Guidance About Farming and the Vermont Cannabis Market from the Vermont Agency of Agriculture, Food and Markets

I.             Is cannabis[1] (marijuana) legal in Vermont?

The short answer is “yes” under state law, but “no” under federal law (and federal law is supreme).

Under state law, cannabis is legal in Vermont for those who comply with state law and the Cannabis Control Board’s (CCB) regulations.

Under federal law, cannabis is a Schedule I controlled substance, so using, possessing, growing, selling, and/or distributing cannabis is a federal crime.  Federal law enjoys “supremacy” over state law in this context, so federal law controls and Vermont law has no impact on the federal prohibition.

Our federal and state governments are separate “sovereigns” with distinct powers, so each government generally enforces its own laws.  In Vermont, state authorities will not bring any cannabis related criminal or civil actions against citizens who comply with state law, but the federal government has the authority to prosecute criminal offenses and/or seek civil remedies for violations of federal law.

II.           The direct conflict between federal and state cannabis laws creates challenges and uncertainty for farmers interested in joining the market.

Vermont’s enactment of Act 164 and the CCB’s subsequent roll out of the adult use cannabis market provides opportunities to enter the state authorized cannabis industry.  However, given the federal prohibition, there is no guaranteed safe path for using, possessing, growing, or selling cannabis.  Although approximately thirty-nine states now allow some form of cannabis use (about half exclusively allow medical marijuana), Congress has not decriminalized cannabis—even in those states that regulate and allow it.

Although cannabis remains a Schedule I controlled substance under federal law, the federal government—including the United States Department of Justice—has been reluctant to prosecute criminal marijuana offenses in states that permit and regulate cannabis when the participants comply with state requirements.

While we cannot offer any assurances about how the federal government may choose to address federal legal violations, criminal prosecution and/or related asset forfeiture do not appear to be the most likely risks associated with cultivating and/or selling cannabis in compliance with state law.

To date, the federal government has generally elected to not bring related criminal charges, but it will not support criminal activity with federal services, funds, or programs, so there may be substantial collateral consequences to growing and/or distributing cannabis.

III.          The potential implications for farmers considering the cannabis marketplace are broad.

We do not attempt to address every potential collateral consequence of violating federal law by growing or distributing cannabis, but highlight some of the risks you should evaluate before participating in Vermont’s cannabis market.

If you grow cannabis, you may expect these potentially significant consequences:

• Ineligibility for federal programs, technical assistance, and/or benefits;

• Ineligibility for federal grants and/or state grant programs that utilize any federal money (like the recent CRF COVID relief grants), including programs the state provides in whole or in part;

• Ineligibility for federally funded conservation easements;

• Federal officials may be unwilling to enter or inspect your land to even evaluate whether you may be eligible for federal programs or aid; and/or

• Ineligibility for state services, programs, grants, or other funds because the state receives related federal assistance.

In addition, Vermont farmers who are considering entering the cannabis market should evaluate other potential implications, including but not limited to the following issues:

• Cannabis may not be grown, stored, or handled on federally funded conservation easement land, including leased or purchased conserved farmland;

• Farmland may not be enrolled in a federally funded farmland conservation program if a farmer cultivates cannabis, even on a distinct parcel not being evaluated for conservation;

• You may be ineligible for federal crop insurance for all crops;

• You may be ineligible for all AAFM administered financial water quality assistance programs (including BMP, CREP, EQIP) and technical assistance;

• You may be ineligible for Natural Resources Conservation Service (NRCS) Agricultural Management Assistance programs (high tunnel and irrigation financial assistance);

• You may lose access to migrant labor through the H2-A program;

• You may risk access to federally backed loans or mortgages;

• You may have difficulty securing banking services because of federal money laundering prohibitions;

• You may not be able to deduct your business expenses from your federal income taxes because businesses that are considered criminal enterprises are required to pay taxes but may not deduct expenses;

• You may be ineligible for federal bankruptcy protections;

• Immigrant workers may face deportation for drug offenses; and/or

• Federal grant recipients are subject to the Drug Free Workplace Act, which prohibits drugs (including cannabis) in the workplace.

The key takeaway is that using, possessing, growing, and/or distributing marijuana is still a federal crime.  Because of that fundamental conflict between state and federal law, there may be serious collateral consequences to producing cannabis in Vermont.

There is no entirely legal path to producing cannabis in Vermont, but there are important factors to consider, and you may be able to substantially minimize your exposure or potential risks.  AAFM cannot provide legal advice to anyone who is considering producing cannabis, but we strongly encourage all farmers to carefully consult with a private attorney when evaluating whether to enter the cannabis market and/or how to operate within it.