Let it be known that on January 22, Vermont decided to move forward in legalizing marijuana. The state accomplished this without a ballot vote. State residents will be allowed to possess one ounce of weed and there will be no penalty imposed for possession of up to two mature cannabis plants and as many as four immature plants.
Vermont joined the growing number of states legalizing marijuana in some capacity, encouraging investors in marijuana stocks.
Vermont is now added to the list of 30 states in the U.S. with programs in place for legalized marijuana, but only 9 – as well as Washington, D.C. – who have legalized weed. Other states have put marijuana legalization on the ballot and left the outcome in voters’ hands. Vermont chose the path of legislation, which has been in process for a few years, bypassing voters and becoming law through a pen stroke.
In this case, the pen stroke was made by the hand of Vermont Governor Phil Scott (R) in House Bill 511, which takes effect in July. A similar legislation came across his desk last year and was vetoed for what he deemed weak language surrounding punishment for those who would sell to minors. He also did not support the organization of a commission that would study the workings of a regulated marijuana market in the state. Both of these issues were readdressed by the Governor through stronger legislative language and Scott’s creation of a task force that will examine the state’s involvement in marijuana sales and focus on educational and preventative measures and strategies.
What the bill does not address is whether Vermont will support the growth of a state market for recreational cannabis. Scott’s few comments on this subject leave things open-ended.
On January 22 he said, “There must be comprehensive and convincing plans completed in these areas before I will begin to consider the wisdom of implementing a commercial ‘tax-and-regulate’ system for an adult marijuana market.” He went on to say, “It is important for the General Assembly to know that – until we have a workable plan to address each of these concerns – I will veto any additional effort along these lines, which manages to reach my desk.”
The open door to future planning to address the recreational marijuana market is good news for MMJ stocks and pot stocks.
Matt Simon, the New England political director for the Marijuana Policy Project, pointed out one practical reason to support a tax-and-regulate system. “Marijuana is widely available, widely used throughout Vermont. Vermonters spend an awful lot of money on marijuana and it all goes to the illicit market. Why wouldn’t we have a regulated system so that money would instead go to taxed and regulated businesses and the state would have some revenue to deal with any costs or issues that do arise?”
Other state officials expressed skepticism over the Governor’s statements, specifically, concern that they express an overall bias toward marijuana as well as a tax-and-regulate system.
Simon interpreted Governor Scott’s objective as preemptive, though not necessarily guaranteed to deliver. He stated, “The tone of the commission all along has been, ‘Let’s figure out how to do this, regardless of whether we think it should happen or not. They’re gonna come up with specific policy recommendations. Now, whether the legislature decides to take those recommendations or not is a whole different story.”
When elections roll around in November, expect legal pot sales to be a key issue in campaigns and likely impacting marijuana stocks.
It remains to be seen whether Vermont’s state legislature in both houses will carry enough weight to pass a tax-and-regulate bill even without the Governor’s support. Vermont legislation requires a two-thirds majority vote in Senate and House of Representatives to override a veto from the Governor.
Lt. Governor of Vermont, Progressive/Democrat David Zuckerman, stated “The very broad sentiment from right to left is that nobody wants Big Cannabis to own Vermont, and whatever we do end up drafting for a tax-and-regulate bill will be oriented toward smaller production facilities and a more broad distribution of the economic benefit throughout the state, as opposed to large out of state corporate version.”
While the stigma associated with marijuana is lessening nationwide, some Republicans still feel lack of support in their own party and with that, greater vulnerability in offering their public support on the issue. Further progress in Vermont, as well as market growth and certain marijuana stock values, may come down to how many state legislators are willing to risk going on record as firm advocates of legal weed sales in the state.
(To learn more about state efforts on marijuana legalization, read State Victories Look Good for Marijuana Stocks.)