commercial cannabis would increase budget deficit

Weekend’s LA marijuana production explosions highlight use of explosive products in VT hemp, marijuana extraction process

By Guy Page

May 18, 2020 – As the Vermont Legislature looks past Covid-19 legislation to consider other high-profile bills, at least two new problems have arisen with S54, legalizing commercial cannabis: deficit spending and explosive ethanol.

With strong lobbying support from a national pro-legalization movement, S54 passed the Senate last year but stalled in the House last year and early this year due to taxation and spending issues and the still unsolved-problem of a reliable driver impairment test. House Speaker Mitzi Johnson (D-Grand Isle) told Vermont Public Radio Thursday May 7 S54 and other high-profile bills may emerge for consideration this year. 

S54 would increase 2021 budget deficit

Thanks to Covid-19, the State of Vermont faces a $430 million budget deficit for 2021. S54 allocates $810,000 to establish a cannabis control board and regulatory system. It also recognizes the setup costs won’t be covered by fees or sales because the licensing and retail process would take several years. So it lets the program borrow state revenue against hoped-for future earnings – in effect, to deficit spend. Many Vermont lawmakers already concerned about the adverse health, educational, public safety and economic impact of commercial marijuana may be highly skeptical about growing the deficit by $1 million-plus while Vermont state employees, businesses and taxpayers are being told they must do more with less. 

Vermonters asking the Legislature “buddy, can you spare a dime?” for basic education, housing, food and employment assistance may wonder at a Legislature willing to front almost $1 million to create a legal industry surrounded by so much controversy and so many question marks.

The $810,000 would pay fulltime salaries for the three Cannabis Control Board members, an executive director “employing such staff as may be required,” a consultant, and office space. S54 allows deficit spending “to the extent that the Cannabis Regulation Fund has a negative balance at the close of the fiscal year 2022.” Eventual state funding needs will far exceed $810,000. Other legal cannabis states have spent state revenue to reduce the educational, public safety, health and substance abuse problems made worse by increased marijuana abuse.

Explosive ethanol used in Vermont cannabis industry

On Saturday, a series of explosions produced mushroom clouds in downtown Los Angeles and injured 11 firefighters. They were traced to butane stored in legal marijuana production facilities. Butane is used to extract THC from the marijuana plant. The “pure” extract is then used in popular concentrated products. 

Vermont hemp production rules approved this year forbid the use of butane or its cousin hexane. So does the 2018 “personal possession” law, except by medical marijuana producers. It’s unknown in Vermont legal marijuana producers use butane – although not for lack of trying. This morning, Vermont Daily called Champlain Valley Dispensaries in South Burlington. We asked if they use butane for extraction. Our call was forwarded to a manager. A minute later they hung up.

Not to worry about butane, though. Agency of Agriculture cannabis guru Cary Giguere answered our question via email: “Hydrocarbon extraction is prohibited in Vermont. Our medical programs use CO2 extraction, water, or ethanol. Hydrocarbon extraction is also prohibited in hemp extraction.”

Ethanol, though, is highly explosive. That’s why it’s used in transportation. 200-proof “food grade” ethanol has a flash point at 57 degrees fahrenheit. Vermont fire safety in 2018 held an ethanol safety seminar in 2018. 

Vermont Hemp Company production facility – http://www.vthemp.com

The marijuana industry recognizes the risk. “Ethanol is flammable and should be handled with care, and any rooms should be properly vented and all tankage/piping should be grounded per code,” wrote the Cannabis Business Times in 2018. “Ethanol extraction is the method of choice for so many of today’s high-quality botanical extractions, and it is gaining traction as one of the most effective solvents on the market today.”

A 2009 derailment of a train carrying ethanol caused a huge, deadly conflagration: “June 19, 2009, a freight train derailed at a rail crossing in Cherry Valley, IL. 19 cars derailed, all of which contained ethanol; 13 of the cars released ethanol, which ignited and burned. One person in a car stopped at the rail crossing was killed in the resulting fire, and 600 homes in the area were evacuated,” according to an Illinois library website. Other industrial ethanol fires include Archer Daniels Midland, Peoria, Illinois, January 9, 2013; Lincolnway Energy. Nevada, Iowa, November 7, 2011; Southwest Georgia Ethanol, Pelham, Georgia, September 15, 2011.

The fire and explosion risks of ethanol, well-known in the midwest, seem not to have been addressed in legislative discussions of S54. “Ethanol’ does not appear in an online search of Vermont marijuana legalization news articles, nor does it appear even once in S54. 

Commercial cannabis supporters often argue that it is ‘safer’ than illegal production and sale. Will the Vermont Legislature review the potential risks of ethanol storage and use in marijuana production, and give statutory direction to the Cannabis Control Board in the interests of Vermonters’ safety? Or will it pass a law that defers all such important decisions to the appointed board?

Full disclosure: the reporter is the former executive director of Physicians, Families and Friends for a Better Vermont, an organization opposed to S54. He is no longer a lobbyist or employee of any advocacy organization. 

Photo credit: Bon Homme (S.D.) County Sheriff’s Office of Sept. 2015 ethanol train fire.

Correction: Friday’s report incorrectly reported the amount of the education revenue deficit. It is $170 million.