Delaware Officials Will Now Let Marijuana Businesses Transfer Permits Between Counties

*“People will still try to put businesses in places that are financially
viable, right? If you oversaturate a market, it’s not a financially viable
business.”*

*By Brianna Hill, Spotlight Delaware*

Delaware’s marijuana commissioner says his office now allows cannabis
license holders to apply to transfer permits between the state’s three
counties—a move that would allow businesses to move away from heavily
regulated localities, such as Sussex County.

In an interview with Spotlight Delaware on Monday, Marijuana Commissioner
Joshua Sanderlin said his decision to open licenses to all counties
overturned a regulation set by his predecessor. It also came after
municipalities and the Sussex County government imposed a raft of
regulations last year that collectively limited marijuana retail shops to
just a few far-flung parts of the county.

In response, state lawmakers sought to limit counties’ ability to regulate
marijuana businesses with the passage of Senate Bill 75 in June. But last
month, Gov. Matt Meyer (D) vetoed the bill, stating that it displaces
“local land use authority without offering any corresponding partnership or
support.”

Sanderlin said his decision to allow license transfers between counties was
not in response to Meyer’s veto. He said his office had decided to change
this rule after receiving requests from licensees to change the county in
which they operate.

As a former marijuana executive himself, he said he understands how
difficult it is to start a business in the industry, “whether SB 75 was in
place or not.”

“It’s kind of a point that I’m trying to make… ‘Yes, we’re your regulator,
but we’re also here to serve as a partner,’” Sanderlin said.

Sanderlin said it’s too early to know how additional transfers might affect
where marijuana businesses ultimately locate. But he noted there could be
initial shifts toward Kent and New Castle counties.

Still, he ultimately expects licensees to spread out amongst the three
counties.

“People will still try to put businesses in places that are financially
viable, right? If you oversaturate a market, it’s not a financially viable
business,” he said.

*‘Plenty of places’ to move to?*

Late last year, the state awarded 125 marijuana business owners their
licenses to operate.

Under regulations created by Delaware’s former marijuana commissioner, Rob
Coupe, those licenses bound each business owner to one of three counties,
in order to ensure that applicants from all parts of the state had a fair
chance to receive a license, Sanderlin said.

Asked when he made the decision to change the rule, he said there was no
specific date but that it came after people had asked for it.

“For me, it’s ensuring that, you know, we have an open line of
communication between us and the licensees,” he said.

To date, Sanderlin’s office has already approved one variance allowing a
marijuana manufacturer to move. Perhaps surprisingly, the licensee is going
from New Castle County to Sussex County after the individual found a viable
site in the southernmost county.

Sanderlin said his office is open to granting more transfers to business
owners who can’t secure a site in their current county and who can also
present a plan and potential location in another one.

Some licensees say that being able to change their county would offer them
more locations to look at, especially amid the veto of SB 75.

“If we don’t get a new [Senate] bill and this is an option, I would be
extremely interested to possibly move, being so my license is in the most
difficult county,” said Derro Smith, a Sussex social equity
microcultivation licensee.

One New Castle County councilman said there are “plenty of places” within
the county to operate a marijuana business under current zoning
regulations. The councilman, Kevin Caneco, further said that if more
licensees move to the county, local officials will apply the current and
appropriate land-use regulations.

“I don’t think people necessarily oppose that. Again, as long as we can
regulate through our land-use department,” he said.

Officials from Kent Levy Court did not offer a response for this story.

*A compromise?*

At the end of last month, Meyer vetoed Senate Bill 75, which would have
overridden county-level zoning laws that dictate how far marijuana
dispensaries must be from sensitive places like schools, libraries and
treatment centers—reducing the buffer to no more than 500 feet.

Sussex County’s current distance buffer between such shops and sensitive
locations is three miles, while New Castle has a buffer of 1,000 feet. Kent
County does not have a buffer but retail marijuana businesses are limited
to areas zoned for commercial, Kent County Planning Director Sarah Keifer
said.

In addition, over a third of Delaware’s 57 municipalities have created bans
on various types of marijuana establishments, making it difficult for
business owners within the industry to find real estate.

On top of zoning hurdles, marijuana business owners also face steep
challenges securing property, financing and investors, as cannabis remains
illegal under federal law.

“It’s all a little bit problematic because we don’t have the money we need
and y’all got all these restrictions,” said Louise Shelton, mother of Derro
Smith, who also holds a social equity microcultivation license in Sussex.

“How do you pass a law saying that cannabis is recreational, but then put
all these stipulations?” Shelton asked.

Last June, Senate Bill 75 faced strong opposition from county leaders and
statehouse Republicans, who argued that it was among a handful of “local
control” bills that would override municipal and county governments’
authority to decide their own land use and zoning matters.

In a statement on the veto, Meyer proposed a compromise that would direct
about a third of the state marijuana sales tax revenue to the county or
municipality in which a marijuana business is located.

He said it would “offset the local costs associated with zoning,
permitting, enforcement and infrastructure.”

If approved, Meyer said that Sussex County has agreed to remove its
conditional use requirement for marijuana retail shops, which gives county
leaders wide latitude over where to allow such storefronts, and reduce the
buffer requirements for them.

The draft county legislation makes no commitments as to what the reduction
would be.

Last week, Sussex County Council discussed proposals to remove zoning
restrictions on marijuana businesses, but did not finalize any decisions.
During the meeting, councilmembers also praised Meyer’s decision to give
counties the authority to decide what changes to make.

Council members defended their 3-mile buffer rule by comparing it to the
buffer used for liquor stores under state law. Still, they said they would
consider possible changes.

While expressing concern that state officials may try to override Meyer’s
veto, County Administrator Todd Lawson said the council hopes to put
forward a proposal to adjust its restrictions “within weeks.”

Meyer’s veto was met with backlash from State Sen. Trey Paradee (D-Dover),
the bill’s sponsor, who said in a statement that he had struck a deal with
the governor in late June to support a future revenue split with counties
if Meyer allowed SB 75 to become law without his signature this summer.

Paradee said that the veto will now do “irreparable harm to dozens of small
business owners who successfully won the lottery to open retail marijuana
stores and grow facilities.”

Some of those licensees, like the mother-and-son duo of Smith and Shelton,
have become frustrated with the heavy restrictions on marijuana businesses.

“It’s like one barrier after another, one hurdle after another. Just when
you kind of think that you gain some progress, it’s like, here it goes.
Rules change, another curveball,” Smith said.

But the license transfers between counties could offer relief, if Sussex
doesn’t first loosen their buffers.

*This story was first published by Spotlight Delaware.*

*Photo courtesy of Brian Shamblen.*

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