The Delaware House Economic Committee narrowly releases a bill to allow medical marijuana dispensaries to enter the recreational market.

Delaware legalized recreational marijuana in 2023, and the state has been working to get the market up and running ever since.

The original bill did not allow medical dispensaries to enter the recreational market earlier than other businesses, but now State Rep. Ed Osienski (D-Newark) is proposing the six compassions centers in Delaware be offered a conversion license.

The license would cost $100,000, which would help fund capital needs for social equity license holders – a grant program for individuals who have been affected by prohibition looking to enter the marijuana businesses. Osienski says the bill could provide up to $3.2 million for the program.

Under the bill, compassion centers could apply for a conversion license as early as August of this year and would be given a 12-month period to pay the fee, with the license expiring after 4 years.

“These licenses will provide a chance for the industry to have enough supply of cannabis to meet the April 2025 targeted date with the beginning of recreational market,” Osienski said.

Currently, the Office of the Marijuana Commissioner (OMC) does not to plan to begin accepting license applications from other prospective businesses until September 1, 2024.

If those applicants meet the requirements, they will then enter a lottery system for the potential to be selected for the certain allotted number of licenses for cultivation, product manufacturing and retail and testing facilities — a process compassion centers would be able to skip under this legislation.

Those licenses would be awarded starting in November 2024 through March 2025.

Cannabis advocates argued other states that have implemented conversion licenses have seen medical dispensaries eventually fail to meet the needs of their medical patients after entering the recreational market.

“I was there for this very same process in New Jersey just a few years ago, and these large corporate players promised to keep up a medical marijuana program, promised to lower prices, promised to have special hours, and they ended up getting fined and criticized for providing none of those things and breaking every one of those promises so far,” Chris Goldstein, a regional organizer for the National Organization for the Reform of Marijuana Laws in Delaware, New Jersey and Pennsylvania, testified.

Some advocates argued Delaware compassion centers have already been failing to properly provide for current medical patients, including Executive Director of the Delaware Cannabis Advocacy Network Zoë Patchell.

“Medical dispensaries have not proven that they can adequately accommodate the medical market, nor offer cannabis at an affordable rate,” Patchell said. “Currently, there are only a selected few strains that are offered in an ounce quantity, while most strains are offered at a lower quantity and above market value. How could these companies possibly outcompete the illicit market with practices like that? Adult use consumers are simply not going to pay those high prices. This bill is setting the adult-use market up for failure.”

But Marijuana Commissioner Rob Coupe says Delaware medical marijuana program is small, with only about 15,000 participants, and that contributes to the high pricing and availability concerns.

“Small markets — you don’t have the volume to get the low price that you want to see in competitive pricing,” Coupe said.

But he affirmed OMC is committed to ensuring the compassion centers continue to provide for their patients, explaining they will hold compassion centers to producing the same amount of medical product they were before entering the recreational market.

“That’s what we will hold them to, and not only hold them to meeting that need, but having them commit to either a strategic stockpile or a surplus where they will have a certain amount of product set aside that we know will meet those patient needs if the adult-use recreational market takes off,” Coupe said. “If they fail — if they don’t — that’s when we as regulators will step in, and that will be a penalty.”

Attorney Adam Windett and member of the Marijuana Control Act Oversight Committee argued the bill offers an unfair advantage to medical dispensaries from a businesses standpoint, who he says are concerned they will flounder without conversion licenses when the recreational market launches, when all other applicants will be subject to a lottery process.

“Passing legislation for the purpose of economic protectionism is arguably an Equal Protection violation — it’s been held to be an Equal Protection violation by several federal courts,” Windett said. “It’s not a legitimate state purpose to protect old businesses from new businesses entering the market. So now this bill is being introduced and propositioned as a means of funding the social equity market in an attempt to withstand an Equal Protection challenge.”

But Osienski says not passing the legislation could deprive the recreational market of the necessary infrastructure to get it up and running by next year.

“[The compassion centers] can ramp up their cultivation so social equity and other retailers can open in April 2025. If we hold back, like the advocates are suggesting, we won’t be able to have that up and running until 2026.”

The bill did not initially receive enough signatures to be released from committee but has since secured the exact number needed to head to the House floor for a full vote.

 A bill to allow medical marijuana dispensaries to enter the recreational market is narrowly voted out of committee in the General Assembly.  Read More