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Despite flood losses, Vermont’s cannabis industry is ineligible for federal aid

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Industry associations are working to assess losses up and down the supply chain to help them make their case to state legislators for additional aid.

After floods devastated Montpelier and much of the state last week, Lauren Andrews, owner of Capital Cannabis on Main Street, spent most of her days cleaning up her retail store in the hopes of reopening on Monday.

But when she arrived to open up this morning, she found the walls and floors coated in water from what appeared to be a water leak upstairs.

“We’re going to have to gut the place and start from scratch,” Andrews said Monday afternoon.

On top of that unwelcome discovery, she and the rest of Vermont’s cannabis industry got potentially even more unwelcome news today: confirmation from federal officials that cannabis businesses would not be eligible for any of the federal disaster aid being made available to other types of businesses impacted by last week’s historic flooding.

Lauren Andrews, owner of Capital Cannabis and AroMed Essentials walks through her flooded store on Thursday, July 13, 2023. Photo by Natalie Williams/VTDigger

“Because we are a federal agency, we have to follow federal law,” Carl Dombek, public information officer for the Small Business Administration, said at a press conference Monday. “Cannabis is not legal under federal law, and therefore we are not able to lend to cannabis dispensaries.”

Any FEMA business assistance program also disqualifies cannabis related-businesses for the same reasons, according to Chelsey Smith, FEMA individual assistance branch director.

Similarly, cannabis farmers would be ineligible for federal crop insurance money, even if Gov. Scott’s emergency request for a U.S. Department of Agriculture disaster declaration is approved, because they are not eligible for federal crop insurance, according to John Roberts, USDA Farm Service Agency executive director for Vermont.

However, federal and state officials said, cannabis industry workers who lose their jobs due to the floods will be eligible for unemployment, because that program is administered by the state.

For a tight-knit industry that has yet to celebrate its first birthday in the state, the news is not unexpected. But it has made industry insiders even more determined to get an accounting of the disaster’s impact to share with state legislators.

Dozens of other cannabis businesses of every license type and size are also in the same boat as Andrews. Suppliers, manufacturers, retailers and vendors, like many other people across the state, are all still picking through the debris to determine next steps.

James Pepper is chair of Vermont’s Cannabis Control Board.

Though the flooding might not pose a “catastrophic” threat to the industry as a whole, individual businesses across the board are hurting, said James Pepper, chair of the Cannabis Control Board, Vermont’s regulatory marijuana body.

Because the industry is limited to Vermont-grown products, the state cannot supplement a bad crop year with outside resources.

“It’s a very interdependent relationship,” Andrews said. “When one of us goes down, it hurts everyone.”

“All these businesses live on a knife’s edge already because of the closed loop system,” Pepper said. “There’s no outlet. There is no pressure-release valve in the cannabis industry. And so … when something bad like this happens, it can ripple through the entire industry.”

Alongside Pepper, Geoffrey Pizzutillo, co-founder and executive director of Vermont Growers Association, said he spent the last week in near-constant contact with folks on every rung of the supply chain to get a better picture of how Vermont cannabis is faring.

Both the Growers Association and the Cannabis Control Board distributed assessment forms last Wednesday, trying to get a better grasp on flood damages and losses.

Responses are slowly rolling in, Pizzutillo said, but the results so far have shown unquestionable “damage and loss” of both outdoor and indoor crops, as well as production facilities.

Cannabis growers are facing particular challenges in gauging the extent of the damage because of their unique product. Other agricultural commodities already have guidance on how to classify damaged or potentially damaged crops, but the Growers Association and Cannabis Control Board are only starting to assess how to do that.

Pizzutillo said compliance director Cary Giguere, who previously worked for the Vermont Agency of Agriculture Food and Markets, is looking at plants like raspberries, which have similar pathogen sensitivities, for reference.

“We don’t consider cannabis an agricultural product, but it’s a seed and it’s a crop that grows in the ground,” Pepper said. “So we can use some of the best practices from the Agency of Agriculture to help deal with this issue in cannabis.”

Fields that were exposed to flood water will likely need testing for potential wastewater contamination, Pepper said. But for cultivators whose crop only endured heavy rainfall, without flooding, recovery seems likely because of how early in the season it is.

Most plants have not budded yet, so there is no worry about mold or mildew causing “bud rot,” he said. The only cause for concern would be if a farmer used auto-flowers — plants that grow quickly and are not dependent on the traditional lighting schedule.

Pepper has also advised Brynn Hare, executive director of the Cannabis Control Board, to reach out to the national Cannabis Regulators Association for additional guidance. He aims to pick the brains of regulators from the Pacific Northwest, which experiences substantial rainfall and, like Vermont, is home to a large portion of outdoor cultivators.

The extent to which it will affect the industry will be realized only in the coming weeks as more growers, sellers and manufacturers fill out the forms. That job has been lower on the priority list, as many spent all of last week just cleaning up their sodden properties.

“It’s too early to tell,” Pizzutillo said when asked about how the cannabis industry will emerge from the floods. “But we want to drive home that it is the entire supply chain. Every license type is being impacted — not just the outdoor farmers, but retailers and manufacturers as well.”

Since the cannabis industry is ineligible for federal help, the two hope to use the assessment forms to support formal requests for emergency state funding, which could be considered at a potential special legislative session. They anticipate a special session is on the horizon, but it has yet to be confirmed.

“I think the best thing that we can do at the Cannabis Board is collect the data and present it to the Legislature,” Pepper said. “And then we’ll see if there is a political will to help the businesses that are very severely hurt by this.”

As for Andrews at Capital Cannabis, she couldn’t say when she might move to a temporary location.

“I hesitate to put a timeline on it because look how that’s worked out so far,” she said. “We have no control over this and are just going to have to take it day by day.”


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