Delaware House Committees Approve Complementary Marijuana Legalization And Regulations Bills

A pair of complementary bills to legalize marijuana and set up regulations for cannabis commerce in Delaware were approved in separate House committees on Wednesday.

Rep. Ed Osienski (D), sponsor of both measures, previously tried to pass a comprehensive bill that would have accomplished both goals at once, but it failed to receive the required three-fifths supermajority vote on the floor last month.

Rather than throw in the towel, the lawmaker devised a two-track approach to reform by introducing one basic legalization bill that would allow adults 21 and older to possess and share up to an ounce of cannabis and another that lays out a specific regulatory framework for an adult-use market.

The former bill would only require a simple majority to pass, and so if that measure is enacted, the thinking is that it would put “extra pressure” on lawmakers to advance the complementary legislation with a supermajority, rather than have legalization without regulations in place, Osienski said earlier this month.

So far, things are going according to plan.

The simple legalization bill, HB 371, passed the House Health & Human Development Committee. Hours later, the regulations measure, HB 372, was approved by the House Revenue & Finance Committee.

At the latter hearing, Osienski detailed the provisions of HB 372, saying the legislation “creates the legal framework to license and regulate a new industry that will create well-paying jobs for Delawareans while striking a blow against the criminal element, which currently profits from the thriving illicit market in our state.”

At the earlier hearing, the sponsor briefly described the simple legalization bill, acknowledging that his previous measure “unfortunately fell short” on the House floor.

Notably, House Speaker Pete Schwartzkopf (D), who was the sole Democrat in the House who voted against the earlier legalization bill, signaled that he might be inclined to support a bill providing a regulatory infrastructure for marijuana commerce if the chamber votes to legalize possession and sharing. That said, he still intends to vote against HB 371.

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Vermont lawmakers followed a similar approach to what Osienski is now pursuing by first passing a noncommercial legalization bill in 2018 and then following that up with separate legislation to tax and regulate sales in 2020.

“We’re thrilled that legalization has new life in Delaware, and that the new bills are already on the move,” Karen O’Keefe, state policies director for the Marijuana Policy Project, told Marijuana Moment. “More than 60 percent of Delaware voters support ending the war on cannabis, and it’s imperative that the legislature find a way to make their will a reality. Too many lives have been turned upside down by prohibition.”

Here’s what Delaware’s HB 371 would do: 

The bill would amend state statute by eliminating penalties associated with the possession of up to one ounce of marijuana by adults 21 and older.

It would further add a section stipulating that adults 21 and older could share up to an ounce of cannabis “without remuneration.”

That section clarifies that marijuana could not be “gifted” as part of a contemporaneous “reciprocal transition” or if the gift is contingent on a separate transaction for non-cannabis products or services.

Here are the main provisions of the complementary HB 372: 

A marijuana commissioner would be appointed under the state Division of Alcohol and Tobacco Enforcement. The official would be tasked with regulating the industry and overseeing licensing of retailers, cultivators, manufacturers and laboratories.

Licenses would be granted through a scored, competitive process, with advantages given to those who pay workers a living wage, provide health insurance or meet certain other benchmarks.

After 19 months of the bill’s enactment, regulators would need to approve 30 retailer licenses, half of which would go to social equity applicants. Social equity applicants would be defined as entities majority-owned by people with past cannabis convictions or who live in an area disproportionately impacted by the drug war.

Those applicants would also be allotted one-third of the planned 60 cultivation licenses, one-third of manufacturing licenses and two of five licenses for testing laboratories. They would also qualify for reduced application and licensing fees as well as technical assistance from the state.

Retail marijuana sales would be subject to a 15 percent tax. No tax would be levied on medical cannabis sales.

Seven percent of the tax revenue would be used to support a new Justice Reinvestment Fund that would provide grants, services and other initiatives that focus on issues such as jail diversion, workforce development and technical assistance for people in communities that are economically disadvantaged and disproportionately impacted by the drug war. The money would also be used to help facilitate expungements.

Home cultivation for personal use would continue to be prohibited.

The legislation would allow individual municipalities to establish their own regulations for marijuana business operating times and locations, and they would also be allowed to ban cannabis companies altogether from their jurisdictions.

The bill provides explicit legal protections for state employees who work with the state-legal market. And it would also allow marijuana businesses to claim tax deductions at the state level—something they’re prohibited from doing at the federal level under a tax code known as 280E.

The tax-and-regulate bill is materially the same as the measure defeated in the state House last month.

At Wednesday’s second hearing, representatives from several state departments raised concerns about the provisions of the regulation bill—including those on outdoor marijuana cultivation, saying that such operations could be a target for robberies.

An even earlier legalization bill from Osienski cleared committee last year. However, disagreements over social equity provisions stalled that version, keeping it from the floor. At the time, Osienski pledged to bring a revised bill for the 2022 session that could earn broad enough support to pass.

When the sponsor’s earlier bill was being considered last year, he said he was caught off guard when he was informed that the inclusion of a social equity fund meant the bill would require 75 percent of legislators in the chamber to approve it.

The lawmaker tried to address the problem through an amendment, but some members of the Black Caucus opposed the changes, and the measure failed.

Osienski has worked with the Black Caucus in the ensuing months to build support and move toward more passable legislation. And a clear sign of the progress is that Reps. Rae Moore (D) and Nnamdi Chukwuocha (D) signed on as cosponsors to the since-rejected bill after pulling their support for the 2021 version over equity concerns. They’re also listed as cosponsors for the new HB 372.

In 2019, Osienski was the chief sponsor of a legalization bill that cleared a House committee but did not advance through the full chamber. That bill would have allowed medical cannabis dispensaries to begin selling marijuana to adults 21 and older while the rest of the adult-use industry was still preparing to launch, a provision that was removed from later versions.

Four of the state’s six medical marijuana companies came out publicly against that change and testified in opposition to last year’s bill. In response, Delaware activists mounted a boycott against those operators.

Portions of the most recent version of the cannabis regulations bills on expungements were removed this session, as they were made redundant by the enactment of separate legislation last year.

As supportive lawmakers have worked to push cannabis reform through the legislature, they also faced the challenge of winning over Gov. John Carney (D), one of the rare Democratic governors who remain opposed to legalization.

Despite his wariness about adult-use legalization, Carney did previously sign two pieces of marijuana expungement legislation. In 2017 and 2018, a state task force met to discuss issues related to legalization, and the governor hosted a series of roundtable meetings about cannabis.

A legalization bill previously received majority support on the House floor in 2018, but it failed to receive the supermajority needed to pass.

Carney’s predecessor approved a measure to decriminalize simple possession of cannabis in 2015.

An analysis from State Auditor Kathy McGuiness (D) released last year found that Delaware could generate upwards of $43 million annually in revenue from regulating marijuana and imposing a 20 percent excise tax. The legal market could also create more than 1,000 new jobs over five years if the policy is enacted, according to the report.

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