Delaware Bill To Let Medical Marijuana Dispensaries Begin Recreational Sales Early Heads To Governor’s Desk

The Delaware Senate has approved a House-passed bill that would let existing medical marijuana businesses in the state begin selling cannabis to adults, sending it to the governor.

The reform is meant to allow recreational sales to begin months earlier than planned, though critics say the legislation would give an unfair market advantage to larger, more dominant businesses already operating in multiple states.

Just two days after advancing through the Senate Judiciary Committee, the bill from Rep. Ed Osienski (D) and Sen. Trey Paradee (D) cleared the full chamber in a 16-5 vote on Thursday.

If signed by Gov. John Carney (D), it 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 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.

The bill “has the potential to raise up to $4.2 million in licensing fees, and that money will then be used to help launch and support the social equity licenses in the form of grants,” Paradee said on the floor on Thursday. “The legislation will also allow the existing compassion centers to provide wholesale supply to new dispensary licensees. This is critically important to ensure the successful launch of the recreational cannabis program in 2025.”

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.”

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Also this week, state lawmakers sent a bill to the governor 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.

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