Are Cannabis Growers Farmers? More Than a Name Is at Stake

Rodgers, a wiry, impish, sharp-eyed man firmly in the middle of life, has a bone to pick. Owner of Vermont Farmers Hemp Company, he is frustrated with many of the rules and regulations shaping the still new adult-use—i.e. recreational and THC-heavy—cannabis market in the state and impacting the farmers that feed it. As recently as February, he delivered these issues—20 of them, in fact—in testimony to the Vermont Senate Agriculture Committee.

On the list was the question of whether adult-use cannabis should be classified as “agriculture,” the same as commercial hemp is in Vermont. Thus far, adult-use cannabis has been considered separately, as part of the business and development sphere. Therefore, cultivators do not share in the benefits enjoyed by those producing industrial hemp or any other traditional crop.

“It’s the exact same plant as hemp, right?” Rodgers emphasizes. “Hemp is agriculture. Adult-use cannabis isn’t. How can that be? It’s the exact same plant, it just has different cannabinoids in it.”

Agriculture or business?

While cannabis smoke has long been mistaken for clouds in Vermont, the legal industry came later than many other states, thanks, in part, to deep, old-school, conservative Yankee roots. In fact, Vermont was one of the first states to ban cannabis, doing so more than 20 years before it became federally illegal in 1937.

The first slack in the reins didn’t come until 2004 with the legalization of medical marijuana in Vermont, albeit without the governor’s signature. Decriminalization of adult-use cannabis, which made possession of under an ounce a civil offence,  came nearly 10 years later along with the allowance of CBD, followed by personal use legalization in 2018, the creation of a Cannabis Control Board in 2020, and the opening of recreational dispensaries in October 2022.

As a plant with more than a century of stigma, cannabis presented a conundrum to a state whose identity is rooted in the soil and farming traditions.

So far, the way to thread the needle was to legally differentiate hemp—used primarily for CBD products and industrial fiber—and adult-use. Hemp was considered agriculture and adult-use, business. This approach was backed up by the 2018 federal Farm Bill, which distinguished hemp from marijuana and designated the former as agriculture nationally.

This distinction impacts farmers in two primary ways.

Valuation of land for property taxes

Farmers in Vermont receive a significant property tax break: active farmland is valued according to agricultural value—or “current use”—rather than fair market value based on real estate or business development. Hemp cultivators retain these savings because the crop is considered agriculture, but if they switch to growing cannabis for adult-use recreation, the reduction in taxes disappears. The same goes for any farm buildings employed in that cultivation or processing of adult-use cannabis, like an old barn for drying and trimming. Furthermore, taking land out of current use status incurs penalty fees, up to 20% of fair market value. This makes it particularly challenging for small, local growers to enter and thrive in the adult-use marketplace.

In a gesture to local control, Vermont gives municipalities the power to allow or disallow retail cannabis sales and set other land-use regulations, creating a patchwork of dry and wet areas throughout the state. A number of towns and cities have also formed cannabis control boards that require applicants to obtain licensure before starting operations. On occasion, the state and local wires get crossed, as seen in one conflict in Charlotte (population 3,900).

In March 2023, the local cannabis control commission of Charlotte, Vermont denied an application for a cannabis license even though it was already approved by the state. This rejection stemmed from the status of adult-use cannabis.

“It did not go through site plan,” noted one Charlotte commission member. “The only thing that’s allowed without getting a site plan are dwellings, forestry, and agriculture. If it’s treated like a business, every business in town that gets a permit has to go through site plan review.”

New law brings clarity

The input from Rodgers and his fellow cultivators did not fall on deaf ears, and, on June 14, bill H.270 was passed by the Vermont legislature and accepted into law—albeit without Republican governor Phil Scott’s signature. The law brings a range of changes to existing adult-use cannabis rules, including the redefinition of adult-use cannabis as agriculture.

According to bill sponsors Reps. Matthew Birong and Rep. Michael McCarthy, outdoor cultivators of any size will officially be considered agriculture and reap the benefits, including the retention of current use status for property tax valuation.

Strikingly, the change excludes indoor production facilities, regardless of whether it’s the same plant or crop size. “We want to encourage outdoor grow,” McCarthy says, “which is less energy intensive and doesn’t have an impervious surface,” as a large indoor growing operation on concrete foundations would have, for example. The law provides support for traditional outdoor farming by helping to keep existing farmland active, rather than seeing it redeveloped or sold for business development.

“We really set out with our cannabis policy that have a craft cannabis industry in Vermont, not a big, huge industrial cannabis industry,” says McCarthy. By supporting and protecting local farmers, the new law can help staff off corporate entities with deep pockets—which Rodgers called “Weed Walmarts”—from taking over the industry in Vermont, as witnessed in other regions of the country.

It’s hoped the change in adult-use status will entice more of the still thriving “legacy market,” aka the black market, into the legal one by removing more of the prohibitive costs and regulations. The bill also aims to settle the constantly shifting ground—an issue that concerns Vermont hemp cultivators considering the adult-use market, like Noah Fishman, CEO and co-owner of ZenBarn restaurant, farms and dispensary. While his dispensary sells adult-use products from other growers and processors, his own fields still only cultivate hemp.

“Part of why we didn’t just jump right into growing [adult use],” he says, “was that there was so much flux and movement in terms of policy and how it was going to pan out. There’s a lot of risk there.” He also points to the experience of the industry out West for examples. “What we saw in California is [that] some policy changes have put, I think, 605, 70% of the businesses out of business…so little things can make a huge impact—real quick.” One example is the Humboldt Cannabis Reform Initiative on the March 2024 ballet that would “destroy the viability of legal cannabis farming in the county” according to Humboldt County Planning and Building Director John Ford in a Times Standard article.

Breaking New Ground

Vermont’s new law marks a distinct change from most other states with adult-use cannabis. In fact, a number of states are actively excluding adult-use cannabis from agriculture classification and benefits, often with the backing the hemp industry.

In Montana, for instance, “The Republican legislature here in 2021 specifically moved to make sure marijuana be explicitly not labeled agriculture,” says Pepper Peterson, president and CEO of the Montana Cannabis Guild. That’s “because Montana gives agriculture so many extra tax and zoning benefits. The hemp industry pushed for that exclusion.” In fact, the law, HB 701, added a ban on outdoor growing altogether, excepting any operations already in action before November 2020. All others must be indoor grows.

That echoes efforts in Rhode Island, according to Evan LaCross, programming services officer and social media manager for Rhode Island Department of Environmental Management. “Bills introduced in previous years, including last year, sought to amend state law to specifically exclude the cultivation and processing of cannabis from the definitions of plant agriculture in Rhode Island,” he explains. The agriculture exclusion applies also in Missouri, Minnesota, Arizona and Virginia.

Oregon, on the other hand, seems to lean more in the Vermont direction, designating marijuana as a crop for purposes of a “farm use,” so long as it’s on land zoned for it and follows the other regulations. It does not include associated farm buildings, however. Massachusetts is moving in this agriculture direction too with Bill H.94, “to include the growing and cultivation of both hemp and marijuana in the definition of agriculture.”

For adult-use farmers like Rodgers, Vermont’s move is a step in the right direction, but, as a former Vermont state senator himself, he understands that change takes time.

“Democracy may be the best form of government in the world, but it’s extremely slow and inefficient,” he says. “Sometimes [you] just have to take what you can get, and you go back the next year. For some of the skeptics, it’s going to be showing them that the sky didn’t fall.”