Interview transcript:
PETROWICH: The office of the marijuana Commissioner recently announced that all medical marijuana conversion licenses may begin recreational sales on August 1. Talk to me about how your office reached this date and the preparation it took to get to this moment.
SANDLERIN: I think it took a pretty decent bit of preparation. We didn't want to launch until we were sure that we could start issuing other new licenses. Since I took office, we've already done– I think we did almost 20 so far, I plan to do another 20 this week. We're hoping in the next two months to have all the conditional licenses that are available to be issued, issued. So that way, as folks join and get their documents in, their sites converted, they can just roll right into the adult-use, and there's not going to be a lag because many times those lags can hurt businesses.
But we also wanted to work with our existing medical companies, who have been the foundation of our industry thus far, who are ready to operate and ensure that Delawareans can start accessing cannabis as soon as possible. So we talked to everybody that's currently operating and asked if they would be able to do a 30-day turnaround. Everybody said they could. And so, given that information and the governor's desire to get this program going, we went ahead and made the announcement, and [we’re] looking forward to getting everything rolling [on] August 1.
PETROWICH: You just touched on this a little bit – about other licenses that you're still working on getting out, or some that you have – but part of the language within the bill that legalized conversion licenses, House Bill 408, it outlines that when a conversion retail facility may commence operations that one of the considerations that must be taken into account is that the commissioner must factor in the number of social equity and microbusiness retail marijuana stores that are available to open.
So can you talk a little bit about this provision and if these considerations were made prior to announcing conversion licenses would open – so essentially, this kind of idea about keeping the competition fair within the market?
SANDLERIN: For us, it's a fine line to walk, and I understand the reasons behind the provision. And so, with the delay of the FBI background check issue, delay of me coming in the office, we didn't want to continue to hold up the program.
And one of the issues we're facing is if– it's chicken and egg in some instances. As long as we maintain medical, and we're not switching to adult-use, it's very difficult for social equity companies especially, microbusiness companies, to get investments, to get capital to operate, besides the fact of our grant programs and the things we're doing at OMC, so it's really important.
It's also important to show other stakeholders, especially local government officials, that the full adult-use industry does not come with a lot of the proclaimed harms to society. A lot of times it's showing that once we're operational, in fact the sky does not fall, that this creates a tax base, this does promote economic development and hiring. Because a lot of these new companies are also facing the issue of, “Where do I put my business?” So, trying to lead by example, I think, is important.
And as I said, while we are opening this conversion, we are also opening it to anybody who can get through the process. This allows me to really focus all of my attention on getting those folks through the process. A lot of the issues right now are we don't have the documents that we've requested in some instances. But working with DATE and my office at OMC, all my staff, we should be through all the cultivation licenses and manufacturing licenses by the end of the month. Next week I will start looking at retail locations as well, both social equity and non-social equity.
And [an] important fact [is], we actually have a few of these new licensees who will be coming online in the next two months. They're not retailers, which a lot of folks point to retailers, but the truth is, if we open a bunch of retailers without manufacturing and cultivation, we see prices go up, we see these guys with empty shelves. So we've been heavily focused on getting the cultivators up – we actually had one go active just last week.
PETROWICH: Along those same lines, one of the key parts of the conversion license program is that it generated around $4 million in funding to support social equity applicant startup grants. So can you tell me more about where social equity license recipients are at with receiving these grants – how they plan to be distributed, and then how close they are to launching?
SANDLERIN: We are very close to launching the program. The intent right now is to take a two-phased approach. There had been a lot of back and forth about how this program would be established – a lot of discretion was left to OMC to develop the program. And so the way we're looking at the program now is it will be a benchmark-based program.
The very first benchmark being, if you can get your conditional license, it frees up some of the grant money which will be provided so that in turn, the licensee can begin to start laying the groundwork for site control. And there will be about, depending on the license type, because each license type has different capital requirements, there will be different benchmarks at which point they can get disbursements.
In addition to that, after site control, what we want to do is provide the ability for – especially more capital intensive projects – to request more of a bulk release for specific capital requirements. For instance, a lab who needs extra extra capital to secure their equipment, we don't want them to have to wait around and hit benchmarks when they need to get their equipment in. So once they have site control, it allows them to apply to do more of a bulk release of the funds that are available to them, specifically to purchase large capital investment products.
PETROWICH: And then can you just give our audience a little bit of a rundown of how many dispensaries will become operational on August 1 and where they're located throughout the state?
SANDERLIN: The easiest way to find out is to go to our website – we have a full list of everybody. We're expecting around a dozen. There'll be 13, I believe, total, which will have the ability to convert.
Just because we tell them August 1, doesn't mean they have to on August 1. We've made that clear. We're just giving them the ability to. So I can't really say for certain how many, and that list will be obviously modified as we add new stores and new locations for folks.
PETROWICH: There's other language within House Bill 408 that says if a medical dispensary is located in a jurisdiction that opted to ban marijuana business, that the medical dispensary could request an open license in a new location.
Is this an option that any of the compassion centers had to use in order to operate lawfully in Delaware? How has that shaken out considering there was a lot of tension over municipalities, county zoning restrictions, etc., how have you seen that come to fruition with these compassion centers that are looking to convert?
SANDERLIN: It's a fluid process right now. Like I said, I'm not exactly sure how many are going to convert on August 1 – there still may be some stores that reach out and ask for the move. Right now, having just announced the conversion, the stores have not reached out and said, “Hey, can we get the open license in our location?” But I don't think that means they won't, necessarily, because there is a lot of tension between local officials and these businesses. And again, that's part of the reason why I wanted to go ahead and launch this program to make sure that we can show folks that it's not going to bring the sky down.
PETROWICH: And there's also Senate Bill 75, which has not yet been signed by the governor. There's been a lot of discourse around the General Assembly overriding local control this legislative session, so this was kind of a hot topic. I know we talked about in our last interview about how these businesses need a viable place to operate, which is kind of what we were just discussing.
So this bill would limit the zoning requirements and restrictions that a county can place on a marijuana business – have you heard any updates from Governor Matt Meyer’s administration about his intention to sign that legislation?
SANDERLIN: Not yet. I know it's under review by his administration. As soon as I hear, I'll probably be able to let everybody know, but I'm sure it'll come out of his office before it comes out of my office.
PETROWICH: Also in relation to the General Assembly, there was the “death” of a bill you could say that would have regulated hemp-derived products and THC-infused beverages. I know we also discussed that a little bit in our last interview – does your office have any plans to tackle this in the near future?
It seems like legislators are still interested in bringing a bill to the table, but unless there’s a special session that's going to be at least six months from now. So just kind of curious about your take on leaving this part of the industry unregulated, or maybe you think that bringing the legal market online will help that? Where do you stand on all that?
SANDERLIN: It's a complicated issue, obviously, because as with much of cannabis, it has a federal-state interplay. It's just the opposite direction, which is very strange to me, having been in cannabis for so long. It does remain a priority to my office, to me personally. I do think we'll see how opening these new stores helps, the conversion helps.
My issue is, there's a proliferation of these companies now, and I think they're more likely to have an impact on the regulated market than the regulated market is on them when you can offer unregulated products at cheaper prices, significantly cheaper prices because you don't have to spend all the money to ensure public safety with testing, accountability and whatnot.
So it remains a strong priority in my office, and I plan to use the next six months to work with members of the legislature, like [State Rep. Debra Heffernan] to strengthen the bill to really focus on how we can not hurt businesses but also ensure that we're protecting the public and we are keeping track of what's coming into the state and what's going into our bodies and what's going into our customers.
PETROWICH: Wrapping up here, you mentioned this right at the beginning, but just to give a more concrete [timeline], what are our next steps as far as the rest of the licenses? Sounds like you guys are really working on getting those out, you mentioned 20 more maybe sounds like next week, so give me a little bit more of a timeline again on where you guys are at and what consumers should be looking forward to in the future.
SANDERLIN: From our administrative perspective, we are looking to have the conditional licenses issued – to the extent we have documents from everybody – have them all issued by the end of summer, if not sooner. Our goal is to have all the cultivators done this month, manufacturers along with those, and start rolling into retailers in August.
I think from there, the ball really goes into the court of the businesses. And it's about finding locations, getting partners and really tackling all the obstacles you tackle when you start a new business, except you're starting a new business in an extremely regulated environment. My goal is to really work with companies, existing and potentially new, to make sure that my office, while regulating ensuring public safety, is also a partner in the process of getting open and supporting an industry.
Because while it's our job to keep it safe, it's also our job to keep it healthy and ensure that while we are overseeing everything that's coming out of them and going to consumers, that they are able to actually open a business and understand the interplay and have questions answered, as opposed to operating in a vacuum. And I think a lot of the time, it's providing information that is the key to getting these businesses going and started appropriately.
So, yes, over the next few months, that's what we're looking at. We have legislative goals, like we just talked about, to discuss with members coming back in January. And ultimately for the consumer, competition is key – providing more products on the marketplace, providing more outlets to procure products, is important to driving down the price, increasing the quality and increasing the access for the individual. Those are really our main goals moving forward, and then to help make sure that our regulations are at the forefront of cannabis regulations in the country as well.
