BELLOWS FALLS, Vt. — The Rockingham Selectboard removed a line recommending a local tax on commercial cannabis businesses from a town resolution on Monday night. This decision came after one selectman expressed opposition to imposing taxes that might discourage new cannabis businesses in Rockingham.
The Vermont League of Cities and Towns (VLCT), a municipal-support organization, is asking every Vermont community to consider a resolution which endorses giving local governments additional authority to regulate and tax cannabis businesses in their community, should a commercial cannabis bill pass into state law. After commercial cannabis failed to reach the governor last year, the Vermont legislature plans to tackle the issue again this term. The VLCT wants the legislature to include measures to protect the authority and flexibility of local governments in their legislation.
One line in the resolution drafted by the VLCT has drawn discussion and debate in several towns so far. The line asks each town and city to support “a local cannabis tax of five percent,” which would be additional to a state-imposed cannabis tax. According to the VLCT, the revenues from this local tax would go directly to municipalities to cover impacts from commercial cannabis, such as additional stress on law enforcement or health services.
The line also states that 70% of the revenues derived from this local tax will remain in the community that hosts retail cannabis establishments while 30% will be distributed between the communities that elect not to host cannabis retail businesses. The VLCT explains in documents to communities that don’t opt-in should still get a portion of this revenue because they will still be impacted as neighboring towns.
Rockingham Selectman Gaetano Putignano said he opposed the idea of the local cannabis tax.
“[Businesses] already pay a lot of taxes in this state,” Putignano said. “I don’t see adding more tax as inviting to businesses that could be a booming industry.”
Though the VLCT resolution appeared to be focusing on retail businesses, Putignano said he was looking at the manufacturing and production side of the industry.
“What I see are jobs, filling vacant buildings and [broadening] the tax base,’ he said. “Cannabis is a large industry and it’s going to be happening in Vermont.”
Putignano said he worries that if Rockingham had a local cannabis tax, those businesses may opt to locate to a Vermont town that doesn’t. Or if the local tax is statewide, businesses might consider locations in neighboring states, such as Massachusetts.
Town Manager Wendy Harrison suggested amending the language to “support a local option to tax.” She said that the most important goal is for select boards to support giving municipalities options to be flexible, and that some revenue will go directly to the communities. Details like whether non-hosting communities should get a revenue share will be a battle in a later legislative phase.
The board settled on a suggestion by Selectman Stefan Golec that the board strikes the line in its entirety from the resolution.
“I just want to move this resolution along unanimously,” Golec said.
Golec said that the debate over taxes and fees will ultimately happen in the legislature, so approving the overall resolution was more important than getting stuck over its numbers.
Striking the line also included removing the support for sharing local tax revenues with communities that do not host cannabis businesses.
According to Harrison, the VLCT wants local municipalities to adopt the resolution to bolster support behind their future recommendations to the legislature. The amendments made by local governments will also inform the VLCT in considering revisions.