Limited licensing, high fees, and stringent policies make HB 110 unfavorable to potential business owners.
(Part of a special four-part report on marijuana in Delaware. Look for stories Monday, Tuesday, Wednesday and Thursday on the status of the proposal to allow sales for recreational use, who’s allowed to grow marijuana, and pregnant women using marijuana for pain relief.)
As HB 110 sits waiting on the House Appropriations Committee, potential cannabis retailers in Delaware are worried that the bill, which would introduce legal sales of recreational marijuana in the state, isn’t geared towards promoting small business.
The bill would introduce legal sales of recreational marijuana in the state.
Brendan Styles, operations manager for Delaware Vapor, said the company would absolutely love to participate in a recreational cannabis market.
“Unfortunately HB110 as written will create a very limited market that will not support small businesses in the state selling cannabis products,” Brendan said. “Delaware Vapor supports recreational cannabis initiatives in general … we know that true open markets encourage competition among retailers which means better prices and better selection for customers.”
Under the bill’s current version, the commissioner will issue 15 cannabis retailers licenses statewide within 16 months of HB 110’s adoption.
During that transitional period, existing compassion care centers can start selling 3.5 grams of cannabis to adults within the first 30 days of the bill taking effect.
The tax rate for this period would be 25 percent, later lowered to 15 percent.
The bill calls for a “competitive scoring process” by which potential retailers may qualify for a license, provided the commissioner receives more applications than the planned number of issuances, to ensure retailers are following “best practice” measures.
The process takes into account the applicant’s experience, training, and expertise, as well as safety and security plans, operations, training, and staffing plans, and any possible criminal history – all with a non-refundable $5,000 application fee that may increase without notice “due to inflation.”
With an additional $10,000 biennial licensing/renewal fee for retailers, labs, and product manufacturers, the costs for a cannabis-oriented startup begins to add up quickly.
The bill also lists certain guidelines and restrictions for the products sold by retailers, including how they are packaged, the serving size, and the length of time it typically takes for a product to take effect.
Delaware Cannabis Reform (DelCanna) president Sam Chick, who opened his Puffster vape supply shop in Dover two years ago, said he’s eager to see marijuana prohibition end, but not so eager for the constraints on small businesses that the bill offers.
“It’s for ‘Big Cannabis,’ corporate cannabis,” Chick said, particularly the small number of retailer licenses. “There are hundreds of tobacco retailers, so that 15 is an extremely low number. There should be no limit – it’s whatever the market bears.”
He’s troubled by the high cost of the biennial license and renewal fee, noting that a tobacco wholesale license in Delaware costs $275, while a license to sell beer and liquor ranges between $1,000 and $1,500.
Chick said while he would love to eventually be a part of the legal cannabis industry should it happen in Delaware, the provisions in HB 110 create a “scheme of control” that is a slap in the face to those fighting to end marijuana prohibition.
As the bill is written, HB 110 will shut out 99 percent of the people who want a part in the industry, he said.
“We need the free market here; you want more people competing, bringing the best prices and quality product to consumers,” he said. “Apple and Dell started in someone’s garage – you shouldn't have to spend a million to be in this industry.”
Regardless, Chick said he remains optimistic that marijuana prohibition will soon be a thing of the past.
“It’s coming, and I think HB 110 is dead and gone,” he said. “I think what will bring it will be a new bill, out of the ashes of this one, that promotes actual free enterprise.”