Plans to launch recreational marijuana sales in Delaware this spring have hit a major roadblock following an announcement by the state’s Office of the Marijuana Commissioner (OMC) that the FBI had denied their updated service code request. The code is required to perform fingerprint-based background checks, which is a prerequisite for the impending recreational market.
The OMC had been collaborating with the state Justice Department and the State Bureau of Identification (SBI) to obtain the service code. However, a dispute between state and federal regulations means lawmakers will have to draft new legislation that aligns with the FBI’s standards.
The state General Assembly remains in session until June 30, so the timeline for resolving this issue remains uncertain.
This delay comes approximately two years after former Governor John Carney permitted the approval of two recreational marijuana measures without signing them. Last year, lawmakers passed additional legislation to clarify and correct certain provisions in the prior Act, including amendments to state codes.
One key requirement mandates that recreational cannabis license applicants submit fingerprints for the SBI to retrieve their FBI criminal history records. However, the agency has now ruled that Delaware’s legislation was not properly structured, further complicating the approval process for 125 cannabis license recipients.
This uncertainty poses financial risks for the awarded licenses, particularly if they are paying rent for facilities without being able to generate revenue. The OMC held lotteries in October last year, granting 110 licenses to testing labs, cultivators, social equity candidates, and manufacturers. In December, another lottery round awarded fifteen licenses to standard dispensaries.
Before stepping down in January 2025, Rob Coupe, the state’s first cannabis commissioner, had aimed for sales to begin in March. Now with the FBI roadblock in place, an alternative path could involve leveraging the state’s existing medical marijuana licensees.
Coupe had worked with legislators to draft a measure permitting the medical marijuana businesses to transition into the recreational market. The legislation, signed into law by Carney in July last year, allows medical dispensaries to convert their licenses by paying conversion fees—$100,000 for testing, retail, and manufacturing permits, and $200,000 for cultivation licenses.
The fee system could generate over $4 million, which legislators have allocated to support social equity applicants.
The fate of Delaware’s recreational marijuana market now rests on lawmakers’ ability to revise legislation and meet federal requirements. The current roadblock is likely to set back not just marijuana firms but also ancillary companies operating in the format of Innovative Industrial Properties Inc. (NYSE: IIPR) that were gearing up to open shop in the state.
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