When anti-cannabis legalization Gov. John Carney nominated a former top law enforcement official to serve as Delaware’s marijuana commissioner in June 2023, some may have questioned how the state’s new adult-use cannabis law would be implemented.
Rob Coupe, a colonel who was superintendent of the Delaware State Police after serving 28 years as a trooper, began his career during the Reagan presidency and spent more than three decades enforcing the law—a law that included the prohibition of cannabis.
Although Coupe retired from the State Police in 2012—going on to serve in the Delaware Department of Correction—his background in law enforcement may have put cannabis legalization advocates on edge when the Delaware Senate confirmed him as the state’s top regulator for a forthcoming adult-use program. He was sworn in in July 2023.
Would Coupe make an earnest effort in getting the marketplace set up for commercial sales?
While not all law enforcement officials oppose cannabis legalization, law enforcement groups often cite concerns over impaired driving, greater exposure of youth, and public safety—along with needs for additional staffing and training—in states that propose and/or legalize adult-use cannabis.
“Definitely a lot of folks felt that way,” Coupe told Cannabis Business Times this month as he works toward meeting a July 2024 deadline for the Office of the Marijuana Commissioner (OMC) to adopt regulations for licensing adult-use cannabis businesses.
But a lot has changed since Coupe attended the state police academy in February 1985 and went on to spend many of his law enforcement years investigating criminal activity.
“One thing that you learn as a police officer is that the law is the law, and your mission is to enforce it—you’re given discretion in some areas—and now the law is, in Delaware, that marijuana is legal,” Coupe said. “And that’s what I tell folks. … You kind of need to separate your views on marijuana being legal or not legal and what this is as a business, because marijuana is legal. So, you can still not like it, and you may not think it should have been legalized, but it is. So, the law is, it’s legal. It’s legal to possess. It’s legal to consume.
“For me, it’s a new mission.”
While this new mission is well underway, Coupe says a lot of things have to go right in order for adult-use sales to potentially launch by March 2025—nearly two years after Carney allowed the Delaware Marijuana Control Act to be enacted without his signature.
And he’d like to hit the targeted deadlines, though the state’s track record for implementing a cannabis market is much slower. It took four years from when former Gov. Jack Markell signed medical cannabis legislation in May 2011 to actually launching sales via one dispensary in 2015. It wasn’t until 2017 when a second medical dispensary opened in the state, and 2018 when a third facility opened.
Now, much of the success of Delaware’s pending adult-use sales launch depends on new legislation to allow the state’s existing medical cannabis operators to transition to the adult-use market, Coupe said.
In Delaware, the OMC was created to operate independently as an adult-use regulatory authority that’s separate from the state’s Office of Medical Marijuana (OMM), which oversees six vertically integrated licensees that operate 13 compassion centers. These established operators have served a medical market that included 29,039 patients who were issued registration cards in 2023, according to OMM.
Although these established licensees can cultivate, manufacture and sell medical cannabis in Delaware, there’s no pathway under the state’s Marijuana Control Act for them to automatically transition to the adult-use marketplace. Coupe said he’s trying to create that pathway via a license conversion process by working with state Rep. Ed Osienski on forthcoming legislation for this legislative cycle. Osienski sponsored the adult-use legislation passed last year.
“It definitely affects how fast we could roll stuff out,” Coupe said. “We’ve offered information of how we think the [forthcoming] bill should be laid out to create this conversion license pathway, and [Osienski is] reviewing it with his team.”
But Coupe and Osienski would have to act fast. No such bill has been introduced yet, and Delaware’s legislative session is only scheduled through June 30.
Bringing a “really strong foundation of performers” from the medical market to the adult-use market would help the program get up and running, Coupe said.
“They’re already established here,” he said. “They’re good businesses that were established in Delaware based on our need. They’ve been contributing to our employment; they’ve been contributing to taxes; they’re providing the service to the patients. So, it’s good business for us to create a pathway for them. So, we are working with Representative Osienski.”
Without this avenue of allowing medical cannabis operators to transition to the adult-use market, it’d be a tall order for OMC to standup a potential retail market by March 2025. Specifically, the lifecycle of a cannabis plant includes roughly four months to grow, a week or so to dry, a day or two to trim, and then at least another month to cure before packaging.
With Delaware’s 60 cultivation facility licenses scheduled to be issued in November, that pushes the five-plus-month lifecycle of the plant to April or May 2025 (beyond the March 1, 2025, retail target).
“And that’s if you already have your facility, right?” Coupe said. “We know it’s a tall order, so to speak, but I think it’s realistic to push for that and to do our best to hit that goal. … In my experience in leadership positions, I have found that if we set a target, we set a date, it gives everyone a focal point, and it creates that sense of urgency to get things done.”
While Delaware very well could begin issuing 30 retail store licenses by the OMC’s March 1, 2025, target date, awardees won’t necessarily open the next day. In fact, the state provides dispensary license winners 18 months to pass criminal history checks, secure locations, secure necessary funding, and essentially meet all compliance requirements before becoming operational.
“So, once you get your conditional license, you would have 18 months to get to the point where we do a final inspection and we give you what we’re going to call an active license, and then you’d be able to open up for business,” Coupe said.
The OMC plans to utilize a lottery system—rather than a competitive scoring process—to award the 125 licenses, including 47 reserved for social equity applicants, Coupe said.
Raising capital is a key hurdle to opening a cannabis business, especially for social equity operators—something the nation recently witnessed with the slow rollout of New York’s adult-use cannabis market.
The New York Office of Cannabis Management’s original plan was to issue up to 175 retail licenses for social equity operators—150 to individuals impacted by prohibition and 25 to nonprofits supporting those formerly incarcerated—and provide these licensees exclusivity to the market for three years.
But when the social equity-focused rollout went underfunded and was challenged in court, the market underperformed: The state had fewer than 40 storefronts open in the first year of sales, allowing the illicit market to thrive, and regulators changed course to allow existing and established medical operators to transition to the adult-use market two years early.
While 24 states have legalized adult-use cannabis in the U.S., Delaware is one of three states in the process of rolling out a commercial marketplace. Minnesota lawmakers, whose governor signed adult-use legislation in May 2023, is also aiming for an early 2025 sales launch.
In Ohio, where voters approved an adult-use ballot measure in November 2023, sales could launch as soon as June 2024. But one advantage Ohio has on its expedited timeline over Delaware is the availability to leverage its existing medical cannabis operators, including 37 cultivation licensees and 120-plus retail licensees, to help kickstart an adult-use program that many expect to hit the ground running.
Here’s the OMC’s current timeline to implement the adult-use program in Delaware:
- July 11, 2024: Adopt final regulations for licensing adult-use cannabis businesses.
- Sept. 1, 2024: Begin accepting license applications. The application fee is $5,000 for open licenses, $3,000 for microbusiness licenses and $1,000 for social equity licenses.
- Nov. 1, 2024: Begin issuing 60 cultivation facility licenses, including 20 each for social equity, microbusiness and open license applicants.
- Dec. 1, 2024: Begin issuing 30 manufacturing facility licenses, including 10 each for social equity, microbusiness and open license applicants.
- March 1, 2025: Begin issuing 30 retail store licenses, including 15 for social equity and 15 for open license applicants, as well as five testing facility licenses, including two for social equity and three for open license applicants.
“We have a lot to do,” Coupe said. “I’m confident we’re going to hit the deadlines. But a lot of things have to go right. There’s so many different pieces that we’re working on, and as long as things keep moving OK, we will be able to be on track for our goal, which is March 2025, to be live, to be actually operational, and that folks in our state will be able to go to retail establishments and purchase recreational marijuana products.”
Coupe said he hopes that not only will a lottery process minimize the work that potential cannabis entrepreneurs have to put into their applications (they would only have to qualify for the lottery, not outcompete other applicants to win), but that it will also minimize the risk of potential lawsuits other states have faced.
“We are working with a consultant who’s worked in other states, and this was one of the first things we talked about was the challenges with a competitive scoring process and the litigation they have seen around that,” he said. “So, what we learned is that by going through a lottery system, it does minimize some of the risks of litigation based on fairness, equity and things like that. So that is what we’re pursuing.”
The proposed two-year licensing fee for “open” retail and manufacturing licensees is $10,000, while social equity and microbusiness licensees would receive a discounted rate at 40% of the regular license for a cost of $4,000.
Meanwhile, the proposed licensing fee for cultivation is based on plant canopy sizes as follows:
- up to 2,500 square feet of canopy is $2,500;
- up to 7,500 square feet of canopy is $7,500; and
- up to 12,5000 square feet of canopy is $10,000.
In addition, retail licensees wishing to participate in Sunday sales must pay a $500 biennial fee to do so. Otherwise, dispensaries can conduct sales from 9 a.m. to 10 p.m. the other six days of the week under the OMC’s proposed regulations. However, Delaware law prohibits the sale or delivery of adult-use cannabis products on Thanksgiving, Easter and Christmas.
While social equity operators will play a large role in Delaware’s adult-use marketplace, they won’t be provided exclusivity in a forthcoming sales launch, as was the case in New York.
To qualify as a social equity operator in Delaware, applicants must have at least 51% ownership and control in a company and meet one of the following criteria:
- Have resided for at least five of the preceding 15 years in a disproportionately impacted area, as defined in state law;
- Was convicted of or adjudicated delinquent of a cannabis-related offense under Delaware law prior to April 23, 2023, except either of the following:
- Delivery to a minor; or
- Any offense with a Tier 3 quantity of cannabis as defined in § 4751C of Title 16 (5,000 grams of cannabis/11.02 pounds);
- Had or has a parent, legal guardian, child, spouse, or dependent who was convicted of or adjudicated delinquent for any cannabis-related offense under Delaware law prior to April 23, 2023, that would qualify under Criteria 2 above.
To help ensure a successful social equity program, Coupe said the OMC is working to provide support and guidance, including an initial eligibility vetting process to make sure those who think they qualify for a license actually qualify.
The office is also working to create a social equity technical assistance program that will include in-person workshops in June.
“It’s just to explain to people what the [application and licensing] process is,” Coupe said. “We’re going to have a guest speaker to talk to them about legal issues they should be aware of—from an attorney. We’re going to have someone talk to them about commercial real estate and challenges they may face, especially with local jurisdictions that have set up restrictions on zoning and things like that: where they can be, [and] how they’re going to navigate that. We’re going to have someone from our Division of Revenue give them a quick overview about taxes and what to be aware of. And we’re going to give an overview of the whole licensing process.”
The workshops will also feature a medical cannabis operator who will explain firsthand what social equity licensees can expect when starting out from scratch in the cannabis industry, he said.
And Delaware’s medical cannabis businesses know what starting an industry from scratch looks like given it took seven years to stand up three medical dispensaries in the state.
