Independent growers want a way to sell their product directly to consumers.
By Otis Roessler, for the Community News Service
Sara Farnsworth started Full Circle Farms, a cannabis farm in Underhill, in 2021 with her own money. She runs the business by herself, along with multiple other jobs to fill in the gaps.
Farnsworth doesn’t hold a retail license, and without one, she can’t sell her cannabis directly to consumers. She says that without market access, she’s missing out on important profits. Now she’s losing hope in growing Vermont cannabis.
“I’m getting crushed by this industry,” Farnsworth said of her cultivation business. “It is crushing my soul. It is financially not viable.”
Farnsworth is one of many small growers who think that Vermont’s craft cannabis industry has a problem. After four years of legal sales, many of the craft cultivators for whom the market was built are feeling left behind in a retail market dominated by dispensaries that grow and sell their own product. Cultivators are hoping for market reforms that allow them to sell their product directly to consumers.
“No one is thriving and surviving. In fact, people are dropping like flies,” Farnsworth said, adding that she’s heard from at least 10 growers who are considering not renewing their cultivation licenses.
According to Geoffrey Pizzutillo, founder and executive director of the Vermont Growers Association, a trade organization that lobbies legislators on behalf of the craft cannabis industry, Vermont’s growers are suffering from a flaw in the state’s distribution model.
That flaw, according to Pizzutillo, is that the law mandates that only retailers, not growers, can sell directly to consumers. This incentivizes retailers to “integrate,” meaning they sell cannabis they cultivate themselves.
Kyle Harris, a member of the Cannabis Control Board, estimates that almost half of the state’s 110 cannabis retailers grow and sell their own product.
The state has also curtailed the size of its cannabis market. Towns must hold public votes before allowing retail sales, and less than a third have done so.
This leaves growers who don’t sell their own product in a bind. With a small number of retailers for them to sell to, and shelves already full of retailer grown products, cultivators are limited in their potential profits. While retailers are able to adjust cannabis prices in-store, cultivators miss out on market fluctuations and retail profits. Meanwhile, Harris says wholesale prices have fallen, though he says that estimation is based on what he’s heard, as the control board doesn’t track sales between licensees.
Even if small cultivators wanted to join the retail market, they wouldn’t be able to. Last year, the control board halted the issuance of new retail licenses to combat retail saturation, according to James Pepper, the board’s chair.
Amid these restrictions, growers are also contending with an illegal market that siphons off potential profits. Pizzutillo says growers need to capture as much of the illicit market as possible to have a healthy legal market.
Chris Lillie, who runs the artisan cannabis company Green Mountain Sativa in Stockbridge, said the ability to sell directly to consumers would support local growers.
“People are going hungry right now. They need a way to sell their product,” Lillie said.
Farnsworth, the cultivator in Underhill, says that without reform, only the producers with the most cash and those with integrated businesses will remain.
“All of the small producers who make up the rural integrity of the state of Vermont are going to leave this market,” Farnsworth said.
Earlier this year, Lillie and Farnsworth founded Vermont Producers Joint, a cooperative of independent cultivators angling for a better share of the market.
They support a retail system in which cultivators could sell their products at farmers markets, or through delivery services. They also want the state to resume issuing retail licenses.
Pizzutillo, meantime, wants retail licenses unpaused immediately, with the stipulation that the control board not allow for any retail locations that contribute to saturation.
The control board supports direct-to-consumer sales, according to Harris, but its members acknowledge the difficulties of such a move. The opt-in rule would have to be circumvented or amended, and more legal sales would mean more work for regulators, and possibly an expanded regulatory body, according to Harris.
The board has also floated the idea of cannabis sales at convenience stores to expand retail opportunities.
“There should be tiers of retail where you could sell pre-rolls or edibles the same way you could sell tobacco products, behind the counter,” Pepper, the board chair, said.
The control board has also recommended that the Vermont legislature set aside $1 million that would support independent cultivators. The funds would offset some operating costs and incentivize dispensaries to sell products produced by independent growers.
Because cannabis is federally illegal, organizations that typically support small businesses have not been willing to prop up independent growers. Many of the organizations receive federal funding and fear that involvement in the cannabis industry could put that money at risk, Harris said. That’s where state money could come in, he said.
“The support networks were not there for these folks,” Harris said.
According to Harris, the board has previously asked the legislature for relief money and has suggested direct-to-consumer sales but has not been successful on either front. The control board does not have the authority to make those decisions on its own.
Changes to the market also face opposition from some public health advocates. Smart Approaches to Marijuana, a Colorado-based advocacy group that aims to stop marijuana from becoming the next “Big Tobacco,” does not support selling cannabis at convenience stores or farmers markets.
“Putting marijuana next to the candy and soda at the corner store is exactly the kind of normalization that made tobacco such a disaster,” said Kevin Sabet, the organization’s president and CEO.
As far as farmers markets, “these intoxicating, toxic products do not belong where families and children congregate,” he said.
Farnsworth, however, said it’s hypocritical to allow substances like alcohol to be purchased at events like farmers markets, while cannabis is more strictly regulated.
“I could take my toddler there and acquire alcohol openly,” she said.
Pepper agrees.
“You just have to acknowledge that there are cannabis consumers in every community, and don’t they deserve a choice?” he said.
Despite potential roadblocks, the Vermont Growers Association says it will continue to push for market reforms. Pizzutillo believes the state has a lot of work to do, and that effective change will require a varied approach.
“It would be foolhardy to put all your eggs in one basket. We need to do multiple things at once,” he said.