With less than a month before the target April 1 adult-use market launch, lottery winners are still waiting for their licenses to begin operations. State officials say the FBI has not yet given authorization to fingerprint so they can complete background checks.
Delaware’s Office of the Marijuana Commissioner (OMC) held lotteries on Oct. 24 for cultivation, processing, testing lab and social equity retail licenses. A subsequent lottery was held Dec. 19 for the remaining 15 retail licenses for general applicants.
The OMC was supposed to begin issuing conditional licenses for cultivators on Nov. 1, for processing on Dec. 1, and then for retail and testing labs on March 1. To date, none of the lottery winners have received their license.
“The delay in issuing licenses has been frustrating for many aspiring operators like myself who are still waiting to move forward,” said Tracee Southerland of the Delaware Cannabis Industry Association (DCIA). “We have already made significant financial commitments, including paying state fees, attempting to secure properties, and preparing for operations – only to be left in limbo.”
Southerland won two social equity testing lab licenses in the lottery, one in New Castle and the other in Sussex. Two other testing lab licenses were reserved for general applicants.
“We were all surprised by the delay,” said Southerland. “The state had provided written assurances that the launch would take place on April 1st, and businesses have been operating under that expectation,” said Southerland. “The uncertainty is putting unnecessary strain on both medical operators and new license holders who have been planning for months.”
Background checks holding up the program
Applicants chosen in the lottery had until Feb. 10 to submit additional documentation for final approval from the OMC. The state’s newly established Marijuana Enforcement Unit within the Division of Alcohol and Tobacco Enforcement must complete a background check on each applicant owning 10% or more of a business before they can finally be issued their license.
“The primary hold-up appears to be that the OMC has not been granted the authority to officially launch the program,” said Southerland. “Additionally, many feel the state is dragging its feet on completing background checks for license holders, further stalling progress.”
As part of that background check, OMC must fingerprint applicants, but OMC’s application for fingerprinting authorization was still pending final approval from the FBI, according to a Feb. 11 press release. OMC continues to wait on that authorization as of March 10, said an agency spokesperson.
Applicants paid a fee of $5,000 to enter the lottery for the open license types, $3,000 for micro-business and $1,000 for social equity. In total, the 1,269 applications generated over $4 million. Of that, $2.6 million was for the open retail licenses that were drawn in December.
Once the prospective operators have their conditional licenses, they will have 18 months to open for business.
The state’s medical market has six vertically integrated companies that control 13 medical licenses. The Cannabist Company Holdings (CBSTF), which appears to be the state’s sole multi-state operator, holds three licenses under its old Columbia Care corporate name. Despite being left out of the original adult-use legislation, a subsequent bill signed in July, HB 408, created a pathway for them to convert to hybrid models so they can also sell to non-patients. Those companies are also still waiting for approval from the state to convert their licenses for the adult-use market.
Local approvals are another hurdle
In addition to the delay from the state, Southerland noted that prospective licensees were having trouble with local approvals.
“Operators are also facing challenges with county zoning regulations, which are making it even more difficult to secure compliant locations and move forward with their businesses,” she said. “These additional hurdles are creating unnecessary bottlenecks in an already-delayed process.”
The DCIA launched a petition on Change.org calling for the market launch by April 1. As of March 10, the petition had 93 signatures.
“Without a legal cannabis marketplace, Delawareans are forced to rely on unregulated illicit sources or travel to neighboring states, which puts public health at risk and drives revenue out of state,” said the DCIA’s petition.
The DCIA planned a rally at the Delaware Legislative Hall in Dover for today, March 11, calling for immediate action from the state.
