3-minute read
Paula Savchenko
| Special to the USA TODAY Network
After becoming the 22nd state in the nation to legalize cannabis, Delaware has been evolving its strategy to ensure a smooth transition from their medical cannabis program to their adult-use program. From expediting the licensing process to removing the list of qualifying conditions for registered patients, Delaware’s ever-evolving laws and regulations have created an expansive cannabis program. With a projected market of $251 million, many are wondering what their instrumental role is in the state’s soon-to-be booming cannabis market.
2024 legislative changes impacting Delaware’s cannabis industry
This year’s legislative session made waves in transforming what we now know of Delaware’s cannabis industry. Gov. John Carney signed House Bill 334 into law, which made significant modifications to the overall adult-use licensing process such as replacing the merit-based scoring process with a lottery and removing the requirement that applicants must secure a facility to apply.
Moreover, House Bill 408 created a conversion license for existing Delaware medical cannabis operators to assist with speeding up access to adult-use cannabis. Current operators will have to pay a hefty fee of $100,000 to $200,000 to serve both the medical and adult-use program with such fees being vital to providing funds for the newly established social equity fund created by this bill.
In Delaware’s medical cannabis space, Carney signed House Bill 425 into law to allow the Office of the Marijuana Commissioner (OMC) to become the overseeing agency for both the medical and adult-use programs. A significant change made to Delaware’s medical cannabis program comes from the enactment of House Bill 285, which removes the list of qualifying conditions and allows doctors to use their discretion regarding when to recommend cannabis to a patient. Furthermore, it expands patient access by allowing reciprocity for out-of-state patients, increases expiration dates for medical cannabis cards, and allows patients 65 years and older to self-certify their need for medical cannabis without a healthcare provider’s recommendation.
Establishing the industry framework
On August 8, the OMC announced that it was opening the application window for cannabis business licenses two weeks earlier than scheduled. Starting on August 19, 2024, interested applicants were able to begin submitting their comprehensive applications in the hopes they are one of the lucky ones to be chosen in the lottery process.
Under Delaware law, there are four license types that can be applied for, Cultivation Facility; Product Manufacturing Facility; Retail Marijuana Store; and Testing Facility. All license types have limits on the number of licenses available, specifically there are only 60 Cultivation Facility licenses, 30 Product Manufacturing Facility licenses, 30 Retail Marijuana Store licenses, and five Testing Facility licenses. Moreover, the licenses available are even further limited by the applicant category the individual or entity chooses to apply under.
More specifically, applicants can apply as an open (i.e.) general applicant, a microbusiness applicant, or a social equity applicant. Those who wish to apply as a social equity applicant to receive a reduced application fee must meet certain criteria to be eligible, such as having 51 percent of ownership and control by one or more individuals who have resided for at least five of the preceding 15 years in a disproportionately impacted area.
To enter a chance to receive one of these coveted licenses, interested applicants will need to provide a comprehensive business plan including financials, a safety, security and diversion plan, an operations plan including social responsibility and work environment plans, regulatory disclosure, and a capitalization table. Specifically, for those who wish to acquire a Cultivation Facility or Product Manufacturing Facility license, applicants will further need to provide an environment and sustainability plan, as well as a quality assurance plan.
Creation of the supply chain and projected market
After the application window closes on Sept. 30, the OMC will conduct a lottery to select the chosen applicants, so they can begin to issue licenses as follows:
issue Cultivation Facility licenses in November 2024;issue Product Manufacturing licenses in December 2024; andissue Retail Marijuana Store and Testing Facility licenses in March 2025.
With the passage of House Bill 408, residents of Delaware can expect adult-use sales to begin as set forth in the OMC’s timeline starting in March 2025. While the conversion licensees will likely be the first ones to open their doors to the public, this new change to the program allows the new licensees to have the time needed to cultivate and process their products to ensure safe and high-quality products make it to the market without issue.
Although Delaware’s medical cannabis program has not brought in significant revenue as desired, the Delaware Office of the Auditor of Accounts — or OAOA — projects that the adult-use market will be valued at $215 million, while creating at least 1,400 jobs over the first five years. Moreover, with an expected $43 million in annual tax revenue, the state will see a boom in economic growth in development at both the state and local levels.
Delaware is at a pivotal moment on cannabis
In summary, Delaware’s cannabis industry is poised at a pivotal moment of transformation. As the state embraces its new legislation and navigates the complexities of implementing a new cannabis program, the potential for economic growth, job creation and social equity becomes increasingly apparent.
Paula Savchenko, Esq. is the founder of Cannacore Group, a multi-state cannabis and psychedelic licensing firm, and PS Law Group, a regulated substances law firm. As an attorney and consultant, she primarily works in the cannabis and psychedelic industries, working with clients on multi-state expansion initiatives. For more information, please visit www.cannacoregrp.com and
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Publish date : 2024-08-28 04:59:00
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