State marijuana czar briefs Lewes council

When Delaware Marijuana Commissioner Rob Coupe started his job last July, his office was a laptop in a conference room.

Now, Coupe has five employees, fully staffed to manage the rules and regulations of the burgeoning legal weed industry.

Coupe delivered an extensive presentation to Lewes Mayor and City Council at its April 25 workshop. It was a state-of-the-state of legal pot in Delaware.

“This is not about the legislation of the use of marijuana – we can’t do anything about that – this is about whether Lewes will allow businesses that support the marijuana industry,” said Mayor Andrew Williams.

Rehoboth Beach, Dewey Beach and Bethany Beach have all banned the marijuana industry in their communities.

Lewes officials are taking a wait-and-see stance to determine if the economic and social impacts are worth it.

“It’s your decision, the city’s decision, whether or not this belongs in your town,” Coupe said.

Delaware decriminalized marijuana possession in 2015. One ounce or less for adult personal use is legal. It cannot be consumed in public or in a vehicle.

Delaware’s medical marijuana program is run separately from Coupe’s office. Coupe will soon be issuing business licenses for the recreational marijuana industry. He said there will be a $5,000 license application fee.

A total of 125 licenses will be up for grabs in four categories: cultivation, manufacturing, retail and testing. Licenses will be awarded by a lottery system.

Coupe said he will start accepting applications Sept. 1, with licenses awarded on the following timetable: 

Nov. 1: 60 cultivation

Dec. 1: 30 manufacturing 

March 1, 2025: 30 retail and five testing facilities.

Coupe said testing is an important safety component.

“Everything is tracked seed to sale,” he said. “When a plant starts, it’s bar-coded and followed through the system. If you have a regulated market that is competitive, folks will want to go there because it’s a safer product.”

Coupe pointed to high standards and testing that already occur in the state’s medical marijuana program. He said pesticides are not allowed to be used on marijuana products in Delaware, adding to the safety factor.

An applicant for any license would have to be successful in the lottery system, receive a conditional license from Coupe’s office and receive all required permitting from the city before a two-year operating license could be issued. 

Council members asked several questions about the potential tax benefits from the marijuana industry. All marijuana products sold in Delaware will have a 15% sales tax, the state’s first sales tax. Coupe said that will generate a potential $42 million in tax revenue.

Keila Montalvo, community relations officer for the Marijuana Commissioner’s Office, said municipalities would not see direct cash flow from the tax. But, she said, municipalities would benefit by adding service and manufacturing jobs that are not season-dependent. Montalvo said municipalities will likely see increased use of electric, water and sewer, and a boost to the commercial real estate market.   

Coupe said every month, 7% of the tax income will be put into the Justice Reinvestment Fund, administered by the Criminal Justice Council. He said that agency will issue grants to municipalities for crime prevention and other initiatives. The General Assembly will have total discretion on how to spend the other 93% of the tax revenue.

In response to a question from Williams, Coupe said a city like Lewes could single out marijuana products for its own local sales tax on top of the state tax. But he urged caution.

“Other states have allowed it and what they’ve seen is that there’s overregulation and the price goes up,” he said. “That makes it hard to compete with the illegal market.”

Montalvo said current  Delaware code does not allow a city to create their own sales tax on marijuana.

He said that is why California still has a strong illegal pot market.

Williams said he thinks council is in a good position to make a decision by Sept. 1.

Coupe’s presentation can be found on the agenda for the April 25 workshop at lewes.civicweb.net.