Politics
Delaware Bill To Let Medical Marijuana Dispensaries Begin Recreational Sales Clears Senate Committee
A Delaware Senate committee has advanced a House-passed bill that would let existing medical marijuana businesses in the state begin selling cannabis to adults, a move designed to allow recreational sales to begin months earlier than planned. Critics, however, say the legislation would give an unfair market advantage to larger, more dominant businesses already operating in multiple states.
The legislation, which the Senate Judiciary Committee approved on Wednesday, would let current medical marijuana providers convert to dual-use licensees that could serve both registered patients and adults over 21. Fees from the license conversions—which are estimated to bring in more than $4 million—would be used for financial assistance to social equity-owned cannabis businesses.
HB 408, sponsored by Rep. Ed Osienski (D), would create a “conversion license” category, laying out requirements for medical cannabis businesses to apply and also stipulating that the applicants who are denied due to local bans can apply for general licenses for a new location, which must be approved as long as they meet the requirements.
Prospective conversion licensees would have to demonstrate that they can continue to meet demand among medical patients, show plans to support the state’s social equity program and enter into a labor peace agreement with a “legitimate” union, for example.
“House Bill 408 essentially creates a pathway for the existing compassion centers to be able to have licensing for recreational marijuana,” Sen. Trey Pardee (D) said during the committee hearing, explaining that when lawmakers first approved legalization, “the idea was to have everybody starting from the same starting point.”
The proposal would attempt to address what Pardee called “some issues” with the current legalization law, which was enacted last year. “Number one was funding for the social equity licenses, to make some money available for grants and trying to figure out where that funding would come from,” the lawmaker said.
The senator also argued the conversion plan could also eventually help equity-owned retail businesses by allowing existing medical marijuana businesses to provide product for the shops to sell.
“For particularly smaller dispensary operators—again, some of the social licensees—where would their product come from?” he said. “The hope would be that those [existing] facilities would be able to ramp up production and be able to provide wholesale product to some of the startup operators of dispensaries.”
Others at Wednesday’s hearing, however, slammed the bill as a handout to big business.
“This is a corporate giveaway, not an equity program,” said Chris Goldstein, a regional organizer for the advocacy group NORML in Delaware, New Jersey and Pennsylvania.
In New Jersey, Goldstein continued, “a lot of these same promises were made by these same companies about equity and medical access… I can tell you that since adult-use conversions were made in New Jersey, our medical program has shrunk in membership by 50 percent.”
“Prices in New Jersey are equal to Delaware,” he added, “and unfortunately, they are the most expensive cannabis prices in the country. We will not begin to compete with the black market by offering more expensive prices.”
Zoë Patchell, president of the Delaware Cannabis Advocacy Network, said she appreciated recent amendments to the bill made on the House floor but still has serious worries about the conversion plan.
“Our main concerns are that this bill gives six exclusive businesses a head start, permits deferred licensing payments for funding that is needed upfront for social equity businesses and grants these six businesses guaranteed vertically integrated licenses,” Patchell said.
Yet other cannabis consumers in the state, however, pushed back on those claims.
“The opposition to this bill would have you believe that this bill is about corporate greed,” said Sally Stewart, a commenter who identified herself as a Delaware cannabis user. “In reality, this bill would give millions to the people who were disproportionately affected by prohibition.”
Advocates at the group Marijuana Policy Project (MPP), meanwhile, support the legislation but want to see further amendments.
Rawan Elfar, MPP’s public policy and membership coordinator, said lawmakers should modify the proposal to allow all adult-use stores to offer tax-free medical marijuana products to registered patients. That would give patients broader access to higher-potency products—with higher purchase limits—without having to travel to a dedicated medical dispensary.
MPP also wants to see a delivery option added to the bill to allow businesses to drop off medical marijuana products to patients.
The House of Representatives approved the measure on a 29–11 vote earlier this month.
Under the legislation, the Delaware Office of the Marijuana Commissioner (OMC) would need to open applications for conversion licenses by August 1 of this year. The application window would close on November 1.
Conversion licensees could start selling cannabis upon approval. Prior to the license expiring, businesses could apply for general licenses.
An amendment made in the House stipulates that all funds derived from conversion licensing fees from existing medical marijuana businesses “shall only be used as sources of financial assistance for social equity applicants issued a conditional license.”
Osienski said during the House floor discussion at the time that the bill “will allow those that are coming in that were disproportionately affected by the prohibition on marijuana to have financial assistance, just like many of our companies and corporations throughout Delaware when they apply to expand here or move here. So this will provide that resource for them and also allow them to get up.”
An amendment from Osienski made a number of other changes before House passage, including increasing the conversion licensing fee from $100,000 to $200,000, making it so the licenses would expire after 24 months instead of 48 months and requiring applicants to “provide an attestation” that they will continue to serve medical cannabis patients.
With the current lack of regulated adult-use access, there have been examples of unlicensed businesses selling cannabis, underscoring the “urgency” of enacting the bill, Osienski said, adding that he agrees with colleagues that “we need to bolster the compassion centers also and make sure that they are not harmed.”
Also this week, state lawmakers sent a bill to Gov. John Carney (D) that would enact state-level protections for banks that provide services to licensed marijuana businesses.
That measure, from Osienski and Pardee, is designed to clarify that banks, credit unions, armored car services and accounting services providers are not subject to state-level prosecution simply for working with cannabis businesses.
Meanwhile, last month Carney signed into law separate legislation to significantly expand the state’s medical cannabis program as regulators take steps to launch the recreational marijuana market. That new law removes limitations for patient eligibility based on a specific set of qualifying health conditions. Instead, doctors will be able to issue marijuana recommendations for any condition they see fit.
The measure will also allow patients over the age of 65 to self-certify for medical cannabis access without the need for a doctor’s recommendation.
All of this comes as regulators are rolling out a series of proposed regulations to stand up the forthcoming adult-use cannabis market. The current timeline puts the launch of the market at March 2025, according to Delaware Marijuana Commissioner Robert Coupe.
