VERMONT — In 2024, Vermont’s homegrown cannabis industry raised $21 million through the state’s excise tax on sales, but these days, retailers are running out of shelf space.

After three years of study growth, the State of Vermont has shut the door — temporarily — on new dispensaries.

So, what is a cannabis grower to do?

“It’s like betting on a horse,” Emerald Visions business owner Nick Smith said from his facility in Alburgh. “You’ve got to bet on what you think is stable, but nothing is stable in the industry.” 

Since Vermont first started regulating its fledgling cannabis industry, there’s been steady growth for those who have been able to get their feet in the door, but the competition has been fierce as savvy business people and national players in the industry have tried to widen the market. 

Not everyone in Vermont, however, is on board.

“The stigma around cannabis is still very real,” Cannabis Control Board Chair James Pepper said. “It has a risk profile similar to cocaine, according to the federal government, so it’s not an irrational fear for someone who hasn’t consumed cannabis in the last 30 years.”

Is cannabis on its way to mainstream? These days, the answer is only getting more complicated in Vermont.

Diversification

Pop your head into one of Vermont’s 110 dispensaries, and you’ll quickly notice how no one location looks quite like another. The ever-expanding selection makes it clear the industry is quickly diversifying around product-type and consumer experience.

“The one thing that we wanted to focus on is being welcoming, approachable and inviting to people who might not identify as a traditional cannabis consumer,” Rev Baker, marketing director at Lake Effect Vermont, said. “We’re not a college dispensary. We’re serving mature adults who want good information and good products.”

Inside the South Hero shop, Lake Effect is open, bright and inviting, in line with a lakeside getaway, or beachhouse, topped with a retro vibe.

“It’s not too sterile, but it’s not that weedbro idea,” Baker said.

But that’s just one approach, Baker said. In the last few years, the cannabis industry across the United States has found success expanding on its earlier stoner vibe — popularly effused by  comedian duo Cheech N’ Chong, as well as Shaggy and Scooby Doo — to turn the cannabis “lifestyle” into something a little different.

“I think a lot of brands are finding their voice now,” Baker said. “The market is maturing quickly and will continue to mature. One nice thing in Vermont, with my experience in craft beer, is that Vermonters care about what’s behind the product.”

One big emerging consumer group for the product, too, are categorized as “female powershoppers.” This demographic group might be hesitant about entering a dark, dingy dispensary, Baker said, but they’re still curious enough about the product to give a try if they could access it via another way due to cannabis’ associated health benefits.

For that reason, many cannabis brands these days espouse the plant’s medicinal benefits for people with anxiety, or as a homeopathic solution for other health issues.

“It’s not the product. It’s the environment. It’s the culture. How do we recreate that sort of environment with a dispensary so that people feel comfortable coming in,” Baker said. 

In St. Albans, X-Tract Vermont’s Rosie’s brand is one part of that larger effort to help women feel more comfortable about cannabis. The company recently released a Lemon Cherry Lip Gloss vape cartridge that looks similar to a lipstick tube, and part of their mission is to destigmatize cannabis consumption — particularly for women.

Some brands, too, are trying to rebrand the smoking experience altogether, as an equivalency to enjoying a glass of wine. 

Smith said a few companies have found success in Vermont’s cannabis markets on such branding alone. These businesses will purchase cannabis in Vermont and re-package it in party packs with smaller easily consumable joints, to play up the experiential side of smoking outside with a group.

Smith’s business Emerald Visions, however, avoids the approach. While there’s a certain taste profile associated with smoking, the levels of nuance aren’t really there with combustibles, in comparison to something like wine, he said. 

Instead, there’s already plenty of complexity involved with cannabis shopping without having to split hairs around taste, Smith said. For some in Vermont, the next big change in the market is expected to focus on how cannabis works.

“It’s all dependent on the terpene profile,” he said.

High potency, low costs

Smith said his indoor cultivation business Emerald Visions — located in Alburgh — has been able to find success as one of the state’s most recognizable brands for a few reasons.

But one of the biggest is his knowledge of Vermont’s market. He’s put a lot of miles driving around to every dispensary in Vermont to talk to people about what they’re experiencing, and he’s changed his operations accordingly to match what folks want.

And so far, many customers in Vermont seem to be seeking out sativas (the categorization for uplifting strains). They appreciate a wide range of options, and they often ask for the highest potency at the cheapest prices.

“A lot of retailers try their hardest to educate the consumer about what’s important, but when they’re done talking, they ask ‘What’s your highest THC?’” Smith said.

Instead, he’d like to see customers talking a little bit more about terpenes. The chemicals are responsible for many of the cannabis plant’s effects on people, and each strain grown has a different mix of the various chemical types.

A full explanation of each terpene-type and its associated effect, however, wouldn’t be able to fit in this article.

“It can be overwhelming presenting really technical knowledge and words they aren’t familiar with,” Baker said. “You can see people get that blank look. So finding a balance is important.”

A few cannabis businesses have tried to simplify that conversation, rolling out various color- or naming- schemes to help consumers better engage with such in-depth information, but it’s often an uphill battle for many.

Baker said it’s often much easier for the alcohol industry, where drinking too much often has the same effect on people no matter if it’s liquor or light beer being served. In comparison, you can’t really tell people buying cannabis the same thing — as some users might get happy and elevated if they smoke a certain strain, while others might get overly anxious, or maybe just fall asleep due to a low tolerance.

The combination of various factors makes it difficult to connect new people to the industry, although it can be an opportunity for the right company and brand willing to go through the effort.

Baker said Lake Effect puts some of its focus on educating the consumer for that reason. Most cannabis consumers know the differing points between a sativa, or indica, and they need someone to help them take that next stop of finding that particular strain, or terpene, that they like best — in the same way someone might start drinking a particular style of IPA, after recognizing that they like beer.

“The consumer is getting more savvy and picking up on the terminology, but that part will take longer because cannabis is a complex plant with hundreds of active compounds,” Baker said.

Regulating and legislating

As companies try to bring in new customers by changing the wider cannabis culture and local brands create loyalty via education, the State of Vermont has tried to walk a fine line to allow the industry to grow, while making sure it doesn’t cause too much damage.

The state’s primary concerns, as explained by the Cannabis Control Board Chair James Pepper, are to stop underage people from using the drug, while keeping down overuse. For that reason, a number of regulations have made sure Vermont’s cannabis industry doesn’t use packaging, or advertising, that appeals to kids.

Under the state’s rules, the CCB is required to give pre-approval to any consumer product on Vermont’s store shelves, and Pepper said edible products that look like typical candies, or brands that lean on child entertainers, characters or influencers are usually a no-go. 

“We really try to focus on products that are advertised to a very young demographics,” Pepper said.

The state also restricts how dispensaries look from the street, as there’s evidence that a concentration of retail places advertising drugs often lead to a higher usage rate for those in the area, including for children.

Cannabis advocates, however, will argue the industry is being unfairly targeted. Pepper said he’s heard from many who say the state’s laws are overly restrictive while other businesses — especially those in the alcohol and tobacco industries — have much freer reign. Advertising for alcohol, for example, is a regular feature of Vermont’s hypercharged brewery industry.

“That’s a point of contention,” Pepper said. “A lot of people would like to have a row of the product in the window display so you can know what’s on display.”

With that said, it seems a few changes are coming down the line. On Thursday, FLORA  Cannabis in Middlebury released the settlement agreement made up after the company filed a lawsuit challenging some of the CCB’s regulatory procedures, essentially loosening up some of the more onerous rules around advertising.

A more substantial change, however, would require legislative authority, Pepper said, and there doesn’t seem to be much support in the House.

Instead, there’s a possibility the legislature reverses any and all momentum, essentially nixing Vermont’s cannabis industry altogether.

It’s a route that Smith said could still happen three years down the line. Support for cannabis has eroded in some places like Massachusetts, and the federal government shows no signs of making any positive moves toward cannabis.

In one future scenario, loosening up Vermont’s laws so there are more users could even create extended pushback against the industry. As Smith noted, many of the restrictions put in place against Vermont’s cannabis industry happened because of the influence of special interest groups and experts that the House leans on extensively. While the industry’s growth has helped create jobs for people like Smith and Baker, the public health experts and municipal representation making recommendations against the industry still have legislators’ ears due to their lobbyist networks.

And there’s also a very large group of taxpayers in Vermont who would never see a cannabis leaf silhouette anywhere if they could help it.

Pepper said one of the first drafts for regulating the cannabis industry would have made all advertising illegal, but Vermont’s Attorney General stepped in to remind folks that you can’t stop people from speaking completely, thanks to the 1st Amendment.

“It is really tricky with advertising,” Baker said. “If you talk to some cannabis companies, they’ll say it’s impossible, but we don’t feel that way. There are ways to do it, and you have to be creative in the approach.”