Section 4.5 Categories of Violations and Associated Penalties.
The Board will levy administrative penalties and other penalties in accordance with the following categories, provided that the maximum administrative penalties for violations associated with the operations of tier I cultivators and tier I manufacturers shall be half the amount provided for in the categories.
To the extent a violation is not listed in this section the Board shall have discretion to assign the violation to an appropriate category and issue a penalty accordingly.
4.5.1 Category I Violations and Penalties
Category I violations are of a severity that could make a person ineligible to receive, renew, or maintain a license or Cannabis Establishment identification card and include:
(a) Operating without all required permits, Board approvals, certificates, registrations and/or licenses;
(b) Making an intentionally false statement to the Board or a Board designee;
(c) Intentionally destroying or concealing evidence of a violation;
(d) Failure to abide by a corrective action plan;
(e) Failure to pay taxes to the Department of Taxes;
(f) Knowingly permitting unlawful activity on the premises of a Cannabis Establishment or dispensary, or during transportation of Cannabis or Cannabis Product, that results in death or serious physical injury;
(g) Operating a Cannabis Establishment or dispensary while the license for the Cannabis Establishment or dispensary is suspended or revoked;
(h) Attempting to change control of a licensee without prior approval of the Board in accordance with Rule 1.17;
(i) Transporting Cannabis or Cannabis Product outside of the boundaries of this State;
(j) Making verbal or physical threats to the Board or a Board designee;
(k) Refusing to allow an inspection or obstructing a Board designee from performing his or her official duties;
(l) Purchasing, selling, or transferring Cannabis or Cannabis Product that has not passed the required analysis by an independent testing laboratory;
(m) Labeling Cannabis or Cannabis Products with potency limits that do not match independent laboratory test results;
(n) Purchasing, manufacturing, selling or otherwise utilizing Cannabis or Cannabis Products from a source that is not a licensed Cannabis Establishment or dispensary;
(o) Purchasing, manufacturing, selling or otherwise utilizing Cannabis or Cannabis Products from a Cannabis Establishment or dispensary whose license has been suspended or revoked;
(p) Purchasing or selling Cannabis or Cannabis Product not found in the Inventory Tracking System;
(q) Failure to properly collect taxes;
(r) Transporting or storing Cannabis or Cannabis Product from an unlicensed source or diversion of Cannabis or Cannabis Products; or
(s) Intentionally selling or transferring unauthorized or unlawful Cannabis Products.
Before consideration of the factors described in section 4.7 of this rule, the Board will presume that the following are appropriate penalties for Category I violations. In no event shall a Category I penalty be greater than those permitted in this section.
For a category I violation which is the:
(t) First violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 20,000, a suspension of a license or Cannabis Establishment identification card for not more than 60 days, and/or revocation of a license or Cannabis Establishment identification card.
(u) Second or subsequent violation in the immediately preceding 3 years, a corrective action plan, a suspension of license or Cannabis Establishment identification card for a length of time to be determined by the Board, and/or revocation of a license or Cannabis Establishment identification card.
4.5.2 Category II Violations and Penalties
Category II violations are violations of a severity that create a threat to public health or safety and include:
(a) Making an unintentional false statement or representation of fact to the Board or Board designee;
(b) Unintentionally destroying or concealing evidence of a violation;
(c) Failing to verify the age of, or selling or otherwise providing Cannabis or Cannabis Products to, a person who is less than 21 years, provided that patients with registry cards may purchase Cannabis or Cannabis Products at dispensary retail operations in accordance with Board Rule 3 and 7 V.S.A. chapters 35 and 37;
(d) Allowing a person under 21 years of age to enter a transport vehicle or a building or enclosure on the premises of a Cannabis Establishment where Cannabis or Cannabis Product is located, provided that Patients with registry cards may enter dispensary retail operations in accordance with Board Rule 3 and 7 V.S.A. chapters 35 and 37;
(e) Permitting employment or otherwise accepting work by a person without a Cannabis Establishment identification card or temporary work permit;
(f) Allowing a person who is less than 21 years of age to work at a Cannabis Establishment or dispensary;
(g) Failure to separate medical Cannabis or Cannabis Product sales from adult use retail sales;
(h) Unlawful transfer of Cannabis or Cannabis Product from a dispensary into the adult use market;
(i) Selling or transferring Cannabis or Cannabis Product in excess of transaction limits;
(j) Failing to maintain required security systems;
(k) Any intentional variance from approved procedures in a testing laboratory;
(l) Failing to notify the Board of theft of Cannabis or Cannabis Products as required by Rule 2.2.17;
(m) Using unauthorized pesticides, soil amendments, fertilizers or other crop production aids;
(n) Transferring, moving, or disturbing Cannabis or Cannabis Product which has been placed on stop sale or quarantined by the Board without Board approval; or
(o) Failing to destroy, selling, or transferring Cannabis or Cannabis Product that has been ordered destroyed by the Board, or that has been adulterated or contaminated without successful remediation;
(p) Selling or transferring unauthorized or unlawful Cannabis Products;
(q) Altering, manipulating, or falsifying a certificate of analysis;
(r) Failing to report lost, stolen, or adulterated cannabis or cannabis products; or
(s) Failing to abide by Cannabis and Cannabis Product testing requirements.
Before consideration of the factors described in section 4.7 of this rule, the Board will presume that the following are appropriate penalties for Category II violations. In no event shall a Category II penalty be greater than those permitted in this section.
For a category II violation which is the:
(t) First violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 15,000, and/or a suspension for not more than 20 days of a license or Cannabis Establishment identification card.
(u) Second violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 20,000, and/or a suspension for not more than 30 days of a license or Cannabis Establishment identification card.
(v) Third or subsequent violation in the immediately preceding 3 years, a corrective action plan, a suspension of license or cannabis establishment identification card for a length of time to be determined by the Board, and/or revocation of a license or Cannabis Establishment identification card.
4.5.3 Category III Violations and Penalties
Category III violations are violations of a severity that create a potential threat to public health or safety and include:
(a) Allowing consumption by any person of alcohol, Cannabis, or other intoxicants on the premises of the Cannabis Establishment or dispensary, or in areas adjacent to the premises of the Cannabis Establishment or dispensary that are under the licensee's control, except as authorized by the Board;
(b) Failing to keep any required records, including updating the Inventory Tracking System;
(c) Failing to respond to a Notice of Violation or failing to pay administrative penalties;
(d) Knowingly permitting any activity on the premises of the Cannabis Establishment or dispensary, or during the transport of Cannabis or Cannabis Products from the premises, that violates Vermont law and that the licensee or an employee has knowledge of;
(e) Selling or transferring unauthorized products or using unauthorized ingredients;
(f) Failing to notify the Board of a modification or expansion of the facilities of the Cannabis Establishment or dispensary;
(g) Violating packaging or labeling requirements, provided that the person or licensee who created the nonconforming label, and any retailer who allows the nonconforming label to be available for sale to a consumer, may both be liable for a violation under this subsection;
(h) Violating advertising laws or regulations;
(i) Storing or delivering Cannabis or Cannabis Products outside the Inventory Tracking System;
(j) Failing to meet requirements for the disposal of Cannabis or Cannabis Product waste;
(k) Violating restrictions on employee and vendor sampling;
(l) Exceeding maximum serving requirements for Cannabis or Cannabis Products;
(m) Failing to comply with requirements for employee hygiene;
(n) Failing to maintain a reasonably sanitary Cannabis Establishment or dispensary in line with industry standards or applicable regulations;
(o) Failing to maintain adequate food safety standards, where relevant;
(p) Selling or failing to dispose of Cannabis, Cannabis Products or food items that are spoiled;
(q) Failing to properly update the licensee's point of contact with the Board;
(r) Failure to maintain quality assurance/quality control program in a testing laboratory; or
(s) Failure to maintain current standard operating procedures, where relevant.
Before consideration of the factors described in section 4.7 of this rule, the Board will presume that the following are appropriate penalties for Category III violations. In no event shall a Category III penalty be greater than those permitted in this section.
For a category III violation which is the:
(t) First violation in the immediately preceding 3 years, a corrective action plan and/or an administrative penalty of not more than $ 10,000.
(u) Second violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 15,000, and/or a suspension for not more than 10 days of a license or Cannabis Establishment identification card.
(v) Third violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 20,000 and/or a suspension for not more than 20 days of a license or Cannabis Establishment identification card.
(w) Fourth or subsequent violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 20,000, a suspension of license or Cannabis Establishment identification card for a length of time to be determined by the Board, and/or a revocation of license or Cannabis Establishment identification card.
4.5.4 Category IV Violations and Penalties
Category IV violations create a climate which is conducive to abuses associated with the sale or production of Cannabis or Cannabis Products and include:
(a) Failing to have in the immediate possession of each Cannabis Establishment or dispensary employee, while on the premises of a Cannabis Establishment or dispensary, a Cannabis Establishment identification card or temporary work permit;
(b) Removing, altering or covering any required notice or sign;
(c) Failing to post any required signs;
(d) Failure to meet employee training and supervision requirements;
(e) Improper storage of Cannabis, Cannabis Products, or other foods;
(f) Failure to take reasonable steps to address pest infestations;
(g) Lack of compliance with the statutory and regulatory requirements for the operation of a Cannabis Establishment or dispensary in another jurisdiction;
(h) Violating Cannabis and Cannabis Product transportation regulations.
Before consideration of the factors described in section 4.7 of this rule, the Board will presume that the following are appropriate penalties for Category IV violations. In no event shall a Category IV penalty be greater than those permitted in this section.
For a category IV violation which is the:
(i) First violation in the immediately preceding 3 years, a corrective action plan and/or an administrative penalty of not more than $ 5,000.
(j) Second violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 10,000, and/or a suspension for not more than 10 days of a license or Cannabis Establishment identification card.
(k) Third violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 15,000, and/or a suspension for not more than 20 days of a license or Cannabis Establishment identification card.
(l) Fourth or subsequent violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 20,000, and/or a suspension for not more than 30 days of a license or Cannabis Establishment identification card.
4.5.5 Category V Violations and Penalties
Category V violations are inconsistent with the orderly regulation of the sale or production of Cannabis or Cannabis Products and include:
(a) Failing to notify the Board of any change in Cannabis Establishment or dispensary contact information;
(b) Making a payment with a check returned for insufficient funds;
(c) Failing to properly submit reports required by the Board; or
(d) Failure to pay for costs involved in screening or testing related to required testing within 60 days.
Before consideration of the factors described in section 4.7 of this rule, the Board will presume that the following are appropriate penalties for Category V violations. In no event shall a Category V penalty be greater than those permitted in this section.
For a category V violation which is the:
(e) First violation in the immediately preceding 3 years, a corrective action plan and/or an administrative penalty of not more than $ 2,500.
(f) Second violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 5,000, and/or a suspension for not more than 5 days of a license or Cannabis Establishment identification card.
(g) Third violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 10,000, and/or a suspension for not more than 10 days of a license or Cannabis Establishment identification card.
(h) Fourth or subsequent violation in the immediately preceding 3 years, a corrective action plan, an administrative penalty of not more than $ 15,000, and/or a suspension for not more than 20 days of a license or Cannabis Establishment identification card.
Section 4.7 Mitigating and Aggravating Factors.
The Board may consider mitigating and aggravating factors when considering the severity of a penalty. Factors may include, but are not limited to:
(a) Any prior violations that the person has admitted to or was found to have engaged in.
(b) Whether the violation impacted public health and safety.
(c) Whether the violation is ongoing or has stopped.
(d) Good faith measures by the person to prevent the violation, including but not limited to the following:
i. Proper supervision;
ii. Consistent and documented employee training; and
iii. Standard operating procedures established prior to the Board's investigation that include procedures directly addressing the conduct for which imposition of a penalty is being considered.
(e) Person's history of success or failure with compliance checks or prior corrective action plans.
(f) Corrective action(s) taken by the person related to the current violation or prior violations.
(g) Willfulness and deliberateness of the violation.
(h) Circumstances surrounding the violation.
(i) The size of the licensee or operation.
(j) The revenues of the licensee or operation.
(k) Person self-reporting the violation(s).
(l) Owner or management personnel is the violator or has directed an employee or other individual to violate these rules or the law.
Section 4.9 Process for Notices of Violation Without Immediate Effect.
Except as provided in section 4.10 of this rule, penalties imposed by a Notice of Violation will not take effect until the Board has rendered a final decision in accordance with the following process:
(a) Within 15 days after service of a Notice of Violation, a person may contest the violation and/or the penalty to the Board by filing a response in writing. The response must specifically identify each issue and fact in dispute and state the position of the person, the pertinent facts to be determined by the Board, and the reasons supporting the person's position.
(b) A failure to contest the violation within 15 days will constitute an admission of the violation and acceptance of the penalty.
(c) The Board shall consider the person's response and issue a final decision in writing within 15 days after receiving the person's response.
(d) A person who faces suspension or revocation of their license or Cannabis Establishment identification card may request a hearing before the Board. The hearing shall take place within 20 days of the Board receiving the request for a hearing unless the person waives the timeline. Evidence may be introduced at the hearing in accordance with 3 V.S.A. §
810. The Board may issue a final decision on the record at the hearing or may issue a final decision in writing within 15 days after the hearing is complete.
(e) To the extent a person is contesting whether a violation occurred, the Board may not find that a violation occurred unless such a finding is supported by a preponderance of the evidence.
(f) The Board's final decision may uphold its original Notice of Violation, may revise the penalty or penalties to be less severe, or may dismiss the Notice of Violation.
(g) A person who is aggrieved by the Board's final decision may appeal in accordance with 7 V.S.A. 847.
Section 4.10 Process for Notices of Violation with Immediate Effect.
Suspensions, revocations, or health and safety orders imposed by Notices of Violation will have immediate effect if they are accompanied by a written finding that the licensee's violation poses an imminent threat to public health, safety, or welfare.
If an administrative penalty or a requirement to produce a corrective action plan accompanies a penalty imposed with immediate effect, the administrative penalty or corrective action plan will not take effect until the conclusion of the process provided for in this section.
(a) The Board's initial Notice of Violation will plainly state that the penalty takes effect immediately. The Board will confirm the Notice of Violation and penalty within 7 days.
(b) Within 15 days of service of such a violation, a person may contest the violation and/or the penalty to the Board by filing a response in writing. The response must specifically identify each issue and fact in dispute and state the position of the person, the pertinent facts to be determined by the Board, and the reasons supporting the person's position.
(c) A failure to contest the violation within 15 days will constitute an admission of the violation and acceptance of the penalty.
(d) The Board shall consider the person's response and issue a final decision in writing within 10 days after receiving the licensee's response.
(e) A person who faces suspension or revocation of their license or Cannabis Establishment identification card may request a hearing before the Board. The hearing shall take place within 10 days of the Board receiving the request for a hearing unless the licensee waives the timeline. Evidence may be introduced at the hearing in accordance with 3 V.S.A. §
810. The Board may issue a final decision on the record at the hearing or may issue a final decision in writing within 10 days after the hearing is complete.
(f) To the extent a person is contesting whether a violation occurred, the Board may not find that a violation occurred unless such a finding is supported by a preponderance of the evidence.
(g) The Board's final decision may uphold its original Notice of Violation, may revise the penalty or penalties to be less severe, or may dismiss the Notice of Violation.
(h) A person who is aggrieved by the Board's final decision may appeal in accordance with 7 V.S.A. 847.
Section 4.13 Administrative Appeals Process.
(a) Appeal to Appellate Officer. A party to a contested case may appeal a final decision of The Cannabis Control Board (Board) to an Appellate Officer by filing with the Executive Director of the Board a written notice of appeal within 30 days of the decision in accordance with 7 V.S.A. §
847. The notice of appeal shall include a statement of questions to be determined by the Appellate Officer. Thereafter, every time a party files a paper, they must send a copy to the other party. The Director shall assign the case to an Appellate Officer. Board staff shall prepare the record of the proceeding or decision and deliver it to the assigned Appellate Officer.
(b) Composition of record on appeal. The record on appeal shall consist of any original documents listed in 3 V.S.A. §
809(e), including exhibits, any transcript of the proceedings, if any, and any other relevant documents submitted by the appellant to the Board. The record shall be produced within 14 days of the notice of appeal unless good cause is shown for a delay.
(c) Transcript of the proceedings. Tape-recordings of any oral proceedings shall be sufficient for a transcript. If a stenographic record of the oral proceedings was made the Board shall file the transcript with the Appellate Officer.
(d) Appellate Prehearing Conference. In any appeal, upon 14 days' notice to the parties, the Appellate Officer may direct the parties to appear for a conference to consider simplification of the issues, possibility of settlement, and such other matters as may aid in disposition of the proceedings by the Appellate Officer.
(e) Briefs; Oral Argument. The appellant must submit a brief within 30 days after the date on the notice that the record is complete. The Board must file any responsive brief within 21 days after the appellant's brief is filed. Briefs shall not exceed 15 double-spaced pages. A case shall be deemed ripe for oral argument when the responsive brief is filed or when the time for filing the responsive brief has expired. Oral argument may be scheduled in advance of the filing of the responsive brief consistent with the requirements of this Rule. Each party will be allowed 15 minutes for oral argument.
(f) Taking Additional Evidence on Appeal. Upon motion and good cause shown, the Appellate Officer may schedule a hearing to take additional evidence on whether irregularities in procedure occurred that are not otherwise of record. The hearing on those irregularities is to be limited to those matters not of record. The Appellate Officer is not authorized to rehear substantive evidence that otherwise was or could have been raised before the hearing authority.
(g) Decision. The Appellate Officer shall issue a written decision within 45 days of final hearing affirming the order of the Board, or reversing and remanding with instructions to the hearing authority on requirements to conform the Board's order to the law.
(h) Further Appeal. An individual aggrieved by a decision of the Appellate Officer may appeal directly to the Supreme Court as authorized by 7 V.S.A. §
847(c) and in accordance with the Vermont Rules of Appellate Procedure.
