Broad Stop‑Sale Authority and Strict Record Requirements in Cannabis Enforcement: Commentary on In re Holland Cannabis, LLC, 2025 VT 61

Broad Stop‑Sale Authority of the Cannabis Control Board and Strict Record Requirements for Bias Claims: Commentary on In re Holland Cannabis, LLC, 2025 VT 61

I. Introduction

In In re Holland Cannabis, LLC, 2025 VT 61, the Vermont Supreme Court affirmed the Cannabis Control Board’s (CCB or Board) revocation of a cannabis cultivation license following findings that Holland Cannabis, LLC had reintroduced a prohibited pesticide—myclobutanil—into its products despite a prior enforcement action and corrective action plan.

The opinion sits at the intersection of Vermont’s emerging cannabis regulatory regime and long‑standing principles of administrative law and due process. It addresses:

  • How broadly the CCB may exercise its statutory authority to issue “stop‑sale” orders under 7 V.S.A. § 904(e)(1);
  • What constitutes a sufficient “threat or potential threat to health and safety” to justify emergency health-and-safety orders under Board Rule 4.6.2 and Rule 4.10;
  • The procedural requirements for a due‑process challenge based on alleged decisionmaker bias, including the need to create an evidentiary record;
  • Preservation and waiver in administrative proceedings, including under Vermont Rule of Evidence 612; and
  • The Court’s insistence on adequate briefing for constitutional attacks on the structure and authority of the Board.

On one level, the decision is a fact‑intensive affirmation of an enforcement outcome against a repeat violator. On a broader level, it crystallizes several important principles that will govern future cannabis enforcement and, more generally, contested administrative cases in Vermont.

II. Summary of the Opinion

Holland Cannabis, a tier‑2 licensed cannabis cultivator, had previously entered into a 2023 agreed disposition and corrective action plan (CAP) with the Board after myclobutanil was found in its products. That CAP required a six‑month remediation period, payment of $27,000 in penalties, and a two‑year plan to ensure pesticide‑free cultivation.

In early 2024, Board compliance agents, conducting random retail sampling, again detected myclobutanil in Holland products—including in 2023 harvest lots that had previously tested clean. Additional testing of retail and on‑site samples revealed a widespread pattern of contamination. The Board concluded that the pattern was inconsistent with accidental environmental exposure and strongly suggested intentional use of the banned pesticide at Holland’s facility. Although Holland bought back some product, it did not issue a public warning to consumers and sent “mixed messages” to retailers about the seriousness of the contamination.

Acting under 7 V.S.A. § 904(e)(1) and its own emergency enforcement rule (Rule 4.10), the Board:

  • Issued a notice of violation (NOV) with “immediate effect”;
  • Ordered a stop‑sale on “all Holland Cannabis products” (effectively a mandatory recall); and
  • Proposed a $20,000 fine and revocation of Holland’s license.

After a contested hearing, the Board:

  • Dismissed one charged violation (for concealing evidence) as duplicative of the pesticide‑use violation;
  • Upheld violations for:
    • Failure to abide by the 2023 corrective action plan (Rule 4.5.1(d)), and
    • Use of unauthorized pesticides (Rule 4.5.2(m));
  • Found that myclobutanil was more likely than not introduced at Holland’s facility through a “willful, wrongful act”; and
  • Revoked Holland’s license, after considering aggravating and mitigating factors.

An appellate officer affirmed, and Holland appealed to the Vermont Supreme Court, raising:

  1. An argument that the stop‑sale order for “all” Holland product exceeded statutory authority under § 904(e)(1) and Board Rule 4.6.2;
  2. A due‑process challenge based on alleged bias of the Board chair, who declined to recuse himself;
  3. An evidentiary challenge under Vermont Rule of Evidence 612 regarding a witness’s use of a written “timeline” to refresh recollection;
  4. A challenge to the sufficiency of the evidence supporting the Board’s findings of pesticide use and corrective‑plan violation; and
  5. A facial separation‑of‑powers challenge to the statutory creation and structure of the CCB.

The Court:

  • Held that the Board acted within its authority under 7 V.S.A. § 904(e)(1) in ordering a stop‑sale on all Holland products by treating Holland’s entire inventory as a “block” of cannabis, deferring to the Board’s interpretation of the statute;
  • Upheld the Board’s application of its own Rule 4.6.2, holding that a “threat or potential threat to health and safety” does not require proof of actual consumer illness;
  • Rejected the bias/recusal claim because Holland created no evidentiary record; unsworn filings are pleadings, not evidence, and there is a strong presumption of administrative impartiality;
  • Found the Rule 612 challenge unpreserved because Holland did not seek production of the document at the hearing; and
  • Affirmed the Board’s factual findings under the deferential standard of 7 V.S.A. § 847(b), holding that the Board need not identify the precise mechanism of contamination so long as it could find by a preponderance that Holland used myclobutanil and violated its CAP.

The Court declined to reach Holland’s due‑process attack on the stop‑sale procedures and its separation‑of‑powers challenge to the CCB’s enabling statute, finding those claims inadequately briefed and/or outside the scope of the proceeding as framed below.

III. Detailed Analysis

A. Regulatory and Factual Context

1. Vermont’s cannabis regulatory framework

The Cannabis Control Board, established under 7 V.S.A. ch. 33, licenses “cannabis establishments,” including cultivators, manufacturers, wholesalers, retailers, and labs. Its core functions include:

  • Licensing and regulating commercial cannabis activity (7 V.S.A. §§ 861(8), 901);
  • Administering compliance and enforcement (id. §§ 843(b)(2), 861(8));
  • Enforcing the statutory requirement that “only unadulterated cannabis shall be offered for sale” (id. § 904(e)(1)); and
  • Adopting rules governing permitted pesticides (id. § 881(a)(2)(A)(ii)).

The Board implemented this statutory mandate via Board Rule 2.1.3, which defines “adulterated” cannabis to include:

  • Products falling “outside of action levels or established tolerances specified in Board testing guidance”; or
  • Products containing any additive or substance that “may . . . present an enhanced risk to human health.”

The same rule structure (Rule 4.x) provides for:

  • Investigations (Rule 4.2.1, 4.3.2);
  • Notices of violation and penalties (Rule 4.4, 4.5, 4.8);
  • General rule that penalties do not take effect until after an opportunity to contest (Rule 4.9); and
  • An emergency exception (Rule 4.10), allowing immediate‑effect orders when an “imminent threat to public health, safety, or welfare” is found, subject to a later contested hearing.

2. Myclobutanil and Holland’s prior violations

Myclobutanil, the active ingredient in several fungicides, is categorically prohibited in Vermont cannabis cultivation because it may cause illness if inhaled or smoked. Vermont requires:

  • Pesticide testing (including myclobutanil) of flower harvest lots and cannabis products prior to sale; and
  • “Clean” certificates of analysis (COAs) as a prerequisite to moving product to market.

Holland had already been investigated in 2023 following consumer complaints of illness. That investigation revealed myclobutanil contamination, and Holland:

  • Agreed not to contest multiple violations related to adulteration;
  • Served a six‑month remediation period with no cannabis commerce;
  • Paid $27,000 in penalties; and
  • Entered a two‑year corrective action plan to ensure compliance without prohibited pesticides.

3. The 2024 investigation and Board findings

In March–April 2024, Board compliance agents, conducting random retail sampling, collected Holland products at Kushies, a retailer. Lab results showed:

  • Myclobutanil detections in several retail samples of Holland flower and pre‑rolls;
  • Detections in roughly one‑quarter of ~130 Holland samples collected across flower, pre‑rolls, and on‑site batches; and
  • Contamination in products assigned to harvest lots that had previously tested clean.

Additional concerning facts included:

  • Holland’s delay of 12 days in permitting on‑site sampling after the agent’s request;
  • Holland’s rapid buy‑back of some Kushies inventory, but no public warning to consumers;
  • Evidence that a strain testing above the myclobutanil action limit had not been properly pesticide‑tested with its stated harvest lot, but only later for potency/pathogens; and
  • Reports of retailers questioning the seriousness of the contamination, such that one retailer independently submitted Holland samples, which again tested positive.

The Board:

  • Rejected Holland’s theories that:
    • Board agents’ sampling may have allowed outside adulteration; or
    • A laboratory “harvest lot switch” created false positives;
  • Credited the Board agent’s description of careful, industry‑standard sampling and the lab owner’s testimony about reliable processes and inventory controls;
  • Found that myclobutanil does not spontaneously arise in the environment and that indoor grows are not meaningfully exposed to pesticide drift; and
  • Concluded that inadvertent or environmental exposure was highly unlikely, and that the evidence “point[ed] overwhelmingly” to Holland’s facility as the source, with willful conduct more probable than mere negligence or “bad luck.”

Against this factual backdrop, the Supreme Court evaluated Holland’s legal challenges.

B. Precedents and Authorities Cited

1. Standard of review and role of the appellate officer

  • 7 V.S.A. § 847(b)–(c): Establishes the standard of judicial review of Board decisions. The Court must uphold the Board’s order unless the appellant shows that substantial rights were prejudiced because the Board’s decision:
    • Violated constitutional or statutory provisions;
    • Exceeded statutory authority;
    • Was made upon unlawful procedure or affected by other legal error;
    • Was “clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record”; or
    • Was arbitrary, capricious, or an abuse of discretion.
  • Pomerantz v. Cannabis Control Bd., 2024 VT 57, and Tarrant v. Dep’t of Taxes, 169 Vt. 189 (1999):
    • Cited for the principle that the Court does not reweigh evidence or substitute its judgment for the Board on factual questions.
    • Clarify that when an appellate officer functions only as an appellate body and takes no new evidence, the Supreme Court reviews the agency’s initial decision directly, without deference to the intermediate appellate officer’s conclusions.
  • Devers‑Scott v. Office of Professional Regulation, 2007 VT 4:
    • Confirms that where a statute affords an intermediate administrative appeal, the Vermont Supreme Court independently reviews the original agency decision; the intermediate appeal simply provides “two appeals” but does not change the standard of review.

2. Deference to agency statutory and regulatory interpretation

  • Shires Housing, Inc. v. Brown, 2017 VT 60:
    • Articulates Vermont’s “Chevron‑like” deference: when a statute is silent or ambiguous and an agency charged with enforcing it has interpreted it within its expertise, the Court defers to that interpretation unless it is “unjust or unreasonable.”
    • Used here to uphold the Board’s construction of “in blocks” in 7 V.S.A. § 904(e)(1) to encompass all Holland product.
  • Plum Creek Maine Timberlands, LLC v. Dep’t of Forests, Parks & Recreation, 2016 VT 103:
    • Supports deference where the agency has broad authority to set standards and enforce them, including methodology for measuring compliance.
    • The Court analogizes the Board’s determination that “all Holland cannabis product” constituted a “block” to the forestry agency’s choice of methods for measuring residual basal area.
  • In re Conservation Law Foundation, 2018 VT 42, and In re McNamer, 2024 VT 50:
    • Reaffirm that courts defer to an agency’s interpretation of its own duly promulgated rules, vacating only if:
      • The interpretation exceeds statutory authority;
      • Conflicts with prior interpretations without justification;
      • Produces unjust, unreasonable, or absurd results; or
      • Displays compelling indicia of error.
    • Applied to uphold the Board’s view that no proof of actual harm is required under Rule 4.6.2, only a “threat or potential threat” to health and safety.

3. Due process, bias, and recusal

  • Withrow v. Larkin, 421 U.S. 35 (1975):
    • U.S. Supreme Court decision establishing that combined investigatory and adjudicatory functions within a single agency do not, by themselves, violate due process; and that administrative decisionmakers are presumed honest and impartial.
  • Sec’y, Agency of Nat. Res. v. Upper Valley Reg’l Landfill Corp., 167 Vt. 228 (1997); McIsaac v. Univ. of Vt., 2004 VT 50:
    • Applied to reiterate the presumption of honesty and integrity in administrative adjudicators and the moving party’s burden to show bias or prejudgment.
  • Burch‑Clay v. Taylor, 2015 VT 110; In re Grismore, 2024 VT 70:
    • Confirm that due process requires an impartial decisionmaker; bias or prejudgment may defeat that right.
  • In re Davenport, 129 Vt. 546 (1971); State v. Putnam, 164 Vt. 558 (1996):
    • Emphasize that, absent automatic legal disqualification, whether a decisionmaker is prejudiced is a question of fact.
    • Place on the moving party the duty to “make a record” capable of supporting a ruling on disqualification.
  • Schweiker v. McClure, 456 U.S. 188 (1982):
    • Quoted for the principle that the burden of establishing disqualifying interest lies on the party asserting it, under a presumption of impartiality.
  • In re Odessa Corp., 2006 VT 35 (mem.), and Ainsworth v. Chandler, 2014 VT 107:
    • Examples where recusal motions failed because the moving party “failed to substantiate” bias claims or provided no evidentiary support.
    • Used to analogize Holland’s failure to provide proof of the chair’s alleged prejudicial statements.
  • In re Illuzzi, 164 Vt. 623 (1995) (mem.):
    • Referenced in a footnote to highlight the important distinction between:
      • Statements that merely describe pending charges; and
      • Statements that reflect prejudgment of the merits.
    • The Court notes that this is the nuance Holland attempted to invoke, though it never created a record of the statements.

4. Evidence, record‑building, preservation, and briefing

  • 3 V.S.A. § 809(g) (Administrative Procedure Act):
    • Requires that agency findings in a “contested case” be based exclusively on evidence in the record and officially noticed facts.
    • The Court uses this to underscore why unsworn prehearing filings are pleadings, not evidence.
  • In re M.L., 2010 VT 5:
    • Recites the classic definition of “preponderance of the evidence”—the scale need only tip “but a feather’s weight” to satisfy the standard.
    • Used to justify upholding the Board’s conclusion that Holland used myclobutanil, even without pinpointing the exact method of introduction.
  • Pratt v. Pallito, 2017 VT 22; In re White, 172 Vt. 335 (2001):
    • Discuss preservation in administrative appeals: issues must be raised “with specificity and clarity” in the original forum to give it a fair opportunity to rule.
    • Used to reject Holland’s belated argument under the Vermont Code of Ethics, which had not been made to the Board chair.
  • Agency of Transp. v. Timberlake Assocs., LLC, 2024 VT 14; State v. Bergquist, 2019 VT 17:
    • Stand for the principle that arguments inadequately briefed—or not assigned as error—are forfeited on appeal, even when constitutional.
    • Applied repeatedly to Holland’s due‑process challenge to the stop‑sale and its separation‑of‑powers claim.
  • State v. Gleason, 154 Vt. 205 (1990); Pease v. Windsor Dev. Rev. Bd., 2011 VT 103 (mem.):
    • Warn that appellants must “diligently develop and plausibly maintain” state constitutional issues with substantive analysis and authority.
    • Used to dismiss Holland’s reliance on the Governor’s letter without doctrinal analysis.

5. Other authorities and rules

  • 7 V.S.A. §§ 1, 904(e):
    • § 1 states that Title 7 must be “liberally construed” to protect public welfare, health, and safety—supporting a broad reading of “blocks” and stop‑sale powers.
    • § 904(e)(1)–(2) requires that:
      • Only “unadulterated” cannabis be sold;
      • Upon detection of violative pesticide residue, the Board “shall” order cannabis to be put on stop‑sale, treated, or destroyed;
      • Cannabis on stop‑sale or ordered destroyed must be “clearly separable from salable cannabis.”
    • These provisions underlie the Court’s conclusion that where contamination is pervasive and not clearly compartmentalized, the Board may treat all product as non‑“salable” and subject to stop‑sale.
  • Board Rules 4.6.2, 4.10, 4.13:
    • Rule 4.6.2: Health-and-safety orders, including stop‑sale, may issue only when “necessary to mitigate a threat or potential threat to health and safety.”
    • Rule 4.10: Provides for NOVs with “immediate effect” where an “imminent threat” is found, subject to later hearing; sets the Board’s preponderance standard.
    • Rule 4.13(f): Allows an appellate officer, upon motion and good cause, to take evidence on alleged procedural irregularities not shown in the record. Holland never moved under this rule.
  • Vermont Rules of Evidence 612:
    • V.R.E. 612(a): When a witness uses a writing during testimony to refresh memory, the adverse party is entitled to have the writing produced “at the trial [or] hearing.”
    • V.R.E. 612(c): The adverse party may inspect, cross‑examine about, and introduce portions related to testimony.
    • The Court holds Holland forfeited any Rule 612 rights by failing to request production during the hearing.
  • Vermont Code of Ethics, 3 V.S.A. §§ 1201–1205:
    • Holland argued on appeal that the chair was required to issue a public written statement explaining the absence of a conflict.
    • The Court declined to reach this argument because it was never presented to the Board, highlighting rigorous enforcement of preservation rules.

C. Legal Reasoning in Depth

1. Statutory authority for a stop‑sale order covering all Holland products

The central statutory issue was whether 7 V.S.A. § 904(e)(1) allowed the Board to put all Holland products on stop‑sale, not just specific tested lots. The statute provides that, upon finding “violative pesticide residue or other contaminants of concern,” the Board shall order the cannabis “either individually or in blocks” to be:

  • Put on stop‑sale;
  • Treated; or
  • Destroyed.

The statute does not define “in blocks.” The Court proceeds as follows:

  1. Identifies ambiguity:
    • “In blocks” is not defined, and the statute does not specify how large a “block” may be.
  2. Applies deference to the Board:
    • Because the Board is charged with enforcing § 904(e), its interpretation of the scope of “blocks” merits deference under Shires Housing, so long as it is not unjust or unreasonable.
    • The Board, in effect, treated Holland’s entire product line as a single “block.”
  3. Reads “blocks” in light of “clearly separable from salable cannabis”:
    • § 904(e)(2) requires that cannabis ordered destroyed or put on stop‑sale be “clearly separable from salable cannabis.”
    • The notice of violation described unprecedented, widespread adulteration, including:
      • Positive tests in multiple products, forms, and locations; and
      • Contamination of products previously tested as clean.
    • Based on this, the Board reasonably concluded there was no category of Holland product that could confidently be deemed “salable” (i.e., unadulterated) and clearly separated from adulterated product.
  4. Considers statutory purpose and liberal construction:
    • Title 7 is expressly to be “liberally construed” to protect public health and safety (7 V.S.A. § 1).
    • A narrow reading of “blocks” that prevented comprehensive action in the face of systemic contamination would be inconsistent with that purpose.
  5. Holland’s failure to engage the text:
    • Holland did not seriously grapple with the statutory language or propose an alternative construction grounded in the text.
    • The Court notes Holland’s failure to demonstrate that the Board’s reading was unjust, unreasonable, or contrary to the statute.

On this reasoning, the Court holds that the Board’s decision to treat all Holland cannabis product as a “block” subject to stop‑sale fell squarely within § 904(e)(1) and the deference owed to the agency’s expertise.

2. Application of Board Rule 4.6.2: “Threat or potential threat to health and safety”

Holland also argued that Board Rule 4.6.2 was violated because:

  • Holland had already engaged in a voluntary recall; and
  • The parties stipulated that no consumer complaints of illness arose in 2024 from Holland products.

Rule 4.6.2 allows health-and-safety orders, such as stop‑sale, “only when necessary to mitigate a threat or potential threat to health and safety.” The Court’s analysis:

  1. Deference to the Board’s interpretation:
    • Under Conservation Law Foundation and McNamer, the Court defers to the Board’s interpretation of its own rule, absent compelling error.
  2. No requirement of actual harm:
    • The text explicitly refers to a “potential threat”; it does not require proof that someone was actually harmed.
    • Evidence that Holland’s adulterated product had entered the consumer stream—combined with the inherent health risks of smoking myclobutanil—was sufficient to constitute such a threat.
  3. Voluntary recall not dispositive:
    • The Board reasonably found that:
      • Holland’s recall was partial (e.g., focused on pre‑rolls);
      • No public warning reached consumers who had already purchased product; and
      • The pattern of detections was expanding and “unprecedented.”
    • Given this, the Board could reasonably conclude that a mandatory, comprehensive stop‑sale—rather than relying on Holland’s incomplete voluntary efforts—was “necessary” to mitigate the threat.
  4. Other states’ pesticide limits:
    • Holland attempted to argue that many states permit higher myclobutanil levels, implying that Vermont’s threshold is overprotective.
    • The Board correctly ruled that the safety of myclobutanil in cannabis was beyond the scope of the license‑revocation proceeding, and Holland failed to assign error or brief the issue adequately. The Supreme Court thus declined to consider it.

The result is a robust affirmation of the Board’s authority to act proactively in the face of contamination, without waiting for documented harm.

3. Due process and the impartial decisionmaker: the failure to build a record

Holland claimed that the Board chair had made prejudicial public remarks about the 2024 case, and that due process required his recusal. The Court’s analysis is a textbook application of administrative due process principles to a sparse record.

  1. Presumption of impartiality and the burden of proof:
    • Drawing on Withrow, Upper Valley Reg’l Landfill, and Schweiker, the Court reaffirms that:
      • Administrative adjudicators are presumed to act honestly and with integrity; and
      • The party alleging bias bears the burden of overcoming that presumption.
  2. Need for an evidentiary record:
    • Under 3 V.S.A. § 809(g), findings in contested cases must be based on “evidence” and officially noticed matters.
    • The Court underscores that a party seeking recusal must “make a record on which a decision could be reached.”
    • Unsworn prehearing filings—even when made part of the administrative record—are pleadings, not evidence.
  3. What Holland actually did:
    • In its prehearing filings, Holland quoted, in fragmentary form, statements allegedly made by the chair “to the media,” without:
      • Identifying the outlets;
      • Providing the full context or underlying documents; or
      • Submitting affidavits or testimony.
    • Holland never moved prehearing for recusal or an evidentiary hearing.
    • At the hearing, Holland orally requested that the chair either:
      • Admit making the statements; or
      • Recuse himself based on the prehearing filing.
    • When the chair indicated the filings were part of the record and did not admit or deny the specific statements, Holland abandoned the effort to elicit testimony and did not offer any evidence.
  4. Consequences:
    • Because Holland presented no evidence of the alleged statements, the Board—and later the Court—had nothing on which to base a factual finding of bias or prejudgment.
    • Absent such a record, the presumption of impartiality stands unrebutted as a matter of law.

Importantly, the Court does not hold that a Board chair’s public statements about an ongoing enforcement action can never require recusal. Rather, it holds that:

“Because Holland failed to create an evidentiary record on this issue, it necessarily failed to show that it was denied its due-process right to an impartial decisionmaker.”

This is a strong procedural message: bias claims must be supported with sworn, admissible evidence in the administrative record, not just argument.

4. Rule 612 and the duty to invoke procedural rights at the hearing

Holland objected during the Board hearing that a compliance agent witness was consulting a “timeline” document while testifying. On appeal, Holland invoked Vermont Rule of Evidence 612, which gives the adverse party the right to inspect any writing used to refresh recollection during testimony.

The record showed that:

  • The witness clarified she had prepared a timeline of dates for her own recollection.
  • When Holland objected, the Board’s counsel explicitly asked whether Holland wanted a further ruling or whether the witness’s explanation was sufficient.
  • Holland’s counsel asked if there was a “commitment to share” the document later; Board counsel agreed to do so absent contrary instruction.
  • No request was made on the record for production of the document during the hearing.

The Court concludes:

  • Rule 612(a) clearly entitles the adverse party to production “at the . . . hearing” if a writing is used to refresh recollection.
  • But Holland never invoked that right at the hearing, and thus:
    • It forfeited its right under Rule 612(a) to inspect the document on the spot; and
    • It also forfeited its associated rights under Rule 612(c) to cross‑examine based on the writing and introduce it into evidence.
  • Because Holland did not request production or renew any objection after the Board’s offer to share the document, its later challenge to the Board’s alleged “mischaracterization” of the document was unpreserved.

This portion of the decision illustrates a consistent enforcement of preservation rules in administrative settings: procedural protections exist, but parties must assert them in real time.

5. Sufficiency of the evidence: no need to identify the precise mechanism of contamination

Holland argued that the Board failed to prove, by a preponderance, that Holland “intentionally introduced” myclobutanil, in part because the Board stated that it was “troubled” that the precise “means of myclobutanil introduction . . . remains unclear.”

The Court rejects this argument on two levels:

  1. Legal relevance of the “means” of contamination:
    • The violations sustained were:
      • Failure to abide by a corrective action plan (Rule 4.5.1(d)); and
      • Use of unauthorized pesticides (Rule 4.5.2(m)).
    • Neither rule requires the Board to identify the precise mechanics of how the pesticide was applied or introduced. The critical questions are:
      • Did Holland’s product contain myclobutanil in violation of law and its CAP?
      • Was this the result of use in its cultivation operations, rather than purely external causes?
  2. Application of the preponderance standard:
    • Relying on In re M.L., the Court reiterates that the preponderance standard is satisfied when the scales of proof tip, “however slightly,” towards the party with the burden.
    • The Board found:
      • A pervasive pattern of myclobutanil detections inconsistent with environmental drift or one‑off contamination;
      • Contamination in multiple strains, product forms, and locations, including on‑site; and
      • Credible sampling and lab protocols, undermining sabotage or lab‑switch theories.
    • From this, the Board reasonably inferred that Holland “employed myclobutanil in its cultivation operation” in contravention of the CAP.
    • The Board’s inability to reconstruct the exact mechanism of administration does not negate that inference under a preponderance standard.

Holland also argued that its alternative hypotheses (sabotage, lab error) were not given sufficient weight. But under the statutory standard of review, the Supreme Court may not reweigh evidence or substitute its judgment on credibility; it asks only whether the Board’s findings are “clearly erroneous in view of the record as a whole.” Finding that they are not, the Court declines to disturb them.

6. Separation‑of‑powers challenge: inadequately briefed and functionally deferred

Holland argued that the Board’s establishment and operations violate the separation‑of‑powers clause of the Vermont Constitution, ch. II, § 5. The claim appears to have been styled as a facial challenge to the Board’s enabling legislation, invoking (without elaboration) a June 2023 letter from Governor Scott expressing constitutional concerns about the Board’s structure.

The Court refuses to consider the argument for several reasons:

  • Scope of the proceeding:
    • The Board had ruled that Holland’s constitutional challenge to the enabling statute was beyond the scope of a license‑revocation proceeding focused on specific violations.
    • On appeal, Holland asserted that this was error but offered no analysis or authority to support that contention.
  • Substance of the challenge:
    • Although framed as a facial challenge, Holland’s argument largely collapsed into the contention that the Board exceeded its statutory authority in issuing the stop‑sale order—an argument separately addressed and rejected on statutory grounds.
  • Inadequate briefing:
    • Holland cited only the Governor’s letter, without doctrinal analysis of Vermont separation‑of‑powers jurisprudence or explanation of how the Board’s statutory powers are unconstitutional on their face.
    • Under Gleason and Pease, this falls far short of the requirement to “diligently develop and plausibly maintain” a constitutional claim.

The upshot is that the Court leaves the constitutional question unresolved, but in the meantime, the Board’s existence and authority remain fully operative and judicially enforced. The decision signals that any future structural challenge must be grounded in rigorous constitutional argument, not merely policy concerns or political correspondence.

D. Impact and Significance

1. Implications for cannabis licensees and the Board’s enforcement powers

For cannabis businesses in Vermont, this decision sends several clear messages:

  • Systemic contamination triggers systemic remedies:
    • Where the Board reasonably finds that contamination is widespread, unpredictable, or not clearly confined to specific lots, it may treat the entire inventory as a “block” and order a comprehensive stop‑sale or destruction.
    • Licensees cannot assume that prior “clean” COAs will shield particular products if later sampling suggests facility‑wide issues.
  • Prior violations and corrective plans heighten risk:
    • Holland’s 2023 myclobutanil case and CAP loom large in the Court’s framing. Re‑offending after a CAP not only supports findings of willfulness but also justifies the most severe sanction (revocation).
  • Partial recalls and quiet remediation are not enough:
    • Holland’s choice to buy back pre‑rolls without public notification or clear communication to retailers was viewed as undermining, not supporting, its credibility and mitigation efforts.
    • Future licensees confronting contamination should anticipate that:
      • Transparent, broad public warnings; and
      • Prompt, unqualified cooperation with Board sampling and recall;
      will likely be critical in mitigating sanctions.
  • Emergency authority is real and will be upheld:
    • The Court affirms the Board’s authority under Rule 4.10 and § 904(e)(1) to act with “immediate effect” upon an “imminent threat,” even before a full hearing, provided that a later contested hearing occurs under a preponderance standard.
    • Due‑process challenges to those emergency powers must be timely raised and fully briefed, or they will be deemed forfeited.

2. Lessons for practitioners in administrative litigation

The decision is equally significant as a procedural roadmap for lawyers litigating before Vermont agencies:

  • Build an evidentiary record, not just a paper trail:
    • Recusal motions and bias claims must be supported with:
      • Affidavits, sworn testimony, or documentary evidence; not merely allegations in briefs;
      • Requests for evidentiary hearings where appropriate; and
      • Timely objections during the hearing.
    • Absent such a record, appellate courts will default to the presumption of impartiality.
  • Invoke evidentiary rights at the moment they arise:
    • Rule 612 rights must be asserted during the hearing—when the witness is using the writing to refresh recollection—not later on appeal.
    • The same principle applies to other procedural objections: silence at the hearing is frequently treated as consent or waiver.
  • Preservation is strictly enforced in administrative appeals:
    • Arguments first raised before an appellate officer, or only in the Supreme Court, are generally too late.
    • Issues must be:
      • Presented to the original decisionmaker;
      • Accompanied by a request for a ruling; and
      • Renewed or clarified as necessary when circumstances change during the hearing.
  • Briefing must be substantive, especially for constitutional issues:
    • The Court reiterates its unwillingness to resolve constitutional questions on skeletal briefing or policy‑level assertions.
    • Practitioners should present:
      • A clear articulation of the nature of the challenge (facial vs. as‑applied);
      • Textual, historical, and doctrinal analysis; and
      • Citations to controlling or persuasive case law.
  • Understand the limited role of intermediate appellate officers:
    • Because the Supreme Court reviews the Board’s decision de novo on the existing record (as to legal issues and under the statutory standard of review), disputes about how the appellate officer characterized that record are usually of limited value.

3. Signals about future constitutional challenges to the Cannabis Control Board

The Court’s refusal to reach Holland’s separation‑of‑powers claim does not foreclose future structural challenges to the Board. However, it does make clear:

  • Such challenges must be squarely raised in a forum that can address them (potentially through declaratory judgment or a properly framed administrative proceeding);
  • They must include:
    • Analysis of the constitutional text (Vt. Const. ch. II, § 5);
    • Discussion of Vermont’s separation‑of‑powers case law; and
    • Specific explanation of how the Board’s functions or structure impermissibly blend legislative, executive, and judicial powers.
  • Relying on a Governor’s signing statement or letter, without legal analysis, is insufficient.

Until such a challenge is properly presented and sustained, Holland signifies that the Board’s enforcement actions—including its most severe sanctions—will be upheld when grounded in evidence and within its statutory authority.

IV. Simplifying Key Legal Concepts

  • Stop‑sale order:
    An administrative order prohibiting the sale of specified products. Under 7 V.S.A. § 904(e)(1), the Board must issue such an order when it finds violative pesticide residues; the products may be targeted “individually or in blocks.” In practice, this can function as a recall when applied broadly.
  • “Adulterated” cannabis:
    Cannabis that is unsafe or non‑compliant, for example:
    • Containing banned pesticides like myclobutanil;
    • Exceeding established “action levels” for contaminants; or
    • Containing additives that create enhanced health risks.
    Only unadulterated products may be sold.
  • Preponderance of the evidence:
    The standard of proof in civil and most administrative cases: a fact is proven if it is “more likely than not” true. The Court describes it as the evidentiary scale tipping “but a feather’s weight” towards the party with the burden.
  • Corrective action plan (CAP):
    A negotiated set of obligations imposed on a licensee after violations, often including:
    • Operational changes;
    • Testing requirements;
    • Monitoring periods; and
    • Restrictions on activities.
    Failure to comply with a CAP is itself an independent violation.
  • Imminent threat vs. potential threat:
    • Imminent threat: Justifies immediate‑effect enforcement under Rule 4.10—danger is sufficiently serious and close in time that waiting for typical procedures would be unsafe.
    • Potential threat: Under Rule 4.6.2, a risk that may or may not have materialized but is serious enough to warrant preventive action like stop‑sale, even without actual harm.
  • Deference to agency interpretation:
    When statutes or rules are ambiguous, courts often defer to how the responsible agency interprets and applies them, especially in technical fields. The rationale is that agencies have specialized expertise and legislative delegations of authority.
  • Facial vs. as‑applied constitutional challenge:
    • Facial challenge: Argues that a statute or structure is unconstitutional in all applications.
    • As‑applied challenge: Argues the law is constitutional in general but unconstitutional as applied to the particular facts or party.
    Holland claimed a “facial” challenge but largely argued the Board misused its powers in this case—closer to an as‑applied theory, and in any event not adequately developed.
  • Preservation:
    The doctrine requiring parties to raise issues in the first decision‑making forum, with sufficient clarity and at the right time, so that the tribunal can address them. Issues not preserved are usually deemed waived on appeal.
  • Inadequate briefing:
    An appellate brief must contain developed argument, citations to authority, and references to the record. Bare assertions or references without analysis are considered inadequate; courts will decline to reach those issues—even constitutional ones.
  • Recusal and bias:
    Recusal is the process by which a judge or decisionmaker steps aside from a case due to conflict of interest or bias. To obtain recusal:
    • The moving party must present evidence of bias or prejudgment, not mere suspicion.
    • There is a presumption that adjudicators are impartial.
    • Statements about a case may or may not trigger recusal, depending on whether they show actual prejudgment of disputed facts.

V. Conclusion

In re Holland Cannabis, LLC solidifies several key points in Vermont’s administrative and cannabis‑regulatory jurisprudence:

  • The Cannabis Control Board possesses broad, but textually grounded, authority under 7 V.S.A. § 904(e)(1) to issue stop‑sale orders that sweep in an entire licensee’s inventory when contamination is pervasive and cannot be clearly segregated from “salable” product.
  • Health-and-safety orders do not require proof of actual consumer harm; a well‑substantiated “threat or potential threat” to health is sufficient, particularly where a prohibited pesticide has entered the consumer stream.
  • Due‑process challenges based on bias require an evidentiary record. Pleadings and unsworn allegations cannot substitute for proof, and the presumption of impartiality is strong.
  • Procedural rights, such as those under Vermont Rule of Evidence 612, are real but must be invoked at the hearing stage; failing to do so will foreclose later review.
  • Under the statutory standard of review, the Supreme Court will not reweigh evidence or second‑guess the Board’s reasonable inferences when supported by substantial evidence, even in technically complex matters like pesticide contamination.
  • Constitutional challenges to the Board’s existence or structure remain theoretically open but will be dismissed unless they are fully preserved and thoroughly briefed with doctrinal support.

In combination, these rulings strengthen the Cannabis Control Board’s hand in addressing health risks and non‑compliance in Vermont’s cannabis market, while also offering clear procedural guidance for licensees and practitioners. The decision underscores that in this regulated space, both substantive compliance (particularly with pesticide bans) and disciplined, well‑documented advocacy are essential.

Case Details

Year: 2025
Court: Supreme Court of Vermont

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