By Ken Mammarella
A good way to start understanding cannabis in Delaware is with a few acronyms and numbers.
Acronyms include THC (tetrahydrocannabinol, the main force behind the psychoactive high), CBD (cannabidiol, well-recognized for its health benefits) and FDA (the federal Food and Drug Administration), because of is complicated stance regarding cannabis.
Numbers include 16,620 (the number of Delawareans who have cards to access medical marijuana), 19 (the minimum number of months it would take for Delaware to start selling recreational marijuana once it is legalized), 100 (percentage of Delaware’s last hemp crop that was destroyed because it had too much THC), 30 (the number of adult-use marijuana retailers being proposed -— in contrast Delaware has 320 liquor stores), and 3600 (a block on Kirkwood Highway with two CBD stores).
That’s just the start. THC and CBD are among 100 or so cannabinoids in marijuana and hemp, which are two related plants in the cannabis genus.
THC comes in two important forms: Delta 9 (the most common form in marijuana) and Delta 8, with both isomers producing a high. Delta 8 is made “through an unregulated process” from hemp, Dr. Jason Silversteen, chairman of the Delaware Medical Marijuana Oversight Committee, told Delaware’s Medical Marijuana Stakeholder Group last fall, and it is illegally sold in Middletown and surrounding areas.
Variations for CBD include CBC, which Jesse Ginefra, owner of Botana Organics, recommends for headaches, among other issues, CBDV (for seizures, he continues), CBG (for inflammation) and CBN (for sleep). Half the people walking into his North Wilmington store are seeking advice about these variations and various ways to be dosed.
“We’re in the business of helping,” he says. “And to understand CBD, we need to understand the endocannabinoid system.”
The system was identified in 1988. Contrast that to marijuana’s medical use, which goes back to 2737 B.C., in China. Ginefra calls the system “your body’s coach,” for its wide impact, including blood pressure, the sleep cycle, memory, learning and hunger.
Customers at medical marijuana dispensaries — Delaware calls them compassion centers — often are seeking advice too.
“Our sales associates will steer you down the path for the effect you want,” such as energy, focus and sleep, says Volley Hayhurst, a Lewes resident who is vice president of operations for Columbia Care. He says that desire for guidance is especially important for older customers, and people age 50 to 70 make up 40% of Columbia Care’s business at its three Delaware dispensaries.
Guidance is also important for adults who dabbled in marijuana when younger. “In the mid-1990s, the average concentration of THC in cannabis samples was about 4%,” The New York Times reported in April. “By 2017, it was 17%, and some products now have THC levels above 90%.”
Schedule I
Another key date in cannabis history is 1970, when marijuana was labeled a Schedule I drug, with no medical value and high potential for abuse.
“This determination has come to be insulated by a byzantine, Kafkaesque, bureaucratic process now impervious to the opinion of the majority of U.S. doctors — and to a vast body of scientific knowledge — many experts say,” according to Scientific American.
That federal classification makes the legal business — both medical and adult-use — “a brutally difficult industry,” says James Brobyn, CEO of American Fiber Co. in Rockland. “You can be a good grower, but you have to be a better businessman.”
Brobyn started in the international cannabis business in 2016 and in May is scheduled to open Field Supply Cannabis as Delaware’s 12th dispensary, strategically set on Kirkwood Highway and Limestone Road, one of Delaware’s busiest intersections.
Botana Organics owner Jesse Ginefra. Photo provided.
Even though medical marijuana has been legal in Delaware for a decade, and adult-use (or recreational) marijuana may become legal soon, that Schedule I classification also functions as a financial straitjacket nationwide, on both how marijuana businesses are established and run.
And that classification also opens the CBD business to dodgy retailers, with Ginefra and Brobyn expressing alarm about gas stations selling who knows what and calling it CBD. That lack of FDA regulation means labels aren’t necessarily accurate in describing how much CBD products contain (or, disturbingly, if they contain any at all) or if they have any contaminants. “Buyer beware,” Ginefra says.
One more key date in cannabis history is 2018, when the federal Farm Bill legalized growing hemp and selling products with CBD, as long as they have less than 0.3% THC. The industry has since grown dramatically, but not smoothly.
“Flat is the new up, sales are growing but price points are dropping,” Natural Products Insider wrote in 2022, reporting on CBD leader Charlotte’s Web. “And the FDA is not lifting a finger to help.”
The “FDA continues to be concerned at the proliferation of products asserting to contain CBD that are marketed for therapeutic or medical uses although they have not been approved by FDA,” the agency writes as part of a 6,000-word FAQ posted online. The answers more often hedge (Q. Is it legal for me to sell CBD products? A. It depends) than speak succinctly (Can THC or CBD products be sold as dietary supplements? A. No.).
“The legal cannabis trade, still in its infancy, is flailing in many parts of the country,” The Washington Post reported on the front page of its print edition in January. “Supply is now flooding the market in several states, economists say, depressing prices and decimating already-thin margins. And competition is sure to escalate as decriminalization spreads, large growers adopt more cost-effective technologies and the illegal market not only endures, but thrives. … 2022 marked the first year that any state recorded a decline in tax revenue from cannabis sales, and it occurred in five.”
And in Delaware . . .
Delaware’s hemp industry is not doing well, judging by Delaware Department of Agriculture stats. Acreage fell by two-thirds from 2020 to 2022; indoor production fell by 90%. Two-thirds of the 2022 outdoor production and all the indoor production was destroyed because it had too much THC.
Opening a store selling CBD items was simple, Ginefra says, but opening a dispensary is complex. Delaware requires dispensaries to be vertically integrated, handling four major tasks — cultivating, manufacturing, testing, and retailing — all within the state. And Delaware is such a small market — just 16,620 people recommended by their doctor and reviewed by the state to get cards that allow them to buy medical marijuana — that “you can’t get scale,” Brobyn says.
Although the attention this year has been on adult-use marijuana, the Delaware Cannabis Industry Association is advocating for several changes in the medical market: self-certification for patients 60 years or older, plus higher THC percentages and differentiated products.
CBD products aren’t sold in major chains, Brobyn says, because the lack of an FDA seal of approval means these chains fear an excess legal burden.
Still, chains of CBD stores, such as American Shaman and Your CBD Store, compete against local entrepreneurs. All post disclaimers that read something like this: “These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat, cure, or prevent any disease.”
“The FDA understands that there is increasing interest in the potential utility of cannabis for a variety of medical conditions, as well as research on the potential adverse health effects from use of cannabis,” the federal agency writes on its website, noting it’s approved just one cannabis-derived drug and three synthetic cannabis-related drugs. “Importantly, the FDA has not approved any other cannabis, cannabis-derived, or cannabidiol (CBD) products currently available on the market.”
American Fiber CEO James Brobyn (l) with Chief of Staff Ceon Harris at one of the company’s cultivation facilities. Photo courtesy American Fiber.
The Delaware Legislature was more confident in marijuana’s medical benefits when it authorized medical marijuana. The introduction to the law cites nearly 5,000 years of medical use and says, “Modern medical research has confirmed the beneficial uses for marijuana in treating or alleviating the pain, nausea, and other symptoms associated with a variety of debilitating medical conditions.”
Even though medical marijuana is legal in Delaware, marijuana itself is still illegal, according to the federal government. “Businesses face many challenges, such as the inability to openly bank with any organizations in the state of Delaware, which creates additional expenses and generates fees when banking out of state,” according to the 2022 Medical Marijuana Stakeholder Group Summary Report, prepared for the state’s Office of Medical Marijuana.
“Compassion centers are unable to obtain a bank loan, so private investors are leveraged, and they often charge higher interest rates. The restrictions prevent the companies from being able to obtain and use company credit cards,” the report continued. Brobyn calls the rates “predatory.”
Startups are costly: Growing and manufacturing spaces costs $350 to $400 a square foot to build, Brobyn says. Compare that to $100 to $150 for houses.
“Under existing laws, cannabis organizations operate as not-for-profit businesses and are taxed as corporations,” the report continued, noting that that “prohibits these companies from claiming the same standard business deductions that other companies are allowed.”
“Everything is taxed,” at an effective rate of 75% to 80%, Brobyn says, compared to 25% to 28% for other businesses.
The financial complexity continues at dispensaries for buyers, who must pay with cash or “certain registered debit cards that have high interest rates and transaction fees,” according to the report. That’s because major credit card companies don’t want to be involved, either.
Medical Marijuana
Delaware’s medical marijuana program began with the 2011 Medical Marijuana Act. The first dispensary opened in 2015. Six firms have opened 11 dispensaries, with more surprisingly downstate, even though the number of medical marijuana cards is split evenly between upstate and downstate. A 12th dispensary is scheduled to open in May in New Castle County.
A Delaware Health and Social Services landing page lists a dozen physical and mental conditions that can qualify people for medical marijuana. The list includes terminal illness, cancer, being HIV-positive, AIDS, decompensated cirrhosis, Lou Gehrig’s disease, agitation of Alzheimer’s disease, post-traumatic stress disorder, intractable epilepsy, autism with self-injurious or aggressive behavior, glaucoma, and chronic debilitating migraines, and anxiety (CBD Rich Card only). People can also qualify if they have a chronic or debilitating disease or condition or if its treatment produces wasting syndrome, debilitating pain, intractable nausea, seizures, and severe muscle spasms.
People must get a prescription for medical marijuana and apply for a card good for a year (there’s talk of increasing that to three years). They can buy 3 ounces of usable marijuana every 14 days, and they can’t use it in public places, any form of transportation, schools, or correctional facilities.
Fresh Delaware sends potential customers looking to order online (but pick up in person) to Leafly.com, which breaks down the merch this way: flower (dried buds, sold by the eighth of an ounce), concentrates (cartridges sold for vaping, sold as half or full grams), edibles (gummies, cookies, candies and tinctures), pre-rolls (individual joints) and topicals (sports sticks and salves). Different strains are promoted to increase and decrease desired feelings, such as arousal and anxiety.
There’s a similar variety for products with CBD. At Botana, they include gummies (the most popular), capsules, topicals (like bath bombs), tinctures (in alcohol extracts), oils, foods (like honeys, mints, chocolates, cookies, drinks, taffies, smoothie mixes and flavoring syrups), disposable vapes, vaping cartridges, hemp flowers (for whatever the customer wants to create) and pre-rolls (basically hemp cigarettes).
The feeling from the gummies lasts the longest, Ginefra says, and smoking CBD pre-rolls is the fastest way to feel the effect (yes, the peppery, oregano-y aroma resembles marijuana).
Ginefra started learning about the business almost a decade ago, while working on a Colorado hemp farm, and he believes that CBD “is a nutrient missing from the modern diet.” He takes it regularly.
He is ready to advise people on whatever their concerns are, the most common being pain, anxiety and problems sleeping. Some products add herbs, mushrooms, or other ingredients, and he also sells CBD products for pets. His concerns for quality control mean he sells products from a small number of businesses, backed by independent testing. “Every month, there’s something new,” he says.
And another key date in marijuana just happened, with Delaware’s legalization of recreational adult use. See What About Legal Recreational Use story at left.
What About Legal Recreational Use?
Adult-use marijuana became legal in April after Gov. John Carney decided he would allow two bills to become legal without his signature.
House Bill 1 decriminalized marijuana possession for personal use, effective April 23. A companion House Bill 2 sets up a system for growing, taxing and selling marijuana, but retail licenses won’t be issued for 19 months, HB 2 says. That lag is similar to nearby states.
New Jersey voters backed recreational marijuana in November of 2020, but the first stores didn’t open until April of 2022. New York authorized recreational marijuana in March of 2021, but the first stores didn’t open until December of 2022. After a referendum in November of 2022, Maryland will authorize recreational marijuana starting July 1.
“As we implement House Bill 1 and House Bill 2, we will do everything in our power to protect children from accessing marijuana and marijuana-related products; prevent Delawareans and Delaware visitors from driving under the influence of marijuana; and closely evaluate the placement of marijuana dispensaries and other businesses, to ensure they do not become a blight on already disadvantaged communities,” Carney said when he would not attempt to veto the bills.
No matter what these other states have done, “nowhere can you buy marijuana and cross state lines,” says James Brobyn, CEO of American Fiber Co. , which owns Field Supply Cannabis, a marijuana dispensary opening in May, and Valor Craft, a THC and CBD brand.
And, according to NORML, an advocacy group, “Delaware has a zero tolerance per se drugged driving law enacted for cannabis, cannabis metabolites and other controlled substances.”
The Delaware Cannabis Advocacy Network estimates that there are 145,000 adult cannabis users in Delaware, or about 18% of the state’s adults. In contrast, 51% of American adults drank alcohol in the last month.
HB 2 establishes a complicated process for adult-use marijuana, with four categories of licenses — cultivating, manufacturing, testing, and selling — and limits of 60 cultivating licenses, 30 manufacturing licenses, three testing licenses and 30 retailing licenses. A “social equity” component covers people convicted of many marijuana-related offenses or who have lived five of the last 10 years “in a disproportionately impacted area.”
Another component is for “microbusinesses,” meaning small firms led by Delawareans, as contrasted to firms like Columbia Care, which operates in 39 states, including Delaware, and wants to expand into adult use in Delaware, says Volley Hayhurst, a vice president.
In retailing, there will be 15 social equity licenses and 15 licenses open to anyone. Applicants will be scored on factors like “fair scheduling, family-supporting wages,” local hiring and diversity goals.
Similar guidelines on local ties and social equity led to a lawsuit that delayed by six months the issuance of some licenses for adult-use retailers in New York. The litigant, whose majority owner lives in Michigan, “has filed a similar lawsuit against Los Angeles,” The New York Times reported in April.
Once the bills become law, detailed rules need to be written.
The Delaware Cannabis Policy Coalition supports “a well-regulated system” that would replace “a dangerous underground market,” raise revenue via taxes, “ensure proper testing, packaging and labeling” and free law enforcement from “enforcing failed prohibition policies.”
“The decriminalization of cannabis doesn’t mean that people who possess personal use quantities of cannabis are not subjected to the criminal justice system,” says Dover attorney Adam Windett. “In fact, the enforcement of decriminalization looks exactly the same as criminalization. In Delaware, people who are suspected of possessing cannabis experience custodial detentions, being placed in handcuffs, humiliating searches of their vehicles and persons, including strip searches, civil asset forfeiture, seizure of their cannabis, fines, and the trauma related to unnecessary police interactions.
“Decriminalization is enforced unevenly, and poor people, young people, and people of color are disproportionately impacted. While these interactions should end with civil citations and not arrests, that is not always the case due to errors by law enforcement and overcharging. In many instances, even if a civil citation is issued rather than an arrest, considerable damage has already been done.
“Far too many people wrongly equate decriminalization with legalization. For the rest of the population, particularly the nearly 6,000 people a year who are cited with cannabis offenses post-decriminalization, the continued enforcement of wildly unpopular prohibitions against possession and consumption of cannabis by adults continues to erode public trust in our system of laws, law enforcement, the courts, and the administration of justice.”
