Delaware Marijuana Legalization Effort Revived With Two-Track Approach Following House Defeat

The fight to legalize marijuana in Delaware this year isn’t over yet, with the sponsor of a reform bill that was defeated in the House last month introducing two new, complementary measures to enact the policy change. And importantly, this new legislative push seems to have at least tentative support from the House speaker, who otherwise opposes legalization.

Rep. Ed Osienski’s (D) first attempt to pass a measure to tax and regulate cannabis for adult use this session was a flop, failing on the floor even though it received a majority of votes. It needed a three-fifths supermajority because the bill included economic components, and it came up two votes short of that.

Now the lawmaker is back at it again with a different, two-track approach. He filed a new pair of bills late last month: one would simply legalize possession and sharing of up to one ounce of marijuana for adults 21 and older, and the other would create specific regulations for cannabis commerce that largely resemble the prior, House-defeated bill.

Osienski’s thinking behind the bifurcated approach is strategic. Since the former bill would simply remove criminal penalties around certain marijuana-related activities, it would only require a simple majority to pass. And he already got those votes on the broader, more complex legalization bill.

If the House approves that legislation, HB 371, then that would “put that extra pressure on some colleagues to say, ‘OK, it’s legalized. To do this right, we should create an industry that will provide this now,’” the lawmaker told Delaware Public Radio.

That extra pressure might actually win over House Speaker Pete Schwartzkopf (D), who was the sole Democrat in the House who voted against the earlier legalization bill.

In an interview WHYY published on Wednesday, the speaker said he still intends to vote “no” on the simple legalization proposal, but he may well vote “yes” on the separate regulations legislation if the former bill is enacted first over his objections.

“If you’re going to tell me that marijuana is legal and come back at a later date at some other point in time to me and say, ‘Well, it’s legal—will you tax it?’ My vote’s probably going to be yes,” he said.

“I’m not voting for marijuana. I’m just voting to tax marijuana that everybody else made it legal to do,” Schwartzkopf said, adding that he’s long believed that legalization is an inevitability and while he won’t “help it” advance, he’s “not going to stop it.”

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.

In Delaware, the new tax-and-regulate bill, HB 372, is materially the same as the measure defeated in the state House last month so it still requires a supermajority to pass. But the sponsor is taking a gamble that he could reach that threshold if legalization is separately enacted without a regulatory framework.

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“What I see is you have very strong, passionate advocates that want this, and then silence,” Osienski said. “There’s no real strong opposition. And unfortunately, some of my colleagues that don’t support this that have gone ‘no’ or went ‘not voting,’ I understand are getting a lot of nasty emails saying ‘Why are you doing this?’”

The simple legalization bill, which has 20 initial House cosponsors and five senators signed on, has been assigned to the Health & Human Development Committee, while the companion legislation dealing with regulations has 17 House members and 10 senators listed in support, was assigned to the Revenue & Finance Committee.

Like the failed HB 305, the new regulations bill would involve appointing a marijuana commissioner under the state Division of Alcohol and Tobacco Enforcement who 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.

There are also equity components included in this latest measure. After 19 months of the bill’s enactment, for example, 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.

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 sign two pieces of marijuana expungement legislation in recent years. 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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Photo courtesy of Chris Wallis // Side Pocket Images.