Rationales I've heard for this approach - which is supported by Tourism Commissioner Wendy Knight but not by the Vermont Chamber - include (1) need for a plentiful and diverse stock of vacation lodgings, (2) absence of any health/safety crisis associated with short-term rental properties, and (3) State staffing insufficient to inspect thousands of short-term rental properties.
Vermont seems not to have all its ducks in a row when it comes to tourism. The state is running programs intended to convert visitors to residents, and to attract remote workers to live in VT while getting paid by companies elsewhere. VT has even gone so far as to withdraw its funding - and hence membership - from regional DMO Discover New England (note the list of five New England states and Vermontless map on that page).
Absent effective destination-marketing efforts by the State, what's going to happen to inbound tourism numbers? Will short-term-rental properties continue to proliferate? Will relaxing health inspections for small licensed properties make them competitive enough to survive against short-term-rental competition under conditions of shrinking demand?
Stay tuned.