Gov. Matt Meyer vetoed a bill Thursday that would have loosened regulations around where marijuana businesses can locate in Delaware, likely further delaying the growth of the weeks-old industry.
But the governor also offered a competing proposal on such zoning reforms, based upon revenue-sharing from marijuana sales with counties and municipalities – opening a new salvo in a contentious relationship with statehouse Democrats.
The defeat of Senate Bill 75, which would have overruled the decisions of county governments that created more restrictive zoning regulations in the wake of Delaware’s marijuana legalization movement, was the first major veto by the first-term governor.
The bill had faced strong opposition from county leaders and statehouse Republicans, who argued that it was among a handful of bills that sought to squash “home rule,” or the principle of self-governance by locals.
“While I fully support the goals of implementing a safe, equitable, and accessible adult-use cannabis market in Delaware, displacing local land use authority without offering any corresponding partnership or support is not how we build durable, effective policy or trust,” said Meyer, who served two terms as New Castle County executive, in his veto letter to legislators.
Sponsor feels betrayed
State Sen. Trey Paradee (D-Dover), who led the push for SB 75, admonished Meyer in a statement shortly after the veto was made public.
“If you give someone your word and you later back out or do not deliver as you promised, you will irreparably tarnish your name and reputation. Once that happens, no one will trust you or want to work with you again,” he said.
Paradee claimed 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. By vetoing the measure now, however, Paradee said that it “will do irreparable harm to dozens of small business owners who successfully won the lottery to open retail marijuana stores and grow facilities.”
More than 100 new license holders for cultivation, testing, processing and retail stores to support Delaware’s recreational marijuana market have yet to open. Many have awaited the outcome of the bill that would have reduced buffers that have significantly limited where they could open such businesses, especially in Sussex County where buffers were set at a restrictive limit of 3 miles from most “sensitive places,” like schools or churches.
So far, only dispensaries established originally for the medical marijuana market have been able to convert to selling recreational marijuana as of Aug. 1. Those businesses, including the likes of Columbia Care, The Farm, Fresh Cannabis and Thrive, formerly known as First State Compassion, also have the benefit of being end-to-end operations. Under the former medical market regulations, they were required to grow, process and sell their own products.
The new recreational market was required to be split up to increase the competition in the market and hopefully suppress pricing.
“The legal market will operate as an oligopoly for the foreseeable future resulting in higher prices for consumers and the continuation of a robust illegal market run by gangs and cartels, whose products pose a serious health risk to consumers,” Paradee added.
When asked about Sen. Paradee’s comments, Mila Myles, the spokesperson for Meyer’s office, said, “The Delaware Way is in the past, and Governor Meyer is focused on the future.”
Rep. Ed Osienski (D-Newark), who has been the primary advocate for marijuana legalization in the statehouse and co-sponsored SB 75, told Spotlight Delaware that he was disappointed with the governor’s veto and argument that revenue sharing was needed.
“The counties don’t get cigarette tax revenue. They don’t get alcohol tax revenue. Why are we looking to treat marijuana differently?” he questioned.
Taxes from both tobacco and alcohol currently go to the state’s General Fund, and counties are granted funding each year from those dollars. This year, about $3.8 million total is being sent to the three counties through the state’s Grant-In-Aid bill.
Osienski said that he would be talking with his colleagues about whether they would support an override of Meyer’s veto. SB 75 passed both the House of Representatives and State Senate by exactly the three-fifths margin needed for an override, meaning supporters can’t afford a single defection.
Notably, former Rep. Stell Parker Selby missed the House vote during her session-long absence, and her newly elected replacement, Rep. Alonna Berry, may give Democrats a buffer in the chamber.
Such overrides are exceedingly rare in Delaware. Before the legislature overrode a veto last year on reshaping a panel in charge of state employee benefits, it had not occurred in 47 years. Three years ago, Osienski suffered a failed override when five members of the House Democratic caucus switched their votes on the original marijuana legalization effort.
Meyer’s proposal
While the governor vetoed the bill that was debated for months this past spring, he has also offered up a proposal that he has reportedly brokered with Sussex County leaders.
In a draft bill that he attached to his veto letter, he proposes sending 4.5% of the 15% state sales tax to the county or municipality in which a marijuana business is located to “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.
With 7% of the tax revenue already required by law to be placed into a Justice Reinvestment Fund for restorative justice, jail diversion, workforce development, and more, it leaves just 8% of funding to be divvied up between the state, counties and municipalities.
James Brobyn, who owns the Field Supply dispensary chain and is the president of the Delaware Cannabis Industry Association, said that he was frustrated by the veto and new politicking over which jurisdiction would receive funding.
“This is always about money and people dividing up this tax pie,” he told Spotlight Delaware. “And the reality is they’re all fighting over a pretty small pie because they’re not letting any of these other operators get open.”
Brobyn said that limitations on available real estate was a major hurdle for those businesses still looking to open. Operators already face an environment with limited business capital, as banks won’t work with marijuana businesses as the drug remains illegal at the federal level.
That limits marijuana businesses to credit unions and alternative banking options to fund their operations, which only decreases the available capital for loans to the industry. In a small state with a comparably smaller customer base than neighboring states, marijuana operators already face significant challenges.
“Let’s get this industry humming so we can get the tax revenue going in. That means you have to make compromises. You have to get these buffers lowered, and you have to support small businesses,” Brobyn said. “Right now, the whole industry is frozen.”
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This story was originally published by Spotlight Delaware and distributed through a partnership with The Associated Press.
Jacob Owens/spotlight Delaware, The Associated Press
