Okay, great. Well, my name is James Pemper. I'm the chair of the Vermont Cannabis Control Board. Today is October 15th, 2021. It's 11 a.m. and I will call this meeting to order. So just my most pressing announcement today is just that the advisory subcommittee process that we started back in early September with each of the six subcommittees meeting twice per week is coming to a natural conclusion. You know, their input and recommendations have been invaluable. They've really given us a roadmap for the next phase of our work. I'd like to remind everyone that the advisory committee members have been either volunteering their time or doing this work in addition to their day jobs. So I just have to thank all of them for their tremendous commitment and service that they provided us as well as the state at this very critical moment. I think the majority of them are going to hold their final meetings next week. We will still call the full advisory committee together before our major milestones and we still may need to call the subcommittees together on a more ad hoc basis as issues arise. But really, you know, the granularity of the decisions that the board needs to make and the pace that we need to make them means that we just are inevitably going to have to move faster than their process has taken historically. So this wind down really is going to coincide with a ramp up of board meetings. Bryn has given each of us assignments on kind of specific decision points. We need to do our own research on our own time and bring recommendations to the full board at our board meetings. I think starting next week, we'll likely be holding longer meetings and then following that potentially multiple meetings per week. And you know, with respect to the open meeting laws, we intend to continue with the same process we've been following since our inception. With respect to posting agendas, public comment, our physical space will likely continue to be our office at 89 Main Street in Montpelier. We'll continue to live stream the meetings as well as record them. And we as a board will continue to hold our after hours public comment meetings on the last Tuesday of each month, at least through the end of the year. Whenever a advisory committee meeting or subcommittee meeting is going to occur, we'll try and announce it in advance at our board meetings. We'll also post it to our website and keep that up to date with those meetings. And on that note, I'm going to call a meeting of our exploratory subcommittee next Wednesday at 2 p.m. to discuss some of the issues that we need to report back on to the legislature for our November one reporting requirement. This is around whether concentrates above 60% should be permissible to make to put into non prohibited products. And whether we should allow conversion of CBD into Delta nine, THC, and then also some recommendations around the future of the marijuana for symptom relief oversight committee. So I think one thing I wanted to note is that we've had some glitches on our website. I think this is kind of a back issue that's been addressed. We lost some data and some of the work that we have been posting to the website has fallen into a digital black hole. But so I think if anyone from the public has made a public comment since Nellie, do you have the date? Yeah, October 7th. Sorry. Okay, so if anyone from the public has made a public comment since October 7th, I think that those will not be reflected on our website. So I would encourage anyone who wants to comment or may have made a comment during that period to repost those public comments. I think that's it for administrative details. Unless Julie Kyle, you have anything you'd like to add? We're good. Great. Okay. Well, then before we turn to the agenda, Julian Kyle, you had a chance to review the minutes from our meeting last Friday, 10, 8, 21. Yes. Yes. Okay. Could I have a motion to approve those? Second. All in favor? Hi. Hi. Okay. So today, turning to the agenda, you know, last week we voted on our market and fee structure and our social equity applicant criteria. Today, I'd like Bryn, if you could, to review our report so that we can finalize that and submit it to the legislature later today. Sure thing. So I'm going to share my screen. So the report is going to come up on the screen here in a minute. Okay. We're going to try this again. Hold on. Not a good week for tech. Let me take it out of. Okay. That didn't work either. Try and pull it up on yours. Yeah. Okay. We're going to try and connect to different computers since this one isn't working. Okay. So this is a report that the full advisory committee took a look at on Wednesday of this week. So the board is just going to take a final pass through and vote to approve it so we can send it to the required legislative committees that are expecting it, which is the House Committee on Ways and Means, Senate Committee on Finance and both the House and Senate committees on government operations. So as a reminder, this is our report on the board's recommended fee structure and licensing structure. And also, that was due on October 1st, but we took a, we had a two-week delay on that. So we're submitting it in conjunction with our report on the social equity applicant criteria. So that's what's covered in this report. And I'm just going to go through these slides relatively quickly since the board has seen them and also the public has had the opportunity to review them at the advisory committee meeting. So this is an overview of what is contained in the report. It starts with a background on the process that the board is undertaken to reach these recommendations. Then it goes through the market analysis that was done by our consultants. Then it gets into the recommendations on the licensing structure and the associated fees. And then we get to the cost, the revenue, and the tax portion. And then it ends with the local fee portion. So as mentioned, it starts with kind of an overview of the process that the board has undertaken, including its advisory committee and its associated subcommittees. The work it's done with, the board's done with the consultants that we've retained. And then the requirements that are in the legislation for the board to report on and also our public comment process. Here you all are. And then here is the list of our 14 member advisory committee that is required in the legislation to assist the board in its work to develop the regulated market. Here is a list of the subcommittees that the advisory committee split into for it to do its work. Here are our consultants. And then this is the portion of Act 62 that describes the requirements for this report. I'm not going to read it, but essentially it sets out those requirements as the board is directed to come up with a fee structure that's accompanied with information that's justifying those fees and the associated licensing structure. And it also includes that the board has to come up with local fee recommendations as well. So this is a summary of the process the board has undertaken to solicit and receive public comments and a summary of the of the public engagement that has been going on since the board undertook its work in May, starting in May. So we've got 16 full board meetings, two full advisory committee meetings, 50 subcommittee meetings, and to date we've received more than 100 substantive comments from the public. Okay, here's the market analysis slides. I am not going to speak about the market analysis in depth, but we have been able to engage with our consultant in many public meetings to review the supply and demand model. So all of those meetings have been recorded and posted on our website. This is the purpose of the supply and demand model. It was we solicited this model from our consultant to determine the annual and seasonal demand for cannabis in the Vermont marketplace and to as correlated to that demand to figure out what what the total square feet of cultivation and production volume would be to meet that demand and then to project the production timelines for indoor and outdoor grows to understand those seasonal trends and supply and demand. This is a summary of the sources of data that were used to determine what the market was going to look like. And then this chart shows an estimate of the number of cannabis consumers seasonally within the different categories that were assessed by the various data sources. So resident medical patients, resident adult use consumers, business and leisure tourists, and then border tourists. This is the slide that lays out the process that our consultants used to determine cannabis demand. The data that was used and how that data was used to create the model. This evaluates the two types of cultivation, the indoor and outdoor cultivation. And then we've got one picture of our supply and demand model which gives you a sense of how complex the model is. The next slide is about harvest and extraction yield. So this is again going into the details about how the model works to evaluate supply and demand based on square feet of flower and canopy. And then this is an analysis of the product production for the retail supply. Oops, sorry. The six primary product categories for harvested cannabis. Flower, pre-rolls, concentrates, vaporizer pens, edibles and topical products. This gives a sense of the demand for each of those categories of cannabis product. And then a total supply and demand chart for cannabis flower. And again, this chart is based on cultivation, what month it is, the harvest yield, extraction efficiency, and allocation of oil to manufactured products. So this is all based on the product category. So this is an analysis of the total cultivation required to meet the demand. And then indoor versus outdoor cultivation. And again, this is showing the difference between indoor and outdoor cultivation if 20% of that cultivation occurs outside what the square footage requirements would be. And if 50% is grown outside, it shows the different levels of the market based on those two different percentages. This is the chart showing the total projected sales for medical and adult use based on product type. And based on all of that market analysis, we move into our licensing recommendations. So we start out with the goals and objectives of the board's work in its licensing structure. And much of this is taken directly from the enabling legislation. So the goals are to promote sustainability, to promote an equitable and accessible industry. And we're doing this by encouraging outdoor cultivation when it's possible. And to include license types that are focused on providing access to small cultivators, individuals operating in the legacy market, and individuals from communities disproportionately impacted by harmful government policies, including cannabis prohibition. So here are the required license types. There are six of them, cultivators, product manufacturers, wholesalers, retailers, testing labs, and integrated licenses. And the board was required to come up with tiers for cultivators and retailers and have the option to tier other license types as well. Other statutory requirements listed here. So the board is directed to propose a plan for reducing or eliminating license fees for individuals that meet the social equity applicant criteria, which is defined as individuals from communities that have been historically disproportionately impacted by cannabis prohibition or directly and personally impacted by cannabis prohibition. So here are some other terms that are defined in statute, small cultivator, defined as a tier in the statute as a cultivator with a plant canopy or space for cultivating plants for breeding stock of not more than a thousand square feet. And then the definition of plant canopy as square foot is dedicated to live plant production does not include areas such as office space, areas used for storage of fertilizer, pesticides, or other products. So here are the initial license type recommendations. The board came up with six tiers for outdoor cultivation, six tiers for indoor cultivation, and one mixed tier with an indoor and outdoor component. Two tiers for retail licenses, two tiers for manufacturing licenses, and then a wholesaler testing lab and integrated license type as well. So here are the cultivation license tiers, indoor and outdoor. This is something that the board reviewed and voted on at your last board meeting last Friday. So you went up to six tiers for outdoor and six tiers for indoor with the caveat that the sixth tier for indoor is not going to be available initially. And if additional supply is needed, the board can allow existing cultivators to move up to that tier six category or the board may choose to just open up applications for indoor tier six at a later point. This slide talks about the mixed tier category. So this is the category that would allow a license holder to hold an indoor cultivation space of up to a thousand square feet. And in addition to that space, grow 50 plants up to 50 plants outdoors at the same license premise, which would give these license holders the flexibility to grow how they choose and to continue cultivating during the outdoor month or during the winter months. I'm going to move on to retail license tiers now. Again, this is something that you saw at your last board meeting on Friday. So the two tiers for retail are storefront retail and a nursery retail. And it describes the storefront as like a traditional retail location selling cannabis and cannabis products. And this tier may also sell what the nursery retail tier would be able to sell, which is seeds and clones to home cultivators or other licensees. I'm going to move on to the manufacturing license tiers now. So again, we've got two tiers here. Tier one would enable the licensee to process and manufacture um using allowable methods of extraction, which includes solvent based extraction. And tier two would provide that these these manufacturer types would be prohibited from using the more dangerous solvents in their extractions. And this is aimed at a lower cost license for businesses that want to make infused or processed cannabis products. And here are the last three license types integrated wholesale and testing. And then the board also discussed some potential future license types that may be available later on that could help build the cannabis industry in Vermont. And as discussed at the last board meeting, these are license types that would either need additional regulation or perhaps legislative authorization. And the board will continue talking about these and thinking more about these and we'll put something forward in January 15th in our reports of the legislature. But still going to continue the conversation on these other license types. And that's part of what the exploratory committee will likely discuss next week. And here is a list of those potential future license types. And for those members of the public that have been tuning into the subcommittee meetings, you've likely heard of several of these. So the co-op cultivation model, limited retail model, which would be an existing business having a having an area of the retail store that would be selling cannabis, a cottage manufacturing license tier, delivery tier, onsite consumption, temporary event retail tier, and then an entry level or reduced rate retail license. Bryn, do you want to pause for questions while you go? Yep. Or want to wait till the end? No, I can I'll pause here. You know, when I was reading through this, I just I couldn't tell the difference between the retail limited and then the bottom one, the entry level or reduced rate retail. To me, they seem like they they're not distinct from one another. I think that this has come up. I do think that you guys talked about this at your last board meeting. The limited limited retail license type versus a reduced rate retail. I did hear some conversation about this in the social equity subcommittee as well. I think this is just an idea that's been floated. And I'm not sure that any subcommittee has gotten into the details of the difference between these license types. Julie and Kyle, do you feel like we need to have both of those on there? I mean, essentially, these are non-existent license types. So I'm fine with leaving them both on there if we can kind of distinguish the difference between them. But I don't fully understand how how, you know, what the contours of each would be or how they would be separate. Well, it seems like there's there are two different options to meet the same goal, which is to have an entry level or a reduced fee or a lower barrier, I guess, is the word I'm searching for to get into the retail. To me, it seems like limited retail is really like a co-location, whereas the entry level retail might be just a smaller tier of retail. Yeah, that's kind of how I'm conceptualizing it right now. Again, recognizing that no committee has dug their teeth into this and it's something we could explore in the exploratory committee. But I kind of I see it helped Julie does, you know, retail limited as the nature of the business as a store within a store, essentially, and the reduced rate retail might just be a smaller dispensary. I don't want to say a farm stand necessarily, but something that's a little bit, you know, with security measures in mind, it's a little bit smaller than your traditional storefront dispensary that we think about when we talk about a dispensary, maybe with, you know, more restricted product allotments. Okay, I'm finally leaving it in and just kind of having that discussion at the appropriate time. Yeah, and I think I seem to recall like, you know, obviously we've talked about retail limited in the context of smaller communities that can't support a full dispensary themselves. And I think this entry level or reduced rate was kind of another option for more rural communities to stand up their own brick and mortar style store without having to attach themselves to a general store, you know, it's for an entrepreneur that it might have the means to have a little corner store, but not a full size grocery store, if that makes sense. Yeah, it seems like a smaller space is what that last one really addresses. Okay. And then how about the manufacturing cottage? Can we dig into that one just a little bit? This is essentially a small manufacturing that doesn't require kind of their kitchen to be inspected. Is that the idea? Um, I mean, I don't think we've gotten as far as in terms of compliance, whether or not the kitchen would be required to be inspected. I think the idea is that it's again another low barrier to entry, but a non professional kitchen. So it could be something that someone does in their home. I don't know off the top of my head what the Department of Public Health does now with that sort of small batch production. I don't necessarily know the public, you know, um, their role. But, you know, I see this as an option for folks who, you know, want to do a relatively easy manufacturing like, you know, producing bubble halves or something like that, that that's just a kind of a supplemental or add on to their existing cultivation license, so on and so forth. Or edibles, somebody who's who's producing edibles out of their home kitchen once or twice a year. But the difference between this and a tier two manufacturer would be that there would be just rest less regulation and possibly a smaller fee. Yes, production, lower production. Okay. Okay. Great. Well, I didn't, I don't want to, you know, pull this up on this. So just wanted to dig in on those two. But am I hearing that we're going to leave these in for now in the report as they're just describing potential future license types. I'll just remind the board that the last bullet on the previous slide provides that these are just considerations that the board is undertaking. They're likely not going to recommend all of them. But they are being considered. So you're putting them forward as ideas. Yeah, right. Okay. So I'll leave them there. I'll move on to the fee recommendations. So we're going to get into what the application and the licensing fee recommendations are now. The first slide in this section talks about the format of these recommendations. We're all familiar with the idea that we're going to be putting forward two proposals for fees for a fee structure. And this slide is a reminder that the directive to the board was to come up with a fee structure that covers the board's operating costs and to repay any appropriations that the board has received and will receive until the market gets up and running. So even with, you know, the budget that the board is operating with now with this, with the limited staff, given the fact that Vermont is a small state and has a relatively, we'll have a relatively small market covering all of the board's operating costs through fees alone is going to result in a fee structure that could be higher than other states when you're comparing licensing fees with the surrounding states and also could provide some barriers to entry, especially considering the directive to the board to create an equitable market and one that prioritizes the legacy market and small other small businesses. So we're putting forward our recommendations with two proposals. One that proposal a which would cover the board's costs and provide enough revenue to reimburse the state for the initial appropriations that the state is given to the board to operate. Again, this proposal is going to be higher relatively than our surrounding states and also could potentially keep prospective people who would like to join the marketplace out of the market. And there's a little asterisk there that links to a state by state listing of licensing fees for those who are interested in looking what other states are using for fees. And then proposal B, this is the one that was designed to balance the goals of generating sufficient fee revenue with providing low-cost entry into the market for many different license types and keeping our fees competitive with our neighboring states. So proposal B contemplates that some of the tax revenue would need to be directed to the board to cover operating expenses and we'll talk about that more later. So starting with the application fee recommendations set forth here on the right proposal A, proposal B, these are both the same for both proposals. So as the board is discussed there's a two-part licensing process where a potential applicant can file an initial intent to apply early on in their process and that would allow the applicant to meet some of the criteria, determine whether they meet some of the criteria before they file an application for a licensing for a license. And then we've got some of the benefits for this two-part process listed here below, gives the board an early sense of demand and allows applicants to get their kind of an early approval from the regulatory body before they have to go into the more detailed part of their business planning, allows the state to collect a portion of the application fee earlier on in the process and it's a relatively low cost first step for an entrepreneur before they evaluate the viability of their plan. So here are the license fee recommendations for outdoor cultivation and the mixed-tier license type. Board reviewed this at your last Friday meeting, proposal A as you can see, higher than proposal B. Since you reviewed these at your last meeting I'm not going to go through them one by one so please jump in if you want to discuss any of these fees. Next is our indoor cultivation fee proposals. None of this has changed from your meeting last week. Moving on to retail. Proposal B is about half for the storefront and a quarter for the Seas and Clones retail type. Here are the manufacturing fees. Again this is all the same as what you looked at last Friday. And lastly the other fee types. So the local processing fee, you did have some discussion of this at your Friday board meeting. You decided to keep the $100 cap on the local fee but you added that the municipality could either set its own fee as long as it didn't exceed that $100 cap or that they could be required to follow the uniform charges schedule that set forth in statute to expand that one a little bit. And then you set a cap at the employee registration fee of $100 maximum. I'm going to move on unless we've got questions. So here are the social equity fee reduction recommendations. This was also, so this has been discussed in the social equity subcommittee. The recommendation here is to waive application fees and then the license fees should be waived. I've got a typo there in the second bullet. In the first year and then reduced by 25% for each following year. So for the first four years there would be a reduction in the license fee and then in the fifth year there would be an expectation that the app that the licensee would pay the full license fee. I'm going to pause here to see if there's some discussion on this point. So Julie this is the recommendation from the social equity subcommittee. Yes. Yes they have and I'm not sure if it's on another slide but they also recommended that there be an option to waive fees for the second and third year if someone's struggling financially and that we would have to design a system for that. Nope that's not in this report. Okay. You know I don't really have a problem with this structure but I do think that until we have the kind of full picture laid out I don't think that it really needs to be included in this report. You know I think there are some supplemental considerations around you know what if a social equity applicant transfers their business ownership to a non-social equity business and what that would mean and I think that there are some considerations around you know day to day operations and what the kind of social equity applicant what their involvement in the business needs to be in order to meet this criteria or to meet these privileges. I think that it's important for the legislature to understand that we want to waive and reduce fees for social equity applicants because I think that ties into the fee structure and I think they need to approve that kind of dynamic but I'm not sure I feel comfortable including this much specificity on this without really kind of digging in with you as the board unless we want to do it here today. The this this piece of it without those other pieces included. I don't know there's part of me that feels like this is part of that picture. You know we I think it's just the definition of social equity applicant that's required of us by today but I think if they're looking at the fees and particularly if they're comparing that proposal A and proposal B it may be helpful for the legislature to understand that there could be significant fees that are waived or reduced as well and and consider that as part of the full financial picture. I don't know what do you. You know I I think you know I agree with Julie there's so much still that we work that we have to do and understanding how ownership transfers will happen how to gauge whether or not somebody is being successful and we should waive additional fees all that is still work that we you know plan to do and engage with with the public. I certainly understand your perspective to Pepper you know I could see us going either way I know that's not helpful but you know it's just hoping the legislature understand how we intend to help social equity applicants recognizing that we're we still got a lot of work to do to ensure the you know nobody's taking advantage the wrong way of our of our program you know those doubles that that double be in the details I think it wouldn't hurt to for the legislature to see how we intend to waive and reduce fees moving forward though. Perhaps we need to note that this is only a piece of that full program but I I do think it would be helpful for the understanding of the full financial picture of the board and the work that we've been doing and where our social equity programs could go. Yeah I mean I my my concern really is is if we are recommending this and it's a one piece of the more complete picture around ownership and transferability that this might change and that's that's my concern about putting this out there and voting on this as a package because it feels like we're kind of saying that this is the benefit everyone that everyone who's watching should expect and I haven't fully you know thought through the the kind of other aspects of this and you know I also would note that I fully expect to support having some sort of reduced fees for kind of the economic empowerment is how Massachusetts refers to them economic empowerment applicants who you know have some who meet some sort of income based criteria or socioeconomic criteria and I don't I don't know what those are going to look like either at this point so I think it's important from my perspective it's important that the legislature know that we intend to reduce or waive fees for social equity applicants and these I'm just going to call them economic empowerment applicants as well but I I don't know if I can vote in favor and I'm happy to be overruled on this of including this this specific this level of specificity at this time I understand what you're saying and if we can ensure that we can provide the legislature generally that we intend to waive and reduce fees for you know folks that you just mentioned I'd be okay with taking out the specificity recognizing we've still got to you know take some take some steps to make sure that we can achieve these one year one through year five goals I just want to make sure that they know what our intent generally is and will be I agree with that I think again my only reservation is that it doesn't give the legislature the full financial picture so if we're asking them to weigh the difference between proposal a and proposal b for fees they may need to consider how you know that there will be you know significant fee waivers and that's part of the if I were if I were considering our budget that would be something I want to know to consider yeah I mean the I I agree with that Julie and I think that we will have a fully waived fee but we also have no idea how many social equity applicants there are going to be you know we've removed residency requirements so you know literally anyone from around the country could come into Vermont and get a license so we just really don't know you know what the scope of this is going to be I mean I think we could just mention to the legislature we intend to waive fees for social equity equity applicants and have reduced fees in future years you know and that will impact you know the amount it will impact kind of both proposal a and proposal b it'll have kind of profound impacts on on both of those so putting that in there and Lou of what's on this line would be helpful I think yeah I would be comfortable with that I just want to make sure that that your point is as mentioned here yeah just as a reminder to the board you do have a specific directive in Act 62 to propose a plan for reducing or eliminating licensing fees for individuals from communities that have been historically disproportionately impacted so that meet that definition for social equity applicant is that bring is that is that a requirement of this report or is that or it's a requirement of this report it needs to be submitted along with the recommended fees for licenses well that maybe changes my mind I wasn't sure that that that was part of that if if we have to submit the plan for waiving fees and reducing fees as part of this report then maybe we do need to include this slide so yes I mean if that's part of the this report then we would need to include this slide I think that it's you can you can still change the slide though if if the discussion is that is about the policy of how you waive how you create these fee waivers the slide can be changed but I do think you have to have a plan you know I I know that the subcommittees did a lot of work on this and I wouldn't suppose that I wouldn't want to overrule that work you know I I think this is a good plan and I think it's pretty much in line Julie was this kind of in line with some of the other social equity programs or benefits from Massachusetts and other states we reviewed all those I would say that waiving and reducing fees was in line with what other states are doing but this this was specific to the discussion of our social equity subcommittee and the input that we received so I mean the definition that the subcommittee came up with it's not necessarily the same definition across other states yeah I don't want to overrule the work of the of the subcommittee either and kind of feel like last minute we're scrambling to change things because we recognize recognize it needed to be in a report today I mean I'm comfortable with this I I certainly recognize your concerns with kind of putting the cart for the horse if we can't figure out how to make it work in practice but I think this is this is an awesome plan that will help folks grow so you know I was when I first read this you know I thought back and I actually rewatched the our kind of meeting that we did with Bo Kilmer and Shalene title and both of them mentioned this a point that kind of just came to mind maybe it's unrelated but you know one of the you know the point that they made is one of the worst things that we can do for social equity is to have a lot of social equity applicants that are relying on their kind of friends and families for putting together capital and then having their businesses fail in year one and year two and that people will be actually in a worse position than when they started and the advice from them was to ensure that we have a very robust system of technical and business support to help social equity applicants and all applicants that need the kind of assistance and business management and technical assistance and support throughout their business as they scale up so you know I try and think back to kind of some of the lessons learned from our hemp industry in Vermont where we had you know very small fees to entry to enter 25 dollars and you know a lot of people thought that this was going to be kind of a really big you know economic benefit and a lot of people I think got burned when the market reality kind of came came together and so you know I don't want to be overly prescriptive as you know regulators as to trying to you know suggest that you know we know any better than kind of the traditional market forces what businesses are going to succeed and what or not but you know I feel like a lot of these concerns like keep rolling around in my head if we have you know fully waived fees in year one and is that going to kind of lead to people wanting to enter this market that aren't prepared to kind of understand the costs and the kind of compliance so that was just a concern that that went through my head when I was looking at this but you know fundamentally if that if that was a concern that was discussed in the subcommittee and the recommendation you know is still you know remain the same or it was at least considered then I really I guess don't have a problem with with accepting this fee structure I think it's kind of I think it's important to remember the context of the wage fees like these are just our fees that are being waived so if somebody wants to start a business they will still have to pay the local zoning fees I mean the only the local cannabis fee is what's waived or reduced here too so if they're building out a structure they're going to have to pay for all the construction costs the local fees or the zoning fees whatever security requirements this is really meant to make it easier for someone who is prepared to handle all of those things enter the market so that's the way I have thought about this it doesn't waive all of the fees or costs of starting a new business all right well um I'm I'm happy to leave this slide in here then and submit it with with this included then I'm going to move on from the social equity fee slide and go to the wrap-up slide for this section which is talking about the board's recommendation that the legislature adopt proposal B for the fee structure and the rationale for that recommendation so the slide talks about the market the development of the market is going to depend very much on the the fee structure and most states do rely on some of the revenue from taxes to cover the cost of their regulatory obligations so using some of that tax revenue is going to lessen the burden on licensees and Vermont and will also in turn benefit consumers and the small operators in the industry so lowering fees is going to invite more applications and license and license fees and it's also going to encourage um like the legacy market to join the regulated market and we've also got a note here that proposal B will likely close the projected revenue gap by encouraging the number of licenses to end up closer to a more robust dynamic than the more limited dynamic and those are slides that come a little bit later in the report so we'll see those shortly also provides that future license types could bring in additional revenue so just another note to the legislature that there may be recommendations for additional license types in the future and then a note that the board may institute a sliding scale as you were just discussing to help low-income applicants and create opportunities for all of our monitors to benefit from the market so just a note for the legislature that though this is our fee structure there may be additional fee waivers that are going to come once you've developed your rules so next we're going to go into the budget projections the revenue projections and some of the dynamics that I was talking about in that last slide and then our justifications for the two different fee proposals so this slide talks about the projected budget for for the board moving forward so projected budget for fiscal year 23 is a little over 2.7 million um there's a note here that the fiscal note for um s54 that was done in 2019 contemplated two staff members for the board um and that fiscal note projected a 1.8 million deficit by the end of fiscal year 24 so factoring in inflation other cost variables um we believe that if the board can bring in an annual fee revenue um plus prorated one-time fee revenue of at least 2.8 million by fy 25 the fees would be on track to cover costs and pay off um the deficit that the board is accumulated in the appropriations within 10 years um a note here that the projected budget contemplates significantly more staff than the board currently has um 11 new positions which would be an enforcement team a licensing team a financial manager and then a data and information project manager and then we're going to move on to the scenarios for the number of applications and as we've noted in this conversation there's quite a bit of uncertainty about how many applications the board is going to receive when we open up those windows to apply um the statistics that our consultants generated came from states that are comparable to Vermont and they came up with three dynamic scenarios to understand what the different licensing ranges could look like for the two different proposals so as discussed earlier those fee costs um under proposal a and proposal b could affect the amount of interest that we get for licenses and you know it's possible that the proposal a fees could discourage applications and lower the total revenue projections so here are those projections under three different dynamics as you can see the dynamic one contemplates quite a bit of interest dynamic two is sort of in the middle and then dynamic three um contemplates less interest in application licenses and then here are the so this was for cultivation this is for the retail manufacturing and the other license types so you see um similar contemplation here for a great demand an intermediate demand and a lower demand and then here are the revenue projections um under those three dynamics for both fee proposals so you can see um that dynamic three with contemplates um a much reduced amount of revenue um dynamic two is where our consultants think that we're going to land this is the most likely scenario according to our consultants um but there is a note that if the proposal a is adopted then the estimated license totals are likely going to move the picture closer to dynamic three with the lower revenue so this is um language that comes from the from existing law that provides for how fees are justified so we've got our justification for proposal a so um these the justification for this proposal a fee schedule um is essentially to cover the operating costs for the board um you know as discussed in the earlier slides we estimated our our the revenue needed to operate the regulatory body and estimated the number of licenses across those dynamic demand dynamics and then developed a fee schedule based on um the estimates for covering our costs so again a note that these fees and proposal a are significantly higher for many license types than in comparable markets justification for proposal b which is the recommendation made in the report um is based primarily on promoting market access and not on covered operating costs but also um it's recommended because it uh is likely to generate a significant annual revenue so we've got um the fees are are comparable to the fees in the similar jurisdictions and which we've noted um in previous slide or actually in future slides we'll get to those in a minute um and then a note that those fees are unlikely to cover the operating costs of the board um but they're much more likely to foster the kind of marketplace uh that we'd like to see a diverse and equitable market which is a requirement of our enabling legislation as well and with adequate supply to meet the demand um high fees and proposal a create a risk that the full market will not develop and that most supply and sales will run in the legacy market so a note too at the end that um regarding having some of the tax revenue um come to the board to cover operating expenses um is that all participate participants in this market especially the consumers are going to benefit from the safe and effective operation of the market and though so it's reasonable for consumers to share in the cost of managing the market by assigning a portion of the tax revenue to support um the board's regulatory operations so now we're getting into the comparison with the comparable jurisdictions so you can see um at the bottom of the table here is proposal a and proposal b for the retail licenses compared with massachusetts main and alaska so you can see that proposal b kind of puts us um around the cost of alaska a little bit higher than the cost of the retail license in main and about half of massachusetts retail fee and then cultivator license there on the right you can see the proposal b um is much more in line with what exists in alaska main in massachusetts so here's the same comparison done for the manufacturing testing and employee registration fees oops sorry so then we move on to the tax projections um over the next several years so um the red is the excise tax and the blue is the general sales and use tax and then there's just a note at the bottom here this is an addition to the slide a change from the version that you looked at on wednesday 30 of those excise tax revenues uh not to exceed 10 million per fiscal year are um directed towards funding substance misuse prevention programming and that's uh pursuant to statute and also pursuant to statute the sales and use tax revenue is directed to fund a grant program to start or expand after school or some summer learning program so that is where those taxes are directed currently under statute i'm going to move on to the final portion of the report which is the local fee recommendations so we've got um a reference to vermont statute about local fees and then some explanation here that costs incurred by municipalities um which comes from the statute is an ambiguous term and it can lead to different interpretations um by each town based on what the municipality considers incurred um so the our consultant recommended that the board um define the term to promote consistency among local government and to set clear expectation for stakeholders and the market structure subcommittee recommended that costs only include those costs associated with processing the applications and that it's likely that current staff levels and municipalities could um would be sufficient to process those applications so as a result the recommendation was that um the board cap those local fees at a hundred dollars let municipalities set them but cap them at a hundred dollars or as mentioned before um require municipalities to follow the uniform charges schedule that's set forth in statute and again that fee would be in addition to any normal local building zoning permitting um signage or other fees that are required at the local level so the justification for that um setting that cap at a hundred dollars um is that the state is going to handle the the sorry where'd it go here we go the state's going to handle most of the application review process so the burden on the local governments should be minimal and processing costs should be low um and the the subcommittee on market structure did um contemplate that the review time for each application would be would be only a few minutes and so it could likely be absorbed by current staff and also a note that the hundred dollar cap appears to be within the range of other local municipal fees um also a recommendation here that the board um recommend to the legislature that they direct one or two percent of the state excise tax on retail sales to those municipalities where the retail sales occurred and um a note here that other states have adopted that kind of fee and it allows local governments to cover their costs associated with um with retail stores being within their borders and support other local initiatives that are struggling to find funding and also allows local governments to generate some revenue from those local businesses and it may encourage municipalities to opt in to allowing um retailers to come into their borders and also in turn would improve access for consumers and reduce um legacy market activity I mean can we pause there yes because we're done hey perfect um on that last piece um Julie and Kyle do you feel comfortable making that recommendation noting that it's not necessarily uh in our purview to tell the legislature how to spend the money um that doesn't directly support our operational needs um however I do think that last bullet on this page is um is important I mean uh the way that I see it is what do we have 29 towns that have opted in currently you know we really do need every piece of the supply chain functional in order to um have a safe and effective market and um you know if if we don't have kind of towns that have an incentive to opt in or even an incentive really to review the applications efficiently um you know we could see supply chain issues at the retail level so um I personally feel comfortable making this recommendation but just want to make sure the two of you do as well I feel comfortable absolutely yeah I feel comfortable you know and agree with everything you said I know we've heard from a lot of folks that want to get this on their town ballot and incentivizing cover weekend municipalities to do so knowing that they'll get something more than a hundred dollar max fee or the uniform fee schedule you know might help um stimulate some some conversation between interested you know um residents and town officials municipal officials to to speed up the process if they're able to I agree and it's the fees and the the unknown cost the town seem to be the most concerned about great well um I think uh brand do do you want us to vote on this if so I think we should pause your public comment first but um is that the idea I don't I don't think that you have to vote on it um you've reviewed it and the report is is um supposed to come from the executive director so I would like to have your your blessing but I don't think you necessarily need to vote on it well is there I know we pause throughout for discussion um is there any discussion Kyle and Julie about this before we officially bless it um no but I think the public comment piece that you're talking about peppers a good idea I only want to say and I know we pause to talk about waving waving and reducing fees for for social equity and talked about that and I've been thinking about that since we um since that part of the the discussion and I think you know recognizing some of what you brought up um in terms of waving fees and inviting you know folks in who might not be successful I think just you know the best part that we can do I mean it's easy to think waving fees is the only thing we can do but I've always thought the bulk of what we can do for social equity applicants is that technical and business assistance how we can do that um in-house but also rely on other state agency partners and and you know private folks in and around Vermont who who specialize in doing this and partnerships we can create and and so I would just be remiss if I didn't mention that I think that is still in our short and long-term plans um even if we're we're waving these here it's it's just not as far as I think we're going to go as a board and incentivizing folks to to come in in this market recognizing as as Julie said it's a reduction of a $5,000 fee or a $10,000 fee it may make or break some folks but it's still going to take a lot of business acumen and the right resources and the right support system to be successful just like in any any market yeah yeah you know my my concern really is just around not seeing the full picture this is one piece of kind of the benefits and privileges but it doesn't speak about speak to the technical assistance and support that we want to offer it doesn't speak to the transferability of these licenses and what that means for the the fee structure so you know I felt a little uncomfortable with just having this in isolation um but you know I I think again I I rely on our subcommittees and the work that was done there and the public input that those committees received um in the kind of direction that they got from our consultants so you know I'm with you Kyle I would like to see more but you know if but I I feel comfortable with that fee structure and I think the rest of those pieces are coming pretty quickly I think the next report on this is due in January so it's I mean the rest of the pieces of this I think we'll get more feedback and that we they'll be coming pretty quickly yeah you know I know this report is due today but public engagement on this and other topics is is only just beginning and how we unpack that is going to be crucial for that January report but this has my blessing I think it's it's a good signal to the legislature on what we intend to do hopefully they don't take this reduced fee structure as an isolated the only thing that we we plan on doing because it's simply not the case great well to any more discussion before we open to public comment no okay um well we're going to pause um before we officially give our blessing to Brent to submit this um for public comment we're going to start with if anyone's in the room is there any anyone who joined physically not today okay well then we'll move to the people that joined via the link first um if you joined um via the link please feel free to raise your virtual hand and we'll call on you for public comment in the order um that you appear um Graham you want to unmute hey folks this is Graham you next roof knocked policy director at rural Vermont um thank you all for the work in this reading through this today it's really helpful to to see I haven't been to a meeting in a little bit um I have a couple questions and just a few comments um and tell me if um how much time you have but you know we're also member of the Vermont cannabis equity coalition which I wanted to presence here as well and we've submitted our recommendations as well and we'll do our best to also get back to you about your recommendations a couple questions um we've sort of made it clear in our written and personal public comments um and our coalition does include two of the three largest agricultural member based orgs in the state NOFA in rural Vermont um that direct market access is critical for small farms and businesses for economic empowerment self-determination and it's important to ensuring that legacy consumers and producers transition to the legal market um and I was wondering in in your recommended license types and future license types is there a license type allowing for consumers to directly access producers and producers to directly access consumers um and I'll also keep going and that's but that question will be what I'll leave you with primarily and also wondering how long you're projecting the licensing approval process to maybe take um the couple points I wanted to make are just that um my initial review that your outdoor and indoor tiers are not commensurate or equitable just in terms of the scale or cost with the cost of indoor licenses proportionally less per yearly square footage and allowing proportionally more square footage at its max scale so I just just suggest that you all check out our comments which are pretty accurately scaled for one to four equivalency also really appreciate the idea of a small farm license which provides for indoor and outdoor production space just keeping in mind that uh yearly the needs of a yearly producer but also the seasonality of growing outdoors so I appreciated seeing that I wanted to affirm chair peppers and Kyle's comments about the need for technical support business support legal support we see this the impact of this in the ag community all the time in particular for social equity applicants and if you look at our recommendations you'll see that similarly appreciate your thoughts around municipalities and capping that that potential fee at a hundred dollars and asking for one to two percent of the excise tax to go to those those folks um I'll leave it there for now thank you thanks graham um I'm not going to answer those questions here um just because I feel like it opens the door just turning public comment into a question answer session but I will um follow up with you um as needed um anyone else um they would like to make a public comment that's joined via the link um please just raise your virtual hand okay anyone who's joined via the phone um you can unmute yourself by pressing star six and if you'd like to make a comment um please feel free great we can hear you if you just want to announce your your name hello my name is Kevin Kamisky uh you can hear me well yes we can hear you great thank you I just want to reiterate how eloquently the previous comment was made um this incentive for the legacy and small-scale markets to have direct access to the consumer I think that would be really key in bringing that market to bear in the state as opposed to just leaving it where it is because of the reluctance for the fees and the additional expenses to the market thank you thank you anyone else who joined via the phone um if you'd like to make a public comment please hit star six to unmute yourself okay um well we'll end the public comment period there um and um I think that this report represents an incredible amount of work I think you know that's laid out uh in one of the early slides 50 um over 50 at this point subcommittee meetings um you know I would say probably a few more board meetings then is laid out there that might not have been captured um I'm I'm very confident in the work um and I think that I would be fine um submitting this to the legislature um so our general counsel has indicated to me that um the board's blessing may not be um formal enough for the legislature so if we could take a vote on the report um that would be great um do you have a name that we should call his friend I would just call it the october 15th um fee structure and social equity applicant criteria report so Mr. Chair before we move I just I want to I want to point of clarification some of the comments that we heard um just now and kind of where we were last week on the direct farm sales and I know that the market the the the market subcommittee did pass a fee associated with it I thought last week we just agreed that in this october 15th report we wouldn't propose that as a fee but are we still expecting our exploratory committee to explore what it would take to actually implement that that type of fee I wouldn't have a problem of adding it to the list of the exploratory committee to keep exploring whether or not we can make that happen in in practicality um as Graham and others pointed out it wasn't on that list and I would I'd move to try and put it on that list just so we can keep having that conversation um I think maybe we again I'm trying to remember what we talked about last week in terms of what fees we were putting forth to the legislature now and that wasn't a fee we're gonna put forth to the legislature now but just recognizing that it could still play a central role in what we're doing down the road is it worth saying on that exploratory page that we wanted and with that we're gonna keep looking at it yeah it was my intention to put before the exploratory committee the specifics around delivery exactly what type of delivery we we would recommend to the legislature and and and associated the the kind of direct consumer sales that the ones that we're talking about now and then also the on-site consumption and special event permitting special event operator those are the primary fee or license types in addition to the ones that are laid out on the um on that on that slide so yes the answer um Kyle is I just yeah I just don't think it made it onto that slide so I just want to make sure that um unless I'm missing it am I missing no that's so we're talking about the potential future license type slide where we put forward the for example the on-site consumption and delivery license you're right so I think it just kind of escaped all of us that that license potential license type didn't make it onto the potential future license types slide and I would just propose that we add that to kind of keep the conversation going with with folks in and around the state and in our exploratory committee and just signaling to the legislature that it's something that we intend to keep looking at is that different than that kind of there's other two retail license types yeah we never really yeah I mean I think I think it's not it's not clear enough that that if that was the intention the entry level or reduced rate retail I mean we could have I guess on a broad read of that this could be you know funneled into that specific license type but I think unless we explain that that's part of that license type the legislature's not going to know so I would just I would just propose that we put farm gate sales as a license type or direct to consumer sales just just so the legislature knows that it's something that we're talking about with the public and contemplating as a board I agree with that because when I read the entry level or the description there it seems to me like that's just like a smaller store so either adding the farm piece to that or adding it as another license type to explore we could we could change the nature of the business to be a little bit more specific right now it says a lower fee retail with sales or space restrictions and we could just be a little bit more clear that that may include the opportunity to sell directly from your farm under the right securities regulations and circumstances or or you know consider it as a as a completely different license type and I'm open to either I just want to make sure that everybody is under the same assumption that we're not completely done with exploring that license type for our folks listening and also for the legislature but it's still an ongoing conversation. Yeah I mean that that works for me I honestly really thought that after our discussion that that was included in that last license type but I'm fine with being more explicit that license type would include direct-to-consumer sales or I mean is Farmgate a well enough defined term that we can just include that? I've read I've heard Farmgate used in this context and other jurisdictions but that doesn't mean that the legislature will understand what we're we're talking about I mean it's kind of a term that's kicked around in the ag community but if we want the specific committees to at the legislature that this report's being sent to it might make sense to say direct-to-consumer sales. Okay brand you made that change or at least we all note it for what we are intend to vote on. Okay well I would entertain a motion to recommend to the legislature all the recommendations that are contained in our October 15th 2021 market and fee structure report. Seconded. All in favor? Hi. Hi okay moving down the agenda I think we have next a subcommittee update and I'll start only because my update will be incredibly brief you know as I mentioned last week the market structure subcommittee has adjourned and the medical subcommittee did not meet this week so my only update is that the marijuana for symptom relief oversight committee did meet they've taken some of the concerns that I had about their recommendations under consideration and I haven't checked in with the chair of that committee quite yet Jim Romanoff but we're going to have a we're going to touch base and I think they have a final recommendation for the board to consider on the kind of future of that committee and so I should have an update a more substantive update for the board next week. So any conversation about that any discussion? Great all right well Kyle do you want to do sustainability and compliance and enforcement? Sure so so both committees only met once this week Monday of course we observed indigenous people's day and didn't have any meetings the theme of the sustainability committee yesterday was on air quality so we had technical assistance from ANR's air quality permitting division to kind of go over various different air quality regulations that ANR has we also looked at the hemp regulations open burning regulations public nuisance odors you know permits to construct and we also talked about you know hydrofluorocarbons as a solvent in equipment use sounds like at least at least one business in the state of Vermont has just tried to try to do that so ANR and VAFM are aware of some of you know the intended unintended consequences of using hydrofluorocarbons and it's in this in this market and its impact on the environment and we did talk about greenhouse gas emissions how greenhouse gas emissions from this emerging market would fit into the climate councils and climate action plan that's being developed currently with a December 1 deadline and I think the the overall consensus was there that the way that they're looking at climate reduction goals it's more on an industry basis from a transportation perspective from a manufacturing perspective like broader buckets than a specific segment of a market like agriculture when it comes to getting that granular so we thought that all the manufacturing emissions transportation emissions so on and so forth would be covered already in a lot of those those reports so really productive conversation again I think this is an area where we're not going to have to reinvent the wheel or start from scratch and it'll be pretty easy to do a gap analysis and slide into existing permitting throughout the state from an environmental permitting perspective as far as the compliance and enforcement committee we again just met once yesterday the focus was on for a majority of the meeting was on transportation and compliance and what transportation not from a delivery retail to consumer perspective would look like but amongst the supply chain how secure a car or business needs to be if you're moving product from your farm to your your drying facility or to a retailer and there is a lot of ranging of opinions on how to best do that for a state like Vermont I think the subcommittee it still has some time to talk about this potentially on Monday but they were interested in a kind of tiered approach depending on the size of your business how much product you're moving you know maybe you don't need to have to retrofit your farm truck as intently as some of the larger facilities may need to do they're moving a lot more product so really interesting conversation and you know I kind of like that that hearing thought so we've got to figure out again what what that would mean in practice but really robust conversation we also talked about waste and waste disposal Jen from VS kind of gave an update on how Massachusetts does it you know locks on dumpsters behind retail facilities that might have thd containing con content in it but again a lot of state and federal environmental regulations really come into play with waste removal you know some states are looking at or requiring product to be rendered rendered unusable unrecognizable is that still the right way to think about waste now that those initial fears when Colorado and other states from the cutting edge of doing so were for fear of folks going through the trash and and you know trying to smoke something that was in a dumpster and I think a lot of some of those fears never really came to to be an actual fear so it's just finding the right and Jake up from the sustainability committee was there to kind of talk a lot about this so um I think the compliance and enforcement committee was was comfortable we'd already talked about waste in the sustainability context and and kind of keeping that conversation mostly within the sustainability perspective and and and how we compost and dispose of biomass and other things other other parts of of the supply chain so that's that's it for me um do you feel like your committees are um going to be able to kind of wind down next week I think the plan for the sustainability committee is to engage at least three more times I know next Wednesday we're going to be talking about social equity and its impact from an environmental sustainability perspective it's going to be an important conversation and then we just have we haven't really gotten to a point in that committee where we've or they have voted certain portions of environmental regulation out of the committee so we're going to use the following two committees to kind of put more work product in front of that committee to get a better signal to the board on you know for instance we we've voted they voted on about 80 85 percent of psds energy wrecks um with the remaining 15 percent because there's just some ground true thing that we wanted to do so we just need to check a couple more boxes um with the with the implant with the compliance and enforcement committee I think that committee can wrap up Monday I think you know I've I've kind of seen generally where folks are what good ideas have come out of that committee how to how to take compliance enforcement security and kind of put the Vermont feel to it and have given me kind of enough direction to to start making um some recommendations to the two of you when we start these longer board meetings and working through phases of our regulations so I'm comfortable with where things are but but the intent of the sustainability committee is to continue to meet until the end of the month great yeah um Julie do you want to give us an update on public health and social equity sure um so public health met um just on Thursday of this week and they um are they started exploring the oversight of edibles and they heard an overview of food manufacturing from an industry expert whose name is Omar or yasabal he has a phd in microbiology and a very extensive background in food safety so he spoke with them for about 30 minutes to sort of give them an overview um and they will talk more about what their recommendations will be on Thursday on Monday excuse me um and also on Monday they'll hear feedback from the Department of Health on the cannabis symbol in the warning language so they will likely wrap up and have their last meeting on Monday um and be able to provide us with their final recommendations the social equity subcommittee continues to meet I think they'll probably meet a couple of more times um kind of building on the um report backs that I've given in the past this week they talked about a portion of the excise tax revenue going to support social equity programs at least five percent was what they discussed they discussed a creation of a social equity trust that accepts public donations to support the programs um and they came to some agreement on how the fund how the cannabis uh business fund should be should be used most of which I think is actually outlined in the legislation but they agreed with um being used for workshops and certificates technical education that of course the operational expenses of the fund outreach programs um a cooperative that they've discussed a social equity cooperative that they've discussed and then of course the low interest loans and grants for applicants um and they are talking about social equity sort of the long term for the board and having a social equity uh board that would be another group of folks that would meet and oversee some of our social equity programs um and they're still discussing what that would consist of and what the duties would be um but they're at a point where they have done a lot of discussing and it's probably time to do some outreach um and understand you know what the impact of these conversations are on the folks that will actually be part of the social equity programs so they are going to have a couple more meetings and then um there will be some town halls I believe in November to to get some more feedback direct feedback that's great yeah well um anything else that we need to discuss today I don't think there's anything left on the agenda I will do one more public comment period um but anything Julie, Kyle, Bryn, you want to discuss before we move to that and then adjourn nope not for me I think we're good okay great well we'll do one more public comment period um and um if you've joined via the link please raise your virtual hand if you'd like to make a public comment hey again folks Graham Unang Struffanoff the policy director of rural Vermont um two things one just getting I know that you just voted that language around future licenses out but one thing to maybe consider is um when you say direct sales to consumer I'm not sure how clear that is folks that we're talking about direct sales from producers to consumers so specifically that producers to consumers part is is important but I I really appreciate you putting that in there and I think we can do the work around making sure that they recognize it as what we're talking about um in one point sort of outside of our racks and sort of outside of the conversation today is around you know compliance enforcement and the conversation of you know whether this will be coming from um like control board or the agency of ag or a different sort of independently generated entity of the ccb you know we didn't include a recommendation around this in our recommendations that we provided the written ones um but in our initial conversations we just wanted to let you all know and put it on the record that um that we see um compliance and enforcement ideally being done inside the ccb itself as a custom component or addressed by the agency of ag through its current hemp program supplemented with other needed things um we feel like it's pretty inappropriate for the political control board and law enforcement to take this role given that we're moving away from criminalization given that we have an existing hemp program um and see the better options being just inside dealing with inside the ccb or with the agency or a combination there so that's that's it I believe thank you thanks rame um anyone else who joined via the link uh wants to make a public comment please raise your virtual hands okay and if again if you joined by phone um and you'd like to make a comment um you can unmute yourself now by hitting star six okay well thank you all for the incredible work today and uh up until this point um it's really kind of an exciting moment to get this report in um and we'll stay tuned uh to see what the next steps are with respect to the report um but um I think uh if there's nothing else we can um we've made it through the agenda and we can adjourn I move to adjourn second all in favor hi hi hi so you know I would just remind folks that uh David indicated to us that we don't actually have to move to adjourn once we make it through the agenda we can uh just I can just call the meeting adjourned which I will do next time gotta break that you know yeah we've been doing it one way for so long it's


Hello in this lecture we will define cash according to fundamental accounting principles while 22nd edition the definition of cash is Includes currency coins and amounts on deposit in bank checking or savings account when we're thinking of cash in the most strict terms We're thinking basically of those things that we generally think of as cash Including currency coins and amounts in the bank So we're thinking about of course the hard cash the currency the coins and the amount in the bank in terms of our checking account and Savings account this would be the most restricted kind of definition of cash when we are thinking about cash When we report cash on the financial statements, we will usually be reporting it in terms of cash and cash Equivalence so we want to take a look at cash and cash equivalents as well


Okay, good afternoon. So we're ready for our next speaker. He is Jim Crandall He's associate director of the Nebraska Cooperative Development Center and he's here to talk to us about some of the Project work they're doing with sustainable entrepreneurs. So I'm going to go ahead and turn it over to Jim. Thank you Thank you. Good afternoon. It's great to be here As Rob said, I'm from Nebraska. I hope that's okay. I'm going back there through Kansas. So I'll be back there tomorrow night, but I want to tell you a little bit of the grant program that we worked off of in Nebraska was aimed at professional development of resource providers So that we could do a better job in helping Particularly ag entrepreneurs who wanted to start new businesses or new enterprises on their farm so in thinking about Telling you about this program I wanted to figure out the best way to convey what we did but the results of the The work that we did during that process that might be more useful to you than just telling you about the kind of programs that we did So I'm going to describe what we did a little bit as far as professional development for the resource providers that we had but I also want to show you some of the resources that we developed not only for the the resource providers, but also for entrepreneurs and Before you leave I have a handout that has several of the links to the screenshots that I'm going to show you So that you can go home and look them up yourself because there is some pretty good stuff in the toolboxes So our our goal was the grant that we received for extension education and through the SARE program was to increase the small business knowledge skills and confidence of Recognized public sector resource provider so extension educators void teachers Particularly resource conservation and development district personnel in Nebraska were very active in helping develop local entrepreneurs But we have a host kind of a network of folks across our state in USDA Rural Development NRCS the Center for Rural Affairs several of the economic developers We all seem to be kind of connected in a network that we can share ideas easily and that actually helps us Learn from each other as well as help each other when we have particular ideas So what we had planned to do with our our grant program was to try to increase the success rate of business startups in Nebraska particularly in rural Nebraska And by doing that doing that by providing good educational programs to the resource providers I think my job Is rural business development. That's what I do all day long We particularly focus on Group formed businesses. So we focus on co-ops and limited liability companies Now I'm just one member of the team in Nebraska is called the entrepreneurship team or the action team Made up of about 30 or 40 different specialist educators Professionals in extension that are focused on entrepreneurship In the entrepreneurship basket, we have three divisions one our new business ventures And that's what this is kind of focused on. We also have community entrepreneurship power community can become Entrepreneurial and help grow businesses for their town And then we have a youth component for 4-H middle school and now we're developing a high school curriculum So our entrepreneurship team is rather large in scope and we focus this on particularly on new business Creation and how we could help those people the best So the folks that came to this program primarily were extension Educators and specialists as I mentioned resource conservation and void teachers, but we also had quite a few people from other agencies public and private USDA rural development was there Our tourism people from the state of Nebraska the Department of Economic Development the Nebraska Community College had some people there as well as the technical school of agriculture out in Southwest Nebraska The Center for all fairs so it ended up being we ended up with 50 different people From a variety of agencies that had an interest in being trained on how to help Businesses get started. We were also fortunate that we had some colleagues from Iowa, South Dakota, North Dakota primarily extension, but a couple other agencies that joined us as well So we were able to interact between different states on on what people were seeing What we focused on were three face-to-face training programs The first program was on the feasibility analysis And and so to try to be helpful to what you folks might be interested in on your farmer ranch The feasibility analysis that we studied was going into to detail of What you can do to study the feasibility of a new project that you want to develop whether it's a Complete new business or if it's an enterprise for your existing farm If you take that in a very step-by-step fashion and that's part of what we focused on you can minimize your risks by Examining the feasibility of something that you're passionate about now. That's a little difficult when you're doing it yourself And I've dealt with that. We've grown businesses. We've helped people start businesses You're so focused on this great idea and you're so passionate about it that sometimes it's hard to step back and say now Does this really make sense? And in the dozen years that I've been doing work with the co-op development center I've worked with over a hundred different new business startups. Some of them didn't go forward and several of them did There's a large percentage of those co-ops or LLCs that started going down this path To sell this product as a group of people and Four years later. They're over here doing something else because they found a better market for what they were doing Same general area, but they where they were targeting themselves changed So when you do feasibility analysis for an enterprise on your farm or a new process that you want to develop you need to go through it step by step and think through it as as Objectively as you can There are tons of resources on the internet that you can bring into that analysis And that's part of what we talked about in our first feasibility study Program that we did over two days Was what information is available? There is census data. There are market studies. I Can guarantee you whatever you're thinking about marketing or selling from your farm somebody else has already tried it Rarely can you find someone that has that now and I know I apologize I don't mean to insult somebody I've had people come to me and say Can you help me do this but not tell anybody what I'm doing because I think somebody will steal my idea And I can go in about five minutes and find three or four other people on the internet They're already doing it already tried it so so don't think you know Don't be afraid to share your idea with other people But you can find what other people have tried and done So that you don't end up having to make some of those same mistakes It's also very important that you go through this process of feasibility Time and time again. I've had groups Against my advice that said no, we don't want to do that. We don't want to take the time to do feasibility We know this is gonna work. We just know it's gonna work and Almost every one of them at some point had to come back and do that study and think about the different steps They needed to go through and it cost them more to do it when they were already that far down the road Then had they done it at the beginning So this feasibility analysis is very important. You look at transportation. You look at production. You look at Product availability. You look at your market. Where is your market? How do I get to the market? How far away is it? Can I supply that market? What if I'm a huge success? And they you know, I have I'm growing enough stuff to last all year, but it's gone in May How do I maintain that market for the next four months when I don't have anything any product? You have to think through those things That relates to pricing it relates to I mean and so I'm just suggesting that as you develop these ideas think about them Thoroughly as you go through them One of the things we talked about that and and for this group that I think you should think about Are you protecting yourself from liability? Through the structure that you set up for your business As a sole proprietor Your personal assets may be at risk when you're selling a product to the consumer. We're in a sue happy society Somebody thinks that your product made them sick Maybe it didn't but if they think it did You may get sued How do you protect your assets that had nothing to do with production of that product? From that kind of action Again the area that I focus in was co-ops and limited liability companies in particular a limited liability Company is one way that you can kind of shield some of your personal assets But again through feasibility you have to learn to do that right A one-person limited liability company doesn't necessarily shield you so you have to think those things through so The trainings that we do with our resource providers particularly in feasibility We spent a lot of time talking about all those steps so that we could help Entrepreneurs go through those steps themselves the second today session that we went through was agri-marketing and we focused on agritourism Marketing your ag business your ag products whatever it might be and again if you go online There's lots of resources or lots of examples that you can use or study as a model For developing your on-farm business whether it's agritourism you want people to come to you or how do you get your product? How do you get your service? How do you get your your name out there? Obviously the use of social media has skyrocketed in the last couple years We are now doing through our center doing more programs for social media for our co-ops and LLCs that are getting started than Than than anything we ever thought we would before The social media is hitting a certain demographic so you need to understand what that demographic is and how do I reach that? Facebook obviously Twitter those kinds of things I Linked in is more professional social media, but there's a place for that so understanding how you can use those kinds of marketing tools to your advantage They're free I Mean other than the time it takes for you to invest in Putting those things on the on the internet like a Facebook page doesn't cost you a thing except the time it takes you to Do it What you don't want to do is start a Facebook page and then leave it for a month and nothing happens So if you're going to invest in those kind of marketing tools, and that's what we talked about with agri-marketing not only that but Advertising locally chamber commerce getting your name known Protecting again yourself for visitors on the farm. That's all part of that packaging Then the last session that we folks focused on was was online marketing Again, we're seeing a lot more of our entrepreneurs in Nebraska, whether it's individuals or co-ops have a great product And to make that product viable they can open it up to the world as their customer We are challenged in Nebraska's I'm sure some of you are where you live in that we're a very rural state We have 1.7 million people We have a lot more cows than that A million of those people are in Lincoln and Omaha and 700,000 of the rest of us take up the rest of the space that's out there And I live out in rural Nebraska and South Central So our challenge for the people in the rural areas is if they're creating a product Who's gonna buy it and how do I get it to them? You know, I grew up in a town of 366 people I can produce the greatest thing but 366 people are only gonna buy so much stuff. I gotta go someplace else to increase my market So the online marketing is a again an opportunity for you to do that That involves things like, you know, how do you how do you have a credit card account online? How do you know, what's it cost to do that? What are the risks of doing that? We want to get paid for what we sell so the online marketing and we Particularly developed Thank you We developed a curriculum for food products, particularly online marketing And so I'll give you the links to some of those. There's some really good information and curriculum in that area So as a follow-up to that and and this is some of the things that I'm gonna give you with the links that you can Go watch. We did follow up webinars with all three of those areas So we went through the training then the folks that helped us with the training About a three weeks later or a month later We did a webinar with them because what we intended to do was learn from them and then go try it out When our resource providers came to these face-to-face meetings They came with the intent that they had a business or two in mind that they were going to go back home and work With so the webinars were to help reinforce that We created a a web-based toolbox of information and resources, which I'll share with you a little bit We recorded some videos of entrepreneurs that have been there and done that And again, it's not the topic area that they focused on that We want them want people to do to understand but it was a process They went through to get to where they were so they had that business And then as I mentioned we had developed a curriculum for direct marketing of the food products so This is just a screenshot of our entrepreneurship page. This is just a little piece of About 30 or 40 different people an extension that have been through some of the training programs So that we have a list of folks an extension that somebody says I need some help They can probably find somebody that's not too far from where they live in Nebraska To give them a hand This particular page focused on the on the videos that we created We have four videos three of them are one business and then a third business was a young lady that developed a chicken Entrepreneurship Where she was raising and selling chickens and how she went about it and how it integrated into her farm I don't I don't know if we have web connection here If this will work or not Probably not Yeah, it's not gonna work. Yeah, I just I had a clip of that video And that happened to be an LLC of two unrelated people Doing somewhat similar business approaches but had completely different product lines what they had in common Is they needed some equipment and it happened to be a cheese-making business Two different families near Lincoln One's a goat dairy one's a cow dairy They both wanted to create our their own brand of cheeses and and spreads What they lacked was the machine rig to do it so they formed an LLC To buy the machine rig together and put it on one farm with the idea that they would rent it from themselves In that process they opened it up so that other dairies in the state that might want to come make cheese Could come to their farm use their equipment and use them as their consultants to help with the development So it it was a business idea that started off to make cheese and ended up being an LLC that became a business that was for rent with them providing consulting fee consulting Issues for a fee to help someone else. So it just that's that idea of they had an idea of where they were going But the path they ended up was a little bit different and they hadn't they hadn't figured on that so The marketing for the ag entrepreneur web page focused on The the new ag businesses that we were working on with some of our entrepreneurs We had a discussion board that was up. You can go read those discussions. There aren't very many on there We found out that as resource providers. We tell people to do things, but we don't do them very well ourselves And so we had this dream that we'd have this discussion board during this two-year training program Where people would really get into it. Well, it doesn't work. You know, it didn't work for us You know, but there's some good discussions on there that media resources professional resources Ag marketing resources and the reason that I want you to take a look at that when you have a chance when you go home If you're thinking about a new business, this is the kind of stuff that you use in your self-feasibility study There's tons of resources listed on these pages that you can go and find Some background that were pertain to just about anything that you're thinking about doing as far as a new enterprise on your farm so And I again, I have a have a sheet here that has all these listed we did the the business feasibility workshop and Online down here are again some more Resources for you that you can tap into that because it's been done The toolbox that's been developed is listed as well Over here. There's other resources in there that are kind of unrelated the things that we picked up along the way That's a well, that's kind of useful. We'll stick that on there for somebody in case they might need it The follow-up webinars that I talked about are still on there You can go listen to what some of the experts did with questions that we had as we began to Grow and do some of the things that we had learned And then this is the one that I think has Lots of information that has a curriculum on there self-directed curriculum where you can go through the process of How you do marketing of a food product online? so if you've got Grandma's favorite salsa recipe and and you're gonna market it in stores But you're also gonna offer it online this could lead you through that process of Understanding the steps of how you go through it and all those kinds of things so in there is a PDF file That breaks out kind of the process of putting it online There's the introduction tells you a little bit about what the course is but This is one of those things that I don't think you sit down and just read one night while you're you know watching Pre-runs or whatever and think that that's gonna help you. This is a study course This is one of those things where you need to take the time to go through some of the details and think it through so So I'm gonna oops Just hand these out I can get you I can get you I can just send it to you through email if you'll get in touch with me So if you if you don't get one, I've got some business cards Provide you some contact information to follow up so Like I said when I was thinking about how to present this program This program was focused on train the trainers kind of and I know that doesn't affect most of you But I wanted to make it get it to the point where there's information that would be useful to you With your business ideas. We have tons of people in Nebraska. They're stacking enterprises on their farm So they start with one thing and that leads to the next thing but What we want to focus on is as they stack that next enterprise the process is still the same We need to think through the feasibility. We need to think through where the market is We need to think through how we're going to get there What ramifications does that have to our base enterprise? It's already there The other thing that we talked quite a bit about is the the personal relationships and starting those businesses What does it do? To your relationship with your family Are you going into business with someone else in your family? You need to think that one through Are you gonna go through into business with a friend? Think those things through We got one business that was created by two very good friends. They're not very good friends anymore It's hard, you know, you have to be honest with yourselves and talk about those issues up front So it's not and it's not just you know with friends if it's husband and wife or Parents and children or whatever You need to address that conflict before you get to it It's okay to sit down and say okay, what if all hell breaks loose and this happens? How are we gonna handle this? We have to agree that we're gonna be honest and open with each other those kinds of things because I Said I it almost makes me cry to see these two friends hardly talk to them so each other now because they got Crossways and they didn't communicate their issues when they came up Cover the feasibility of what's required to The question is the Last part of the program talks about food products. There's a curriculum for marketing online It does probably does not talk much about regulations The whole process in general talks about how you go through creating a business And that's putting together a business structure doesn't talk necessarily About the details of that business that you do need to investigate so probably not as much as what you might want but The outline is there that will get you to the point where you can take that next step and find the regulations