Stay Informed: Latest Developments on Delaware Cannabis Licensing
Delaware, the 22nd state to embrace the legalization of adult-use cannabis, is steadily marching forward on the path to a well-regulated and responsible cannabis industry. The state’s recent updates have set the stage for a series of critical developments.
Draft Regulation Updates
As Delaware gears up to embrace the era of adult-use cannabis, it is unveiling a multifaceted regulatory structure that will define the landscape of the industry. The Office of the Marijuana Commissioner is releasing draft regulations on a weekly basis as it prepares for the implementation of the licensing, which can be found here. One of the crucial dates on the horizon is July 11, 2024. On this day, Delaware anticipates finalizing the comprehensive regulations governing the recreational cannabis industry. This will pave the way for the acceptance of all license applications starting in September, with licenses starting to be issued on a staggered schedule by October 2024. Cultivation licenses will be the first to be issued, followed by manufacturer licenses beginning in December. In the current circumstances, retail sales will begin in March 2025.
Aside from the draft regulations, the state legislature is also deliberating on other proposed bills. One of the proposed bills is aimed at providing more financial transparency, as a legislative committee in the state has given the green light to a proposal that would establish statewide safeguards for banks offering services to licensed cannabis operators. The proposed bill, H.B. 355, aims to make it clear that banks, credit unions, armored car services, and accounting firms cannot face state-level prosecution solely for conducting business with cannabis companies.
License Types
The licensing framework is comprised of three primary categories: open licenses, microbusiness licenses, and social equity licenses. Each of these categories has its distinct set of license types and a meticulous application process.
Open License: This category encompasses various license types tailored for individuals and entities from any state eager to participate in Delaware's burgeoning cannabis market. Open licenses include Cultivation Facility Licenses, Product Manufacturing Licenses, Retail Marijuana Store Licenses, and Testing Facility Licenses.
Microbusiness License: To qualify for a microbusiness cultivation or product manufacturing license in Delaware, applicants must fulfill all specific conditions, including:
Ownership of 51% or more by individuals who have resided in Delaware for a minimum of 5 out of the preceding 10 years.
Employing no more than 10 personnel.
Operating a facility with a size not exceeding 2,500 square feet.
Possessing no more than 1,000 plants per month.
Social Equity License: The state of Delaware is actively promoting social equity within the cannabis industry. To be eligible for a social equity cannabis license in Delaware, applicants must meet one of the following specific criteria, such as:
Ownership of 51% or more by individuals who have resided in a disproportionately impacted area for at least 5 of the preceding 10 years. These areas have not been defined as of yet.
Was convicted of any cannabis offense in any state, except for the following : (1) having a prior Tier 3 cannabis offense conviction or (2) delivery to a minor related to a cannabis offense.
Delaware will be issuing a total of 125 licenses, which include:
60 cultivation facility licenses are available for both indoor and outdoor growing operations.
For facilities with canopies less than 2,500 square feet, 20 microbusiness licenses and 10 social equity licenses will be granted.
For facilities with canopies more than 2,500 square feet, 20 open licenses and 10 social equity licenses will be issued.
30 product manufacturing facility licenses
With an equitable distribution of 10 licenses for social equity applicants, 10 for microbusinesses, and 10 open licenses.
30 retail store licenses
With 15 open licenses and 15 designated for social equity applicants.
5 testing facilities, serving as quality control labs to ensure compliance with Delaware's stringent cannabis product standards.
Of these, three licenses will be available for open application, while two will be exclusively reserved for social equity participants.
License Allocation
It is important to note that in their first draft of regulations, the Office of the Marijuana Commissioner has made the decision to enter all eligible applicants into a lottery system. This lottery shall be conducted in an impartial and random manner, with the format of the lottery being determined later at the discretion of the Commissioner.
Fees
A structured fee system has been established to ensure the seriousness and commitment of applicants, while also accommodating social equity and microbusiness endeavors.
Application Fees: To initiate the licensing process, all prospective applicants are required to submit an application fee of $5,000. This particular fee structure has been carefully designed to deter individuals who lack genuine intent from applying, thereby preserving valuable regulatory resources. Applicants pursuing Social Equity licenses are subject to a reduced application fee of $1,000, reflecting the state's commitment to promoting equitable participation in the cannabis industry. Microbusiness applicants will face a $3,000 application fee.
License Fees: Upon successful license awards, a distinct fee structure comes into play. Open license holders are expected to pay an annual fee of $10,000. In contrast, Social Equity and Microbusiness licensees benefit from a 40% discounted rate, resulting in an annual fee of $6,000. This approach ensures that smaller-scale businesses and social equity initiatives can thrive in the cannabis sector.
Sunday Sales License: For establishments seeking to operate on Sundays, a separate Sunday Sales license will be required, incurring an additional cost of $500 every two years.
Municipality Decisions
While Delaware has made significant strides in the legalization of cannabis, it's worth noting that a wave of towns, including some highly popular beach destinations, have taken measures to deny the production and retail sale of cannabis within their boundaries. This has led to a diverse landscape of responses from various municipalities across the state.
Cities and towns such as Bethany Beach, Dagsboro, Dewey Beach, Millsboro, Millville, Ocean View, and Rehoboth Beach have exercised their authority to prohibit the cannabis industry. Moreover, several others, including Fenwick Island and Seaford, are contemplating similar bans. Meanwhile, it remains under consideration in other communities, including Georgetown, Lewes, Milford and Wilmington. Officials in Dover and Milford have displayed a more friendly stance, appearing inclined not to impose a ban on the industry, as evident in discussions during meetings held towards the end of last year.
It's also essential to note that regulated marijuana businesses are permitted in unincorporated areas. This is because the legislation does not grant Delaware's three counties the authority to impose bans, thereby creating a complex combination of local responses to the evolving cannabis landscape.
Ready to Become a Licensed Cannabis Business Owner in Delaware?Global Go specializes in cannabis licensing and applications (99% win-rate in hundreds of applications), compliance automation, advanced analytics, SOPs, mergers and acquisitions, new product launches, technology, security, and best practices. Enhance your prospects for success by reaching out to a Global Go Cannabis Application Director (including team members based in the Delaware Valley) and accessing invaluable Delaware insights today.