizations – that along with some of the public health pieces have been my focus. So we all kind of have a piece of this.

We have managed to hire through our executive director, who was probably our first great hire Brynn Hare; she was lead counsel prior to being with the board. She’s hired an incredible team, and really focused on the skills that someone brings to the role – not just the skills that you see on paper, but the soft skills as well. We had kind of decided early on that what we wanted in terms of compliance and licensing was people who could bring the legacy market into the regulated market. That was a charge from the legislature, but it was also a desire of the board. So our teams have spent a lot of time on the phone via email coaching people through the licensing process when they could, and then as it relates to compliance, bringing people into compliance where they could.

Hoffman: Excellent. That was a fantastic description of how the board is functioning. You hit on two very important issues for me, and I would like to unpack them. I think we talked before that we were probably going to be addressing these first is obviously the equity component. New York has been getting a lot of press about what they’re attempting to do. First with the Conditional Adult-Use Retail (CAURD) license, which is going to folks that were convicted of a cannabis offense prior to the MRTA becoming enacted. Obviously, we’re having some challenges with that in New York, there’s the Variscite NY One lawsuit, which is enjoining us from giving licenses to applicants in five regions around the state. So we’re already starting to see our challenges related to this equity program here in New York. Obviously, folks that are familiar with what Illinois did, they also had similar challenges. So let’s start with equity, and then we’re going to talk a little bit about legacy into regulated market. Can you talk a little bit about what Vermont has done as far as social and economic equity in the cannabis space and where you think it’s going to go in the state going forward?

Hulburd: The legislature charged us with defining what social equity is for the Cannabis Control Board in terms of how we were going to license and identify social equity applicants. And we did that through a tremendously public process. We took our 14-member Advisory Committee, we broke them up into small groups based on certain topics, and one of them was social equity. We worked with folks outside our organization, we worked with folks and other partner agencies, and then we had a number of public hearings around it – some of those that board attended, and then some of them were hosted by someone that we hired to consult so that there were opportunities for folks to share experiences they had with cannabis prohibition without the board being there, and hen we got sort of a summary of that.

It was important for us that people feel like they were speaking freely without necessarily speaking to a regulator. We also spent a lot of time having one-on-one conversations, and that came from early on in our meetings, we had full day meetings. In the very beginning, someone at the end of one of our meetings, gave a public comment and said, ‘You know, you’re all asking for public comment, and you’re asking for our opinion, but please know that by doing that, we feel like we’re putting ourselves at risk.” And so it became clear to the board that we needed to do some direct outreach to the folks who would be social equity applicants and have a lot of direct conversations about what they were experiencing, what the need might be, and what might encourage them to come into the regulated market.

In the state of Vermont, we’ve defined social equity candidates as people who are Black or Hispanic, has previously been incarcerated for a cannabis related offense or a family member and a particular type of family member of someone who has been incarcerated for cannabis related offense. Then we had another category, which was from a community and somebody had to provide for us information about what that community was in some demonstration of a community, and how that community was harmed by prohibition.

From there, we launched our program. We didn’t do a point system like other states did, if someone completes the application process, all the way to the end, and they have all of the pieces in place, then they go up for approval. And we don’t have any caps on our licenses or anything like that, so it really is a free market. There will be folks in that free market that are successful, and there will be folks that aren’t; it really is how a market works. But we did prioritize our social equity applicants. We also created a second tier of – sort of – prioritization, which included economic empowerment applicants – which include women, veterans and other minorities. So we had three categories of prioritization: the social equity prioritization, the economic empowerment prioritization, and then sort of your general standard applicants. Our first sort of handful of meetings where we were licensing folks, even though our social equity applicants were maybe 20% of the applicant population, they were 100% of our approval. So we achieved that we did prioritize those applicants.

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Hoffman: I want to be very clear about what you just said, Please repeat what you just said.

Hulburd: Sure. In the very beginning, social equity applicants were about 20% of our total applicant pool, but in the first couple of meetings where we were approving licenses, they were 100% of our approvals, which means we prioritize those approvals.

Hoffman: If I may, New York, folks up in the OCM, I hope you’re paying attention. I do know here in New York, when we get to the later licenses, the No. 1 criteria that the state will look at – and in fact, I expect the first question on the application to be – are you a social and economic equity applicants, and their applications will go into a separate pool, and probably be reviewed first.

But let’s be very clear about what Vermont did. You guys implemented this program, the equity applicants were a minority of the overall pool. But when it came time to issue licenses, that was who got the licenses. So important. Kudos to Vermont, I think that’s the way programs need to be implemented. And I apologize for interrupting.

Hulburd: No, that’s all right. And just go ahead to further demonstrate that prioritization: now that we’re further down the chain of licensing, there’s still about 20% of our licenses are social equity applicants, but now we’re most of our approvals now are not social equity applicants.

Hoffman: Well, that’s a fantastic answer. That’s what we wanted. What have been the challenges implementing your equity program? Where have you not made the grade?

Hulburd: We started with a prequalification program. By the time we got the approval from the legislature for the fees, and got all the pieces in place that we needed, there wasn’t a lot of time between the start of prequalification and the actual start of the licensing period. Where prequalification was helpful was that folks who needed a piece of paper to go to a landlord and say, “Yes, this I’m a serious applicant here, so please do sign a lease with me.” It didn’t grant them anything other than a piece of paper, it didn’t grant them any ability to operate or anything like that. But I think that was helpful for folks – at least for that period of time – in that regard.

Hoffman: Just to take a quick detour, what was involved in Vermont’s pre qualification that allowed you to do that?

Hulburd: They had to provide an operating plan and a record check.

Hoffman: Real quick, on this background check: does Vermont allow cannabis people that were convicted of cannabis crimes to own licenses or work in the industry?

Hulburd: Yes, of course.

Hoffman: Okay. Perfect. Because you know, there are states that don’t, which is boggles my mind completely.

Hulburd: Yeah, I don’t understand that. It seems like if we want a market that comes with maturity, then it’s people who know what they’re doing to some degree.

Hoffman: Hallelujah! All right, I apologize, but that was perfect. We did want to talk about the prequalification of it, because I do think that is something that New York ought to look at. I do think it helped your program move along, and grease the wheels – so to speak – for people to do exactly the things that you were talking about. It showed that they were serious, and that whoever they were going to, should deal with them. So again, I apologize for interrupting, let’s keep going with perhaps what’s not working so well. And then what the future is for the equity program in Vermont, let’s hit both of those.

Hulburd: Sure. In a perfect world, between prequalification and licensure, we would have had a lot more time, and we could have provided maybe some technical assistance or support or something like that, in that time to actually help the licensees – particularly social equity applicant licensees – to be prepared for licensure. We didn’t have that kind of time, and we had to make some decisions about how we were going to roll out our program.

For example, on our online application, the initial version of that was not as intuitive as the version we have now. But we had a choice, we can roll out what we have, or we can wait until it’s perfect; and we wanted to get things going. So we rolled out what we had, and that was a struggle – not just for social equity applicants, but for everyone. We do have through our Agency of Commerce and Community Development, there is a cannabis business loan fund that was funded with $500,000. That money was meant to provide all of the support for that fun and low-interest grants and loans. So already, that’s not enough money to make an impactful difference in someone’s business, especially since many social equity applicants are undercapitalized. So, where I think we are failing is that there is not enough money in that fund. And there isn’t enough money either for the loans or grants or for assistance, because we really could be providing a great deal of education to our social equity applicants. We have a local college that has a cannabis certification, but our social equity applicants who are undercapitalized can’t afford to go to that program, nor do they have the time, because they’re working on their business.

If we had more funds for that loan fund or that business development, we could be doing a lot better for social equity applicants, it would have been better if we’d had it set up when they were applying. But now that they’re up and running their businesses, it would be great if we could get some funding into it to be able to allow them to do some business planning and get some port support and that we’ve done some of that, but not nearly as much as we could.

Hoffman: What advice would you give to New York, regarding the CAURD program?

Hulburd: I would say the thing that we did that was most important was building trust with the cannabis community that we want. We wanted to bring the legacy market into the regulated market, and so the first thing we did was build trust. And listen, I mean, we really heard what the challenges were, what their concerns were, what was going to be needed to operate. We had lots of one-on-one conversations. For the first several months, my day was booked with just individual phone calls for whoever was calling me. It was really just listening.

Hoffman: That sounds like sage advice to me. Alright, so let’s move on now to what I think is probably the first topic you and I really discussed together when we initially met. And that is: how do you get the legacy market to participate in the regulated market?

Hulburd: One of the things that we did: our smallest license, – our Tier 1 license, which is for cultivation anyway, and it’s 75% of our cultivation licenses now – is only 1,000-square-feet, or 125 plants. I don’t know what New York’s requirements are, in particular your smallest licenses, but I know that in a lot of other states 1,000 square feet doesn’t even register on the list of licenses. But we knew that in Vermont, a lot of our cultivators were growing in their basement, in their backyards on some corner of their farm, and that it was probably small. This was a decision that was made at the legislature. This was the legislature listening to the legacy market when they passed the bill.

They defined the Tier 1 license as 1,000 square feet. Not only did they define that, but they gave us a tremendous amount of power as a board to go through our regulations and waive certain things for those tier one cultivators. After we had all of our rules designed, we went through rule by rule and said, “do they need to do this? Do they need to do this? Do they need to do this?” and we waved a number of rules for them, so that it would make it easier for them, so the barrier would be lower for them to come in.

It’s also the lowest cost, it’s $750 for a 1,000-square-foot license for Tier 1 cultivator, so it’s manageable for a social equity applicant, and that license fee is waived in the first year. If you’ve had previous cannabis, and you’ve been growing in your basement, some of what you need might already be there. And we wanted to make that transition as easy as we could. Given that there were rules that we did have to make – I mean, there are rules everyone has to follow, it isn’t a free-for-all. We did have to do certain things, people will have to have some kind of security that there are cameras and cleanliness and things like that, that maybe they weren’t held to in the past that they will have to do now. But we tried to make that barrier really low. So folks would come in.

Hoffman: Outstanding. I mean, I think that’s a great way to do it. Are there other plans to do other outreach to try to get other legacy players into the regulated market?

Hulburd: We don’t have delivery in Vermont yet, but if we could have that, that would be very helpful. I think you and I have talked about the fact that cannabis markets, prior to being regulated, were generally delivery markets. So that would be another way that would be another low barrier potential way to enter the market. The other piece that we are sort of grappling with in Vermont is that we have THC caps, both for concentrates and for flower. In particular, I think we’re hearing from some manufacturers – and in legacy, manufacturers that won’t come into the market – if it’s 60%, they can’t make a product. Without a filler for that. The business analysis of it is not is not fruitful.

We’re working on both of those things in the legislature this year, and then I think the other piece is that we’re in our first year. So I think there are some legacy folks that are sort of waiting to see how all this happens, and I think we’ll continue to see a lot of our growers or outdoor growers, I think we will see some new growers next year.

Hoffman: Fantastic. Julie, this has been a pleasure. You are welcome at AMA anytime, we will certainly want to have you on again after you’ve had another year under your belt up there in Vermont. And after we’ve had a chance to get our program here in New York really up and running and compare notes.

Hulburd: Thank you, It was a pleasure.

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