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With marijuana now legal in Delaware, attention will turn to how the regulatory framework for recreational sales is established in the First State. | PHOTO COURTESY OF ELSA OLOFSSON/UNSPLASH[/caption]
Ever since Rep. Ed Osienski once again introduced marijuana legalization and recreational sales legislation in January, the waiting game on whether 2023 would be different than prior failed pushes was on.
A Democratic majority didn’t waste time this year pushing personal possession legalization and a regulatory tax and sale bill over the finish line, even gaining some Republican House votes that had demurred just last year.
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Jacob OwensEditorDelaware Business Times[/caption]
Seeing that the writing was on the wall, and desperately trying to move past the public focus on legalization, Gov. John Carney decided to not stand in the way and belabor the process. The centrist politician, a rare Democratic governor to consistently oppose marijuana legalization citing its negative health impacts, held to his conscience by letting the bills become law without his support.
It was an unceremonious end to the decades-long debate over the drug in Delaware, and it surely does not end the legitimate criticisms that the governor, many Republicans and some in the business community continue to voice.
Making access easier to a new recreational drug will undoubtedly lead to more people using the drug. Residents of states where cannabis has been legalized use marijuana 24% more frequently than those living in states where it remains illegal, according to University of Colorado research published in August.
While marijuana may not be deadly like heroin, fentanyl or other opiates, I don’t think anyone would argue that using the drug is particularly good for one’s health aside from treating chronic pain and other particular symptoms. Its use by minors is especially detrimental to brain development like other drugs. Carney has long said that his opposition to marijuana stems from his years advocating against smoking as lieutenant governor alongside the late Gov. Ruth Ann Minner.
Last year, Delaware also saw 165 roadway fatalities, the most in decades. Carney has been hesitant about legalization because it will likely increase the number of DUI instances in the state. Colorado – the first state to begin legalizing recreational sales in 2014 – saw its traffic fatalities involving marijuana rise 140% between 2013 and 2019, from 55 to 132.
For employers, the thought of increased workplace accidents and injuries by intoxicated employees has been a concern. According to federal data, however, Colorado saw nearly the same number of workplace deaths in 2021 than it did in 2011, well before the legal market was set up.
With all of that said, marijuana is already readily present in our communities – just take a walk through Wilmington or Rehoboth Beach, or drive on Interstate 95, and it won’t take you long to spot the smell. Legalization is a way to ensure product quality and safety and create new tax revenue, estimated to be worth upward of $43 million annually.
One of my biggest concerns is whether the legal market in Delaware can properly squeeze out the illegal market though, which would help keep the drug out of the hands of children. Zoe Patchell, the executive director of the Delaware Cannabis Advocacy Network that was a driving force for legalization here, told me that some states have been more effective than others in that work.
“We've obviously seen some states like Colorado and Oregon that got it right and put consumers first, with significant results of underscoring the illicit market because the prices are so much lower in states that haven’t over-regulated the implementation of this market. And then we've seen some states like California who got it terribly wrong and have listened to greedy corporate interests that are just trying to make a profit off this industry,” she said.
California has the same 15% retail tax on marijuana that Delaware has proposed, but it also charges a cultivation tax and allows municipalities to add their own taxes. Its licensing system is also woefully deficient, allowing unlicensed businesses to compete with the licensed ones. All of that squeezes many providers out of California’s market.
Luckily, Delaware’s framework established by House Bill 2 is more thoughtful, avoiding some of the pitfalls that have stymied other states. It sets aside 77 of the first 125 licenses to be issued for locally-owned companies, making it more difficult for the “Big Marijuana” corporate companies to muscle out the market.
The law also sets aside a number of “social equity” licenses for those who have previously been convicted of a marijuana-related offense or live in a disproportionately impacted area. It seeks to make amends to areas that have been unequally punished in the prohibition era – although notably the sentences for those currently serving time for marijuana-related offenses are not commuted.
There is considerable work to be done in the next year to set up the regulations and licensing system of the recreational market though, including the hiring of a new state marijuana commissioner who will lead a new office under the Office of the Delaware Alcoholic Beverage Control Commissioner.
“We’re basically building a lot of this from whole cloth,” Peter Murphy, a Saul Ewing partner who has focused on cannabis law across the country, told me. “But I think they can get it done.”
Delaware also benefits from a smaller licensing pool, which could help it review and approve applicants faster. The state doesn’t want a prolonged lag time to sales or it could see a growth of gray-area stores, like those growing right now in New York, Murphy added.
“The bottom line is that consumers already have a market that we've been patronizing for decades and if the regulations aren't right, and the products and services aren’t up to par, this market will fail,” Patchell added.
The clock is now ticking.
