Delaware Releases New Draft Cannabis Regulations
Your Guide To Navigating Delaware Cannabis Regulations
2024 is shaping up to be a gangbusters year for cannabis and we have been eagerly eyeing the tiny state of Delaware and everything that it’s been up to across the industry. Now we are excited to see the Office of the Marijuana Commissioner has unveiled draft regulations for its adult-use cannabis program.
At just 16-pages, these cannabis regulations are packed with new information on everything from license types to business application processes. Here is a breakdown of everything you need to know about these new regulations and when to expect some new updates from the state.
Available Cannabis License Types
As has been known for a while, but now additionally clarified with these draft regulations, we have a full list of what license types will be able to be pursued.
Below are the licenses individuals or businesses can seek in the upcoming licensing round:
Unique and Tier-Based Cannabis Licenses
There are also some additional subsections and even tiers which can be applied for with these licenses. This includes an open license (which is available for all the above license types), social equity license (more on that later!), and microbusiness license (available only for cultivators and manufacturers). As for tiers, cultivation licenses issued will come in tiers 1-4, which vary depending on the size of canopy space you want your cultivation facility to have. Below are additional details on the respective cultivation tiers.
- Tier 1— less than or equal to 2,500 square feet of cannabis plant grow canopy for an indoor facility or less than or equal to 1 acre of cannabis plant grow canopy outdoors
- Tier 2—2,501-7,500 square feet indoor, 1.1-2.5 acres outdoors
- Tier 3—7,501-10,000 square feet indoor, 2.6-5 acres outdoors
- Tier 4—10,001 or more square feet indoor, 5.1 acres or more outdoors
Micro Cultivators and License Caps
For micro cultivators, a Tier 1 license is the maximum allowed. Microbusiness will also have a 10-employee cap.
The Commissioner has also detailed that they will have caps on the number of licenses awarded. At most, they will issue 60 cultivation licenses, 30 manufacturing licenses, 30 retail licenses, and 5 testing licenses.
License Application Requirements
What we always look for when a new state is opening up whether it’s a medical market or adult-use market, what will the application process be like? Now we have a clearer idea.
Application rounds will be announced at least ten days prior to accepting applications. This announcement will include the following:
- Types of licenses during licensing round
- Number of licenses available
- Beginning and closing date of application period (which will be for a period of 45 calendar days)
This is a pretty tight time frame, so people will need to be on top of notifications from the state, changes to regulations, and additional application requirements so they don’t miss out on submitting a complete and qualifying application.
Required Plans & Cannabis-Specific Properties
Applicants will need to submit multiple plans to initially qualify. These include:
- Business plan, including an annual budget and pro forma financial statements
- Safety plan
- Plans for operations, training, and staffing
- For cultivation and manufacturing applicants: an environmental and sustainability plan
A crucial detail we learned is that property or facility ownership is not a requirement prior to conditional licensing and will not need to be explicitly detailed as part of the initial application process. All applicants will also need to undergo a criminal background check which will include fingerprinting and a criminal history record check for each of the applicant’s owners, officers, and directors.
After reviewing all applications, only those who meet the Commissioners qualifications will then be entered into a lottery. The Commissioner may also issue fewer licenses than authorized if there are an insufficient number of qualified applicants.
Once individuals are selected from this initial lottery process, they will then have just 10 days to complete a supplemental application which will include additional information such as the aforementioned background checks, verification for documentations, a proposed jurisdiction for operations, and more.
Social Equity Provisions in Delaware
And for social equity applicants, there are more details and documentation needs in order to qualify. To meet eligibility as a social equity applicant, an individual must hold at least 51% ownership and control and be either a resident for at least five of the preceding ten years in a disproportionately-impacted area or was convicted of or adjudicated delinquent of a cannabis offense (with some exceptions) or married to or is the child of someone with a cannabis offense.
Application Fees for All License Types
Pre-License Fee
All applicants will need to submit a nonrefundable application fee:
- $5,000 application fee for all open licenses regardless of license type, will have a while
- $3,000 for microbusinesses
- $1,000 fee for social equity qualifying applicants
Post-Approval Fee
According to the draft regulations, when a license is approved, license holders will need to pay a licensing fee. This is where some of the discrepancies popped up in our review:
- $10,000 fee for all retail, testing, and manufacturing businesses biennially
- $2,500 – $10,000 fee for cultivation based on tier
Social Equity Fee
The regulations also state that social equity applicants will also pay 40% of the open license type licensing fee, so a $10,000 retail licensing fee for a social equity applicant would be only $4,000.
Microbusiness Fee
Microbusinesses will also have licensing fees which match the costs of the social equity applicants.
Key Dates for Delaware License Applications
We also have some key 2024/2025 dates to bear in mind as far as timelines go with applications thanks to these cannabis program regulations and additional information provided by the Commissioner.
- March 29 – Final day for public comment on the draft regulations. Comments can be sent to OMC@delaware.gov with the regulation section you are commenting about in the subject line.
- July – Regulations adopted
- September 1 – License application acceptance
- October 1 – First licenses begin being issued
- November 1 – First cultivation licenses begin being issued (up to 60)
- December 1 – First manufacturing licenses begin being issued (up to 30)
- March 1, 2025 – First retail and testing licenses begin being issued (up to 30 and 5 respectively)
Avoid The Complexity With A Delaware Cannabis Consultant
As is often the case when states drop new cannabis program regulations, there is a lot to take in, and potentially even some angst about the process for securing a license. Luckily, we at Canna Advisors are here to help with financial modeling, business planning, and crucially licensing needs as Delaware kicks things into gear.
Contact our team of Delaware consultants to get working on you Delaware license application today or schedule an hourly consultation to have your specific questions answered by our experts.