Delaware Has Now Legalized Adult-Use Cannabis. Hello Delaware!
Get Ready. The Delaware Cannabis Boom Is Upon Us.
Delaware has become the 22nd state to legalize cannabis, at long last. While we would have been more thrilled to see Governor John Carney sign HB 1 and HB 2 which legalized cannabis and created a framework for its regulation, we’re just happy he didn’t veto them! Having had a medical market since 2011, we’re glad that Delaware has joined some of its neighbors (way to go Maryland and New Jersey!) in the adult-use market. But what will the Delaware marketplace look like? Let’s take a look.
Delaware’s Cannabis Program Timeline
We’re all excited to buy some weed at our favorite shop in Dover or Wilmington, but that may not be for a while. First, a commissioner will be appointed by the governor to implement regulations and licensing efforts in the new market. Then, an application window will open which may not be until May 2024. Only after this will licensed operators be able to grow, package, and sell their cannabis products. Unlike some other states, we do have concrete dates within the regulations which define when some licenses will need to be awarded by.
Some of deadlines for when the commissioner must issue licenses are:
- Cultivation: 15 months from enactment (July 2024)
- Manufacturing: 16 months (August 2024)
- Retail Dispensaries and Laboratory Testing: 19 months (November 2024)
Sad to say, customers may not be able to make their first legal purchase in a dispensary until November next year. This shouldn’t be too surprising knowing Delaware’s history with slow cannabis rollouts. Though the medical market was officially approved in 2011, the first medical shop didn’t open until four years later. So, in some ways, we’re making some progress!
Possession In The First State
“Personal use quantity” of cannabis, i.e., possession of one ounce or less of cannabis, has been decriminalized in Delaware since 2015, but individuals were still subjected to a $100 fine. HB 1 has updated this language and allows for personal use quantity of upwards of 12 grams of concentrated cannabis and cannabis products containing 750 milligrams or less of Delta-9 THC. There is still a civil misdemeanor for possessing more than this amount and public consumption remains prohibited. Home cultivation is also unlawful.
Regulating The Delaware Cannabis Market
HB 2 creates the Delaware Marijuana Control Act which establishes a 15% levy on retail sales of cannabis and creates a basic framework for products which are “tested, labeled, and subject to additional regulations to ensure that consumers are informed and protected.” We’ll be seeing certain license type activities such as cultivation, manufacturing, and retail with state regulators being authorized to issue up to 60 cultivation licenses, 30 manufacturing licenses, and 30 retail licenses to qualified applicants. This cap isn’t surprising—there has been a cap in the medical market—but the size is. For instance, there are right now only five different operating compassion centers in the state.
It seems likely the state is anticipating not only some additional tourists from neighboring Pennsylvania—the only state which borders Delaware without an adult-use market—but also as an aim to reduce travel times for individuals in the state (the state’s first compassion center may have opened in 2015 but a second one didn’t open until 2017, forcing many Delawareans to drive upwards of 180-miles to visit the lone operation).
Social Equity and Microbusinesses
There will be special provisions for social equity and microbusinesses applications, including discounted application fees. Of all the licenses that will be awarded, one-third of cultivators and manufacturers, one-half of retail licenses, and two-fifths of the testing licenses, will be specifically for social equity applicants. To meet the criteria of a social equity applicant, 51% ownership of the business must be held by one or more people who have resided for at least five of the last ten years in a disproportionately impacted area or have been convicted of or adjudicated delinquent of a cannabis-related offense, with a few exceptions. Spouses or children of persons convicted of the qualifying cannabis-related offense can also be regarded as being a social equity applicant.
Microbusiness licenses will also be avaiable, so long as the business will not employee more than ten people. Canopy sizes cannot exceed 2,500 square feet and microbusinesses also cannot process more than 1,000 cannabis plants each month. Twenty cultivation and ten manufacturing licenses will be reserved for these microbusiness applicants. There will be no retail microbusiness licenses.
Launching a Cannabis Business In Delaware? Your Application Planning Starts Now
We have some time before Delaware kicks into high gear, but it is never too early to begin financial modeling or business planning for your cannabis business in the nation’s first state. Don’t hesitate to reach out to us at Canna Advisors if you’re interested in learning more about opening a cannabis business and be sure to follow our state guide to Delaware Cannabis for the latest updates.