Marijuana Moment: Delaware Lawmakers Approve Bill To Launch Recreational Marijuana Sales Early Through Existing Medical Cannabis Dispensaries

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A Delaware legislative panel has approved a bill to launch recreational marijuana sales early through existing medical cannabis dispensaries—disregarding concerns from activists who argue the measure will give current businesses run by multi-state operators an unfair advantage.

The House Economic Development/Banking/Insurance and Commerce Committee voted on Tuesday to advance the measure to let current medical providers convert to dual licensees that could serve both patients and adult-use consumers months earlier than the current sales timeline.

The legislation is being sponsored by Rep. Ed Osienski (D) and Sen. Trey Paradee (D), who championed the legalization law that’s being implemented and have taken a number of steps to build upon the reform this session.

HB 408 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.

“This bill will leverage the existing medical medical program to provide a strong foundation for a successful adult-use recreational programs—providing support for the equity program, saving time and resources and generating tax revenue to state within a short time frame,” Osienski told the committee before the vote on Tuesday.

“This will provide an expedient pathway for regulated marijuana to consumers by April 1,” he said.

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. The licenses would expire after four years, but businesses could apply for general licenses prior to that expiration. There would be a $100,000 license fee, and revenue would be used to provide financial assistance to social equity applicants seeking conditional licenses.

Some marijuana reform advocates have concerns that the legislation would unduly favor existing operators over new entrants into the market.

“It’s imperative that this process is done right,” Zoë Patchell, executive director of the Delaware Cannabis Advocacy Network, told lawmakers. “HB 408 would roll back progress by granting six lucky businesses a golden ticket opportunity that no other business will be awarded.”

“HB 408 as written will allow these six businesses to skip line, skip the potential lottery process and grant guaranteed vertically integrated licenses in the limited license market, while all new market participants will be forced to get in the back of the line in hopes of winning a lottery, regardless of how skilled or knowledgeable that business is,” she said.

Chris Goldstein, a regional organizer for the National Organization for the Reform of Marijuana Laws in Delaware, New Jersey and Pennsylvania, told lawmakers that they should not replicate what he said were mistakes made in New Jersey where medical cannabis businesses were given a leg up in entering the recreational market.

“All the promises I’ve seen in New Jersey so far have indeed been broken,” he said. “HB 408 is a model for how not to do things. It’s how New Jersey and some other states have tried it. No state has gotten equity right, and unfortunately, HB 408 is a formula to get it wrong again.”

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The measure’s advancement comes about two months after the legislature approved a separate bill, which was also sponsored by Osienski, that would significantly expand Delaware’s medical marijuana program. It’s currently pending action by Gov. John Carney (D), who allowed the underlying legalization law to take effect without his signature last year.

The legislation would remove limitations for patient eligibility based on a specific set of qualifying health conditions. Instead, doctors could issue marijuana recommendations for any condition they see fit.

It would also allow patients over the age of 65 to self-certify for medical cannabis access without the need for a doctor’s recommendation.

A Delaware Senate committee separately passed a House-approved bill last month that would enact state-level protections for banks that provide services to licensed marijuana businesses.

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.

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