A Breakdown of the Delaware Adult-Use Cannabis Legislation

Cannabis buds and joint resting on a cannabis magazine for Delaware adult-use cannabis

 

In the spring of 2023, the Delaware state legislature approved the passing of House Bill 1 and House Bill 2 resulting in it becoming the 22nd state to legalize adult-use cannabis. This created the framework for how the Delaware adult-use cannabis market will be regulated, what licenses will be made available, and what the licensing process will look like. Here’s a breakdown of the legislation.

 

What types of cannabis businesses will this allow for?

Adult-use retail, cultivator, manufacturer, and laboratory facility licenses will be made available. These licenses will be awarded among three categories of applicants: Open, Social Equity, and Microbusiness.

 

Open Licenses are available for individuals and entities from any state.

Open licenses include the following:

  • Retail Marijuana Store License
  • Marijuana Testing Facility License
  • Marijuana Cultivation Facility License
  • Marijuana Product Manufacturing License

 

Microbusiness Licenses require applicants to meet ALL of the following conditions:

  1. 51% ownership and control by 1 or more individuals who have resided in Delaware for at least 5 of the preceding 10 years.
  2. Intends to employ no more than 10 employees.
  3. Will not operate a facility occupying more than 2500 square feet.
  4. Will not possess more than 1,000 marijuana plants each month.

 

Microbusiness licenses include:

  • Retail Marijuana Store License
  • Marijuana Product Manufacturing License

 

Social Equity Licenses are reserved for applicants that are Delaware residents that meet one of the following criteria:

  • At least 51% ownership and control is held by one or more individuals who have resided for at least 5 of the preceding 10 years in a disproportionately impacted area.
  • At least 51% ownership and control is held by one or more individuals who meets one of the following criteria:
    • (1) Was convicted of or adjudicated delinquent for any marijuana-related offense except any of the following:
      • a. Delivery to a minor.
      • b. Any marijuana offense with a  Tier 3 quantity of marijuana as defined in § 4751(c) of Title 16.
      • c. The functional equivalent of the offenses described in either item a. or b. listed above under the laws of the United States, any state or territory of the United States, or any other country.
    • (2) Is married to or the child of a person who was convicted of or adjudicated delinquent for any marijuana-related offense.

 

Social Equity Licenses include the following:

  • Retail Marijuana Store License
  • Marijuana Testing Facility License
  • Marijuana Cultivation Facility License
  • Marijuana Product Manufacturing License

 

How many adult-use cannabis licenses will be available?

Delaware will issue a total of 125 licenses for adult-use cannabis. This includes:

 

    • 60 Cultivation Facility Licenses will be issued to the following:
      • Facilities less than 2,500 square feet:
        • 20 Microbusiness licenses
        • 10 Social Equity licenses
      • Facilities more that 2,500 square feet:
        • 20 Open licenses
        • 10 Social Equity Licenses
  • 30 Product Manufacturing Facility Licenses will be issued to the following:
      • 10 open licenses
      • 10 social equity licenses
      • 10 microbusiness licenses
  • 30 Retail Store Licenses will be issued to the following:
      • 15 open licenses
      • 15 social equity licenses
  • 5 Testing Facility Licenses will be issued to the following:
    • 3 open licenses
    • 2 social equity licenses

 

How much will it cost?

Application Fees will be $5,000 for Open license applicants, $4,000 for Social Equity license applicants, and $3,000 for Microbusiness applicants. These fees are non-refundable.

License Fees will be required for applicants that are awarded a license. This is an annual fee amounting to $10,000 for Open licensees, and $6,000 for Social Equity and Microbusiness licensees. Facilities that wish to operate on Sundays will also be required to have a separate Sunday Sales license, which costs $500 every two years.

 

What is required in order to get a license?

In addition to meeting the base requirements of the license category that you wish to apply, you will also need to prepare to submit an application to the state. The applications will be competitively scored, with those receiving the highest scores in their respective categories being awarded licenses. The criteria that will be scored includes but is not limited to:

  • A comprehensive business plan, including an annual budget and pro forma financial statements.
  • The experience, training, and expertise of the applicant and managing officers.
  • The applicant’s plans for safety, security, and the prevention of diversion. 
  • The applicant’s plans for operations, training, and staffing, including all of the following:
    • A social responsibility plan outlining diversity goals, including plans to recruit and hire people of color, women, and veterans and to support their ownership and promotion within the organization, as well as the percent of employees it plans to hire from within the respective city or region of the State.
    • A plan to provide a safe, healthy, and economically beneficial working environment with fair scheduling practices, family-supporting wages, and benefits for its employees.
    • Any criminal, civil, or regulatory history encountered by other entities the applicant and managing officers have previously controlled or managed. 
    • The suitability of the proposed location for the facilities.
    • Any other criteria that the state may determine they will require by the time of applications.
  • In addition to the requirements listed above, open license applications must include the following:
    • An attestation signed by a bona fide labor organization stating that the applicant has entered into a labor peace agreement with such bona fide labor organization.
    • For those applying for Cultivation or Manufacturing Facility licenses, an environment and sustainability plan, including efforts it will take to minimize the environmental impact, and resources needs of its facilities and other business operations, such as plans to minimize water usage, employing organic cultivation methods, and adoption of other sustainable business practices will be required.
  • Regulations that should be addressed within the plans listed above as well as others perhaps yet to be established can be found in HB2 subsection 1331. Regulations.

Who will oversee and enforce the regulations and licensing process?

Cannabis licenses and regulations are the responsibility of the Delaware Division of Alcohol and Tobacco Enforcement through a new Office of Marijuana Control Commissioner. The Department of Safety and Homeland Security (DSHS) will work in partnership with the Department of Health and Social Services (DHSS) to implement House Bill 1 and House Bill 2 (the Marijuana Control Act). They are tasked with creating the framework for the production, manufacture, and sale of legal recreational cannabis.

 

What is the best way to prepare to get an adult-use cannabis license?

If you are considering applying for an adult-use cannabis license in Delaware, Harvest 360 is equipped to help you. Our team at Harvest 360 brings a combined 32+ years of experience providing start-up services in the cannabis industry, helping over 250 cannabis businesses in 15 states begin operations and maintain compliance. We fully understand the challenges and complexities involved with starting and operating a cannabis business, as well as the time and effort required to navigate the regulatory processes.

Book a free consultation with us here: Book a Free Application Consultation.

 

Timeline and Key Dates for Adult-Use in Delaware:

  • May of 2024 – The State anticipates that licensure applications will be available.
  • July 1st, 2024 – Deadline for Delaware to adopt the regulations required to administer the licensing of recreational marijuana businesses.
  • August 1st, 2024 – Applications for all licenses will begin to be accepted.
  • September 1st, 2024 – Licenses will begin to be issued (this is the first date the commissioner is allowed to issue licenses of any type).
  • October 1st, 2024 – The state will issue 60 Cultivation Facility Licenses, provided that many qualified applicants exist in total, spread amongst the three applicant pools (this is the deadline for when these licenses must be issued).
  • November 1st, 2024 – The state will issue 30 Product Manufacturing Licenses, provided that many qualified applicants exist in total, spread amongst the three applicant pools (this is the deadline for when these licenses must be issued)
  • February 1st, 2025 – The state will issue 30 Retail Licenses and 5 Testing Facility Licenses, provided that many qualified applicants exist in total, spread amongst the two applicant pools (this is the deadline for when these licenses must be issued).
  • July 1st, 2025 – At any time after this date, the Commissioner may accept applications for any type of license and issue licenses in excess of the numbers identified in HB2 if either the Commissioner determines additional stores or facilities are needed or the number of active licenses in a particular category is under the number permitted by HB 2.

We advise that you continue to check the DSHS page for any updates on further developments on the adult-use cannabis process in Delaware.

Book a free consultation with us here: Book a Free Application Consultation.