Out of State Tourists Can Fund VT Cannabis Industry (Today)

[Original Commentary - Eli Harrington - Thursday, February 18, 2016]

There’s no debate or doubt as to the economic potential of cannabis markets.  None.  Skeptics can confirm that Forbes recently reported “U.S. adult-use marijuana sales rose 184% in the past year,” with the market for legal cannabis in 2016 projected to be $5.4 BILLION.  

For some, this might not be the most compelling reason to reform our cannabis laws in 2016, especially since the legislature first has to find the funds to take even preliminary steps on the very conservative bill being proposed.  As VTDigger reported Tuesday, “Early estimates peg the cost at $2.2 million in fiscal year 2018, the first year the law would go into effect. The annualized cost of implementation could run as high as $12 million.”

Want to apply for a cultivation license? Nonrefundable application fees start at $15,000.00 via S.241 draft 6.1 passed by Senate Finance Committee on 2/12/16

Want to apply for a cultivation license? Nonrefundable application fees start at $15,000.00 via S.241 draft 6.1 passed by Senate Finance Committee on 2/12/16

The current proposal certainly does its part to raise the revenue through licenses on the future cannabis-nesses themselves, charging $15,000 to apply for even the smallest legal cultivation license – ya know, for the little guys.  Would-be Vermont (or DBA Vermont) ganjapreneurs will be plenty challenged financially by things like coding, zoning, crop failures, and spider mites, so policy-makers should be thinking hard about how to reduce the price for Vermont cannabiz to play.

Since we’ve got to raise funds to help with the start up costs from somewhere, let’s stay true to our Woodchuck roots and think more about how we can raise money from out-of-state tourists instead of our neighbors.  To that end, I would like to propose that we consider mandating and selling a consumer license that non-Vermont residents must present in order to purchase cannabis; furthermore, that if passed, this sale begin in 2016 in order to fund the start up costs associated with regulating cannabis in Vermont.

Imagine that (whenever/however/wherever it’s legal for adults to purchase cannabis in Vermont) in order to purchase cannabis, every non-Vermont resident will be legally required to present a special “VT Ganja Pass” at the point of sale.  The concept is that you’ve got to pay the cover charge to get into the club before you can buy a drink, or secure (purchase) a visa to travel to (some) other countries. 

The VT Ganja Pass itself is something that could be purchased in person for $10 a person at any store in Vermont that sells alcohol.  Regardless of size, these existing stores and employees would already be equipped to make sure customers are 21+.  Alternatively, a card could be purchased online, in which case, the consumer would show the printed voucher at the register and still have an ID checked in person before being given a card.

green photo id sign

Because any existing Vermont retailer who can check an ID can participate, out-of-state cannabis consumers would necessarily spread some of their spending around the state, even without the stores or communities that sell the cards themselves being anywhere near a cannabis product, production, or advertisement.  Buy the Ganja Pass when you pick up yourVermont beer and groceries in Bennington, then stop at the Manchester roundabout to visit the hypothetical cannabis retail outlet, where it’s scanned. You purchase a few pre-rolled joints and a medicated maple bar, then head out on your way to the ski house near [Vermont Ski Resort].

Instead of storing value like a gift card, VT Ganja Pass would track amount of cannabis purchased and serve as an ID displaying gender and home state...check out what Cannacash is doing in Colorado online here...

Instead of storing value like a gift card, VT Ganja Pass would track amount of cannabis purchased and serve as an ID displaying gender and home state...check out what Cannacash is doing in Colorado online here...

When they receive the physical card, the consumer would get a (stylistic, Vermont-y) scannable, recyclable card with their age and state of origin.  Purchasing the card wouldn’t collect or display a specific name or address, but a consumer’s age, gender (however described), and state of residency are useful initial data points and would be saved in a database and displayed on the card itself.

 

At the point of cannabis sale (lounges or retail), employees would only need to be familiar with one VT Ganja Pass, rather than 50 states of potential fake IDs, thereby reducing the likelihood of selling to underage consumers and training for budtenders.  With minimal technical requirements, at the point of sale, when a VT budtender would scan a VT Ganja Pass, he/she would also see the card’s purchase history and how close it was to the out-of-state purchase limit of x grams.

The VT Ganja Pass could expire after 3/5/7 days, meaning that a new card would be purchased every separate VT trip that cannabis is purchased...

The VT Ganja Pass could expire after 3/5/7 days, meaning that a new card would be purchased every separate VT trip that cannabis is purchased...

Because one card is tied to one individual and tracks his/her maximum purchase, the VT Ganja Pass would also help limit the amount of cannabis that a single consumer can purchase, a key provision in satisfying the Cole Memo’s requirement to limit dispersion of legal cannabis into neighboring states. 

Could someone cheat and go buy another card somewhere for $10?  Sure, but there will only be so many retail outlets for purchasing cannabis and only so many tourists who want to purchase extra cannabis badly enough to pay the extra $10 and exert the effort to secure an extra card. 

Ever heard of Kickstarter?  Crowdfunding is increasingly popular for start-up businesses, films, and events...

Ever heard of Kickstarter?  Crowdfunding is increasingly popular for start-up businesses, films, and events...

The crowd-funding twist on all of this – I am technically a Millennial – is that we don’t need to wait until there are actual cannabis retail outlets operating in Vermont in order to start selling the VT Ganja Pass.  Call me crazy, but if the online purchase of a future physical VT Ganja Pass card (which would still be picked up in Vermont in person when available in 2018), were available online for $10 each with only one available online per IP address, I could imagine raising anywhere from $1M - $10M in a very short period of time.

In addition to raising funds, the attention from an online sale of the cards themselves would also provide insight into the regional cannabis tourism market (who would travel to VT) and the overall size of the regional cannabis market.  Again, the lack of reliable data has been a hindrance to policy makers, so our ongoing policy discussion would benefit from knowing if the tourist demand is closer to 10 tons or 100 tons.

As a promotion, the VT Ganja Pass might even inspire a few more tourists in 2016...

As a promotion, the VT Ganja Pass might even inspire a few more tourists in 2016...

The VT Ganja Pass program would undoubtedly be a huge marketing promotion for Vermont right now, and maybe even inspire folks to visit VT now during a dismal winter tourism season.  If – uh oh – the promotion went viral and cards were vastly oversold, each one is still only limited to a ¼ oz (7g), and is only activated in person in Vermont with the presentation of a legitimate 21+ ID.

If this kind of program contributes even $1000 to offsetting costs of taxing and regulating cannabis, it’s all net profit for the state coffers.  Ideally, those revenues – taxing at point of sale is still not a bad idea – would be shifted to infrastructure to help maintain our roads for the benefit of Vermonters and the tourists that help fund our economy.

Reforming our cannabis laws is obviously no simple process and for both seasoned advocates and green Millennials, it's too easy to overlook broader concerns that to us, seem obvious--like how we pay to start whatever might pass without cannabis revenues.  However, with this and other cannabis policy challenges, the biggest limitations are self-imposed.

To harness the potential of cannabis in Vermont in a way that most fits our principles and truly represents the will of our people, we not only need more innovative input from creative citizen advocates, but the leadership and vision to consider bold ideas.  If that means kick-starting a theoretical cannabis consumer ID card to pay for implementation and reduce the financial burden on Vermonters, why not think outside the box?

Eli Harrington is a native Vermonter and the founder of Vermontijuana.

Special thanks to Monica Donovan for editing support!