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Delaware entrepreneurs itching to get in early on Delaware’s budding recreational pot industry are expressing frustration as retail sales expected to start this spring remain on hold.

“We’re all sitting on our hands waiting for the market to open,” said James Brobyn, president of the Delaware Cannabis Industry Association and a conversion license holder.

Activists say they want the state to set a date for adult-use cannabis sales to begin and to force local governments to loosen their zoning restrictions. The state of Delaware was set to launch its retail cannabis industry this spring, but it’s been delayed and the state has not released an updated timeline, license holders said.

Lawmakers legalized recreational cannabis in 2023, creating a system for licensing cultivators, manufacturers, retailers and testing laboratories. The state also created a pool of social equity licenses where people who had been negatively affected by past marijuana crime enforcement could enter the market with lower barriers to access. The market was set to open in April, but the Office of the Marijuana Commissioner has yet to provide an updated timeline.

Market delays

The state has conducted a lottery system to award 125 adult-use recreational market licenses, with 30 retail stores planned throughout the state — 14 in New Castle County, 10 in Sussex and six in Kent. Seven conversion licenses were awarded to medical dispensaries so they could sell both medical and recreational marijuana out of their existing facilities. The cost of those licenses range from $100,000 to $200,000.

The stumbling block, OMC Community Relations Officer Keila Montalvo said, is at the federal level. She said the office is waiting for the FBI to give final approval of its application for fingerprinting authorization, causing a delay in opening the market. Delaware’s newly-established Marijuana Enforcement Unit within the Division of Alcohol and Tobacco Enforcement is conducting background investigations.

Montalvo said conditional licenses will be issued after a successful background review. It was unclear if that meant the FBI background check, the checks through Marijuana Enforcement Unit or both. She said conditional licenses are not yet active.

Meanwhile, lottery winners have shelled out tens to hundreds of thousands of dollars or more to set up operations in anticipation of the recreational pot market going live in April.

Jen Stark is co-owner and CEO of The Farm, a medical cannabis dispensary. She said it cost almost $1 million to convert her business so she could also  sell recreational marijuana, which is waiting for the Office of Marijuana Commissioner to hit the go button.

“The state is basically supporting the non-regulated illicit market and it’s a backwards incentive,” she said. “They legalized it two years ago and now everyone’s comfortable with purchasing weed on the street or from smoke shops illegally.”

The OMC agency is also currently without a commissioner. Marijuana Commissioner Rob Coupe resigned in January, right before Gov. Matt Meyer took office. The position was posted on March 4 and closes early next week.

Zoë Patchell, who heads the nonprofit Delaware Cannabis Advocacy Network, said the former commissioner did not disclose the delay until January, right before he left office.

“Even then, OMC kind of tried to gloss over that the FBI had still not approved the background check process for new businesses,” Patchell said. “However, they have an existing FBI approved background check process in place for the medical marijuana dispensaries.”

Patchell said there’s been a lack of information from the commissioner’s office since the delays were disclosed.

“Advocates have been pushing for answers and for the implementation process to get back on track,” she said. “We’ve been stonewalled and there’s been no communication.”

An OMC spokesperson said a meeting with advocates is anticipated for March or April.

Zoning obstacles

Tracee Southerland, founder of Safe Leaf Analytics, and Charles Roark are social equity license holders. Southerland has two testing facility licenses, one in New Castle County and one in Sussex County. Roark has retail licenses for New Castle and Sussex County and a manufacturing license. Both are struggling to find a place to set up shop.

“So far I just bought a nice piece of paper,” Roark said. “What we’re also running into is city councils are just putting these ordinances on blankly because they don’t really know what they’re dealing with when they’re dealing with recreational marijuana. I’ve actually kind of heard that they just don’t want that kind of riffraff or that kind of people in their city.”

Sutherland said the uncertainty is hurting her ability to build her startup.

“The few investors that I have been able to catch their interest are ‘When’s rec opening? What? You don’t know? I’m not interested at all,’” she said. “Or ‘Let me know when you do.’”

Patchell describes the zoning ordinance in Sussex County as a complete, exclusionary ban on retail sales. The county restricts weed stores to the C3 zoning district reserved for heavy commercial uses. It also requires any site to be located outside of three miles of any municipality, church, school or substance abuse treatment center. Her group asked Delaware Attorney General Kathy Jennings to stop the county from enforcing the ordinance, but Patchell said she declined to intervene.

The town of Middletown has implemented a complete ban on marijuana businesses. The city of Dover only allows retail stores in the Highway Commercial zoning district along U.S. 13 and Bay Road. Stores must be certain distances from residential areas, daycare centers, schools, hospitals, colleges and universities and substance abuse centers. The Wilmington City Council recently voted to pause issuing business licenses to retail facilities for the next 90 days.

Adult-use marijuana advocates point out weed retail stores are being treated vastly differently than liquor stores and even cannabidiol, commonly known as CBD, stores.

Some advocates recently traveled to Legislative Hall to put pressure on lawmakers and Gov. Meyer to speed up the opening of the recreational marijuana industry and open up areas for adult-use cannabis businesses.

Rep. Ed Osienski, D-Newark, and Sen. Trey Paradee, D-Dover, have sponsored several pieces of legislation creating the recreational pot regulatory system. Osienski told WHYY News he believed Paradee was working on legislation that would require counties pass zoning restrictions that are more in line with how liquor stores are regulated. Paradee did not respond to several requests for comment.

Delaware Cannabis Industry Association President James Brobyn and The Farm CEO Jen Stark say they want to pressure the governor to step in and get things moving.

“It is important we get open as soon as possible or we’re going to not generate any of the benefits that everyone wants from cannabis because we sat on our hands,” Brobyn said.

Osienski said he supported allowing the medical marijuana facilities to sell recreational pot before others so that the industry can open quicker.

Patchell and her group oppose any special treatment for medical cannabis operators, such as allowing them to get conversion licenses, which could possibly allow them to start recreational sales first.

“We’ve seen the new markets generate millions of dollars in the first week, it will generate significant revenue for all participating businesses and it sets the overall tone for the market,” she said. “It’s unfair to allow the medical dispensaries to begin sales while new legal businesses are not permitted to operate.”

Montalvo said the decision to activate the medical conversion licenses will go to the next commissioner.

A spokesperson for Meyer said in a statement the governor understood the urgency of hiring a new commissioner.

“Gov. Meyer has long been a supporter of both recreational and medical marijuana and it’s crucial that we get this right,” Director of Communications Mila Myles said. “Not only for those looking to open businesses in Delaware, but for communities that have long been victims of the war on drugs and medical patients forced to live in the shadows for decades.”

Roark said if things don’t start moving soon, social equity applicants will start to feel the financial pinch. These applicants can be someone convicted of certain marijuana-related offenses in Delaware or a person who is related to someone convicted of one of those offenses, such as a parent or child, before pot was legalized for adult use on April 23, 2023.

“The way that the social equity is set up, it sounds like a great thing, but what they’re doing is they’re going to start bankrupting these families,” Roark said. “These families are going to go bankrupt waiting because they put all this money in and they can’t get anything back out.”