Delaware has faced a fair number of challenges in bringing its recreational marijuana market to fruition.
From municipality bans to county-wide zoning restrictions to FBI background check delays – marijuana business license holders have already been through the ringer without a single operational dispensary to show for it.
While there are still no adult-use retail locations two years post-legalization, Delaware’s new Marijuana Commissioner Josh Sanderlin says business licenses are finally being distributed.
“We have actually already begun to issue licenses– conditional licenses. On my first day, we went down to Georgetown, Delaware, and issued a conditional license for cultivation out down there,” he said.
Sanderlin clarifies that while no conditional licenses have been granted to retail locations, he is ready to hand them out as businesses provide the necessary documentation.
Once a business has its conditional license, it has 18 months to become fully operational and receive its active license.
Getting the market up and running in a safe and effective manner is Sanderlin’s top priority, arguing once these businesses become a part of their communities, opposition to recreational marijuana could soften.
“As long as the program is stagnant, it’s much easier to say that opening these businesses will cause a problem. But once they’re open and causing no problems, that makes that argument much harder to make and stand against,” Sanderlin said.
While the new commissioner could not provide a timeline as to when Delaware consumers can began purchasing recreational marijuana products, he is confident a successful market launch is on the horizon.
Interview Transcript:
PETROWICH: You have over 15 years of experience with marijuana regulation and public policy. So for starters, just talk to me about how you got into the cannabis space, how your work in this field has evolved over the years, and how that led you to leading the cannabis industry in Delaware.
SANDERLIN: Yeah, so I began while I was doing government affairs work here in Washington, D.C., about 2013 and 2014, we were hired by the city and county of Denver, and that time coincided with their transition from medical use to full adult use.
So I got to get a really behind-the-scenes look. I would go meet with local officials, business owners and get an understanding of how it was being implemented, what their issues were and then come back to D.C. and talk to lawmakers here. Getting involved in things like the banking issue back then – I remember going to one store and they showed me their vault that was just for holding cash, and it was taller than I am, and I’m over six feet tall, and just filled with cash and hearing all the horror stories.
So at that point, I did that. We were with them, and then I came back to the firm I was working at, which was a very large firm, and said, ‘I want to do this practice. I think cannabis is an underserved area, and it’s only going to go up and get more important.’ And they told me I was out of my mind, that they were a very large law firm, and there was no way they were going to do cannabis – It had been decided. And so I had been there for 10 years, and at that point, I decided I was going to break out on my own.
So when I broke out, I went and started working with smaller companies here in D.C., doing medical but also getting ready for the eventual recreation, helping people comply with laws. I’m a Maryland attorney, so I started doing work in Maryland as well. I got hired here and there – I got hired by one company as an in-house general counsel, and it was a tech company that was in the cannabis space focused on social equity.
As with tech companies, they don’t always work out, but it allowed me to kind of get a more in-depth understanding of the social equity side of things and the needs in the industry. And as my career progressed, I went back to running my own firm and working exclusively with cannabis businesses.
What I’ve learned over the years is that it’s a very underserved community, a business community. You know, lawyers, CEOs, CFOs – it’s getting better, but a lot of times, I would be hired as outside general counsel by these, and I would end up doing all sorts of things, everything from my legal work, all the way down to more COO type things.
That allowed me to really see many facets of the industry, really understand, from a business perspective, what you’re facing when you open one of these companies. And it really still just continues to drive my desire to take this job where I can have a real direct hand on the policy side of things to help implement a program that is safe, responsible and transparent.
PETROWICH: Just to clear this up ahead of time, there were some concerns raised by the Senate Executive Committee during your confirmation hearing around your involvement with some cannabis businesses in other states. So per Delaware Code, the committee requested you divest from those companies before your full confirmation in front of the Senate. You’ve since been confirmed, so I just wanted to check in, are you fully divested from these companies as of now?
SANDERLIN: Yes, ma’am. To make it simple, I fully divested and just didn’t even take buyouts. I just walked away from the companies.
PETROWICH: So jumping right in now into the nitty gritty of everything, Delaware has clearly faced some challenges in getting its recreational market up and running.
Adult-use marijuana was legalized in April 2023, so we are now two years post legislation, and there are still no recreational dispensaries in Delaware. There’s a lot to tackle here, but let’s start with the most recent advancement and then kind of work our way backwards.
So as of now, the last public update on the industry followed the governor’s signing of a bill that fixed a technicality in Delaware code that was prohibiting the FBI from issuing the necessary service code for marijuana business lottery winners to go through the federal background check process. That service code has since been issued, although there is another bill in the legislature making an additional technical correction in relation to federal background checks.
So really, the question here is, where are we now? Are the background checks underway? And do we have any semblance of a timeline for when lottery winners will be issued a conditional license so they can begin opening their businesses?
SANDERLIN: Yeah, background checks are fully underway. We’re doing it systematically. It’s being done through date. Excuse me, we have actually already begun to issue licenses, conditional licenses. On my first day, we went down to Georgetown, Delaware, and issued a conditional license for a cultivation out down there. So that was literally the first thing I did when I took the job, and we are making a full press to start doing those as well, getting more and more out there, ensuring that, you know, folks have the ability to get their businesses up and running. Stop waiting and start actually, you know, producing product for the industry, especially industry or supply sides of the industry that require a long lead up time, like cultivations.
PETROWICH: So I believe, via the code and in general, it makes sense to issue those licenses for cultivation and testing and manufacturing first, and then we’ll get retail later, and then I believe they have 18 months to get everything up and running.
So I’m curious, is there kind of a rough estimate of when the retail licenses will be handed out, or is that sort of dependent on how the back end of all the other businesses get up and running?
SANDERLIN: I mean, these are conditional licenses, right? So for us at this point, it’s when they’ve supplied the things they are required to supply, we can get them up and running on their conditional and allow them to start entering into contracts they need to enter into, site control.
I don’t think it’s a matter of, ‘Hey, we’re just going to wait until the end and then throw them all into the system.’ We’re working through them, just as we’re working through the cultivations and the manufacturers right now.
The documents we have gotten back from the licensees, they just kind of lend itself to doing these cultivations early on. But there will be a focus on getting as many as we can get out, right?
We don’t want to wait any longer – we understand. We’ve heard the industry, we’ve heard the advocates, we’ve heard the Delawareans. We’re making every effort to get this product, to get this whole program moving as expeditiously as possible, but also in a way that is effective, right? We don’t want to be rushing just for the sake of rushing, and then, you know, end up making something worse by doing that. But we are working expeditiously.
PETROWICH: And so just to be clear, as of now, no conditional licenses have been given out to retail facilities specifically?
SANDERLIN: No
PETROWICH: Another major roadblock for lottery winners has been finding a location to even open up their cannabis businesses, right?
So Sussex County has practically implemented a de facto ban with its buffer zone requirements from sensitive areas, and nearly every municipality in the southern part of the state has banned marijuana business. But these types of zoning restrictions and all out bans have also made their way up north – this is a problem statewide.
So there is a bill in the legislature right now, in fact it’s on its last step before heading to the governor for signature, that would prohibit retail marijuana stores from opening within 500 feet of a place of worship, school, child care facility and other sensitive locations. And this is a lot less than Sussex County’s current buffer zone of three miles. Advocates in the space and lottery winners are widely supportive of the legislation, but opponents, particularly Republican lawmakers, argue the state is overriding local control, right?
So I know your job is to enforce the regulations passed by the General Assembly, but how do you feel about the requirements in the legislation, and do you think Delaware could even have a viable recreational market without these changes?
SANDERLIN: So I mean, first and foremost, you have to have the ability to locate a business to have a business. So it’s important that these companies have a place to go. That being said, issues of sovereignty between the state government and the local governments is way beyond my pay grade and really cuts the heart of democratic government.
So, I’m not really ready to wade into those waters. If this bill passes and is signed by the governor, then I’ll be able to implement that. If it doesn’t, then that means we’ll need to work even closer, even more closely, with the counties and the municipalities to help them understand that this is a legitimate business, this is not something that’s going to ruin neighborhoods.
And I think part of that really is making sure that we get– it’s working with the counties, but it’s also making sure we get this program going, right? As long as the program is stagnant, it’s much easier to say that opening these businesses will cause a problem, but once they’re open and causing no problems, that makes that argument much harder to make and stand against.
And I think working with counties, working with local governments and understanding their concerns is very important. We’ll see in the next couple of weeks what happens with SB 75.
PETROWICH: Another key part of legalizing adult-use recreational marijuana was the creation of the social equity license program, and this provision ensured a certain number of business licenses were granted to those who were disproportionately affected by marijuana prohibition and that they would receive financial support from the state when starting their business.
And so to help fund this program, the legislature passed a bill creating conversion licenses, which allows medical marijuana dispensaries to purchase a license to also sell recreationally. Now, those medical dispensaries have not yet begun selling recreationally because under code, you as the commissioner can only authorize them to operate once other dispensaries are up and running.
So these are two different licenses, but they are intertwined in a way. I’m curious with what you’ve seen in other states, what are your thoughts on how Delaware has set up conversion licenses, especially considering some argue these licenses give medical dispensaries an unfair competitive advantage, as well as your thoughts on the social equity license program and kind of how the two mingle?
SANDERLIN: So every state is wildly different in how they design their laws, how they implement their laws, how they reform their laws as they go – we’re all learning on the fly here with cannabis.
And one thing about the industry is, not only are the laws different in each state, the consumers are different in each state, what works and doesn’t work is different, the obstacles you face are different.
I think, thus far, from what I’ve seen, Delaware has done a superb job of identifying the need of providing the licenses for that purpose, and then the funding stream that we are working on I think is leaps and bounds ahead of what I’ve seen in other jurisdictions and will be much more targeted towards providing folks in the social equity category with the access to capital, which nobody really has in this industry, but especially folks that usually fall into the social equity class.
PETROWICH: And now just taking everything to a broader level, I don’t think you would be here in Delaware if you didn’t have faith in the state establishing a successful recreational marijuana industry, but based on your experiences and other states programs, are there any changes or additions to Delaware’s recreational program that you would make or think the state should consider moving forward?
SANDERLIN: I think right now, the eye on the prize for us and for me is getting what we have open before we start worrying about what’s next.
That being said, I think Delaware is excellently positioned to get our program going, right? Having come on board not long ago, and coming from the outside in, I have a different perspective on everything, but I’ll tell you, the staff at the OMC, my agency, have really done a phenomenal job getting us to the point we are at.
I know that doesn’t get as much play in the media – a lot of times it’s about “delay, delay, delay,” but these folks have everything lined up. We are working really quickly, and the only reason we can work quickly at this point with me just coming in is because everything is set up and in place. So, you know what’s next? I don’t know, but what’s immediately next is getting us up and running.
PETROWICH: There are several businesses in Delaware selling hemp-derived substances, which are legal currently under the 2018 U.S. Farm Bill, via a loophole, so there have been concerns raised, particularly around young people, having access to these products, but business owners argue strict regulations would put them out of business.
So how do you think Delaware should proceed when it comes to regulating hemp-derived products versus these cannabis products?
SANDERLIN: Well, I mean, arguing to somebody in the medical cannabis space or the recreational cannabis space that over regulation causes your business to go out of business, doesn’t really play well. We are one of the most heavily regulated industries in the country, and that’s for safety reasons, right? Do I think we over regulate in some states? Yes.
But that being said, we still operate, and we are facing way more challenges. I think if something is intoxicating, or something is consumed by people, it needs to be regulated, it needs to be overseen. We need to know what’s in things. We need to inform consumers and make sure that everybody– not everybody’s a good actor in the business industry, right? There are a lot of us that are good actors, but they’re ones that aren’t, and being able to protect the public is our number one goal. I think, in regulating these products.
PETROWICH: That’s all that I have for you. Is there anything else you want to add, or anything we didn’t touch on that you think is relevant based on where the market is at now, or where you see it moving forward?
SANDERLIN: I mean, I think there’s just a ton of potential in Delaware. You were right when you said earlier, I wouldn’t have taken this job if I didn’t think that, and I’m really excited to be in a position where I get to help stand up this whole industry in the state and make sure that it’s done in a safe way that protects the public and provides access to consumers.
It’s been over two years since the First State legalized recreational marijuana, and Delaware has yet to open any dispensaries.Rob Coupe, the first leader of the Office of the Marijuana Commissioner, stepped down in January, and the governor did not tap a replacement until last month.That new commissioner – cannabis attorney Josh Sanderlin – says despite Delaware’s challenges, he is confident in seeing a successful rollout.Delaware Public Media’s Sarah Petrowich spoke with Sanderlin about the trials and tribulations marijuana business owners have faced – and what consumers can expect moving forward. Read More
