Aspiring cannabis operators in Delaware are waiting on the state’s Senate to pass a bill that could correct a regulatory impasse with the FBI over background checks and pave the way to finally launching the state’s adult-use market.
In late March, the FBI notified the Office of the Marijuana Commissioner that its request for a service code to conduct background checks had been denied, citing a need for explicit statutory language identifying the individuals required to obtain background checks, state Rep. Edward Osienski told the House Committee on Economic Development/Banking/Insurance & Commerce on April 8.
Currently, the Delaware Marijuana Control Act prescribes how background checks will be conducted but does not specify who will be subjected to those checks.
To solve the problem, Osienski sponsored HB 110, which amends the existing cannabis law by specifying that those who require background checks include anyone who works for a licensed cannabis operation. This includes contractors, employees, volunteers, directors, officers, board members, agents, and anyone who holds 10% or more interest in a cannabis business.
“This bill will address needed updates to Delaware’s code that will assert language to align with FBI requirements,” Osienski said during the committee meeting. “I know this is a disappointing setback especially for the entrepreneurs that have invested so much and the consumers who have been anxiously waiting for legal access.”
The market was supposed to launch by April 1, but the state’s Office of the Marijuana Commissioner has been unable to complete background checks on license applicants without authorization from the FBI in order to access the federal agency’s fingerprinting database.
The FBI has rejected the state’s application for access at least twice, with the most recent denial coming in the last week of March, according to Osienski.
Public Law 92-544 dictates how the federal government uses criminal records and who it shares them with. It has strict criteria for the regulations that govern a state agency that seeks access.
Among other requirements, any state regulation that would authorize it to seek access to the FBI’s criminal files “must identify the specific category(ies) of licensees/employees falling within its purview, thereby avoiding overbreadth.”
HB 110 unanimously passed the committee, and two days later on April 10, the House passed the bill, sending it to the Senate with 37 votes of approval and three abstentions.
Activists criticize OMC while governor blames federal bureaucracy
Activists are frustrated by the delays in launching the market, according to Zoe Patchell, chair of the Delaware Cannabis Advocacy Network, who spoke before the House committee.
“It is frustrating that it took nearly three months for the OMC to explicitly admit that there’s been a delay when the developing issue was disclosed in the Delaware Marijuana Control Act Oversight Committee meeting on Jan. 13,” she said. “I’ve been seeking answers and details about these delays that have continually gone unanswered. This underscores the need for increased transparency, accountability and entirely new leadership in the OMC.”
Gov. Matt Meyer briefly addressed the criticism over how the state has rolled out its adult-use market during his April 10 State of the State address, including the fact that OMC’s original commissioner, Robert Coupe, stepped down in January ahead of the market launch.
“The FBI’s insistence that Delaware’s original recreational marijuana law is insufficient is just another egregious example of federal bureaucracy stifling state-led innovation,” said Meyer. “One thing I can assure you, we will name a new Marijuana Commissioner within days, we will cut through federal bureaucracy, and we will work with urgency to meet the promise of our state’s recreational marijuana law.”
Meyer’s support of the program is in stark contrast to the previous Delaware governor, John Carney, who allowed a pair of bills legalizing adult use to become law without his signature two years ago. Carney had vetoed similar legislation in the past.
Unclear when cannabis market will open
If the legislature is able to fast-track HB 110 to the governor’s desk, and the state gets its FBI authorization, it is still unclear how long consumers will have to wait for the official launch of the adult-use market. Acting Commissioner Paul Hyland indicated there were still zoning obstacles for retailers on the local level during the April 8 committee meeting.
“They should be building, getting their stuff ready. This is the final hurdle,” he said. “There are some folks that are having trouble with zoning.”
The OMC was supposed to begin issuing conditional licenses for cultivators on Nov. 1, for processing on Dec. 1, and for retail and testing labs on March 1. To date, none of the lottery winners have received their license.
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.
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 before they can finally be issued their license.
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. Those companies are also still waiting for approval from the state to convert their licenses for the adult-use market.
The OMC did not respond to a request for comment by deadline.
