As Delaware moves forward with its cannabis legalization plans, many entrepreneurs are eyeing the opportunity to enter the cultivation market. If you’re considering applying for a Delaware cannabis license, this guide will walk you through the essential steps and requirements.
Understanding the Timeline
The application window for cannabis cultivation licenses in Delaware is set for September 1-30, 2024. A lottery selection will follow in late October, with conditional licenses potentially being issued as early as November 1, 2024. It’s crucial to be prepared well in advance of these dates.
Types of Licenses Available
The types of licenses and the minimum requirements are set forth below. The regulations may impose additional requirements:
Social Equity Licenses
A social equity applicant is a Delaware resident that meets one of the following criteria:
- An applicant for any type of license with at least 51% ownership and control by 1 or more individuals who have resided for at least 5 of the preceding 15 years in a disproportionately impacted area.
- An applicant for any type of license with at least 51% ownership and control by 1 or more individuals who meets one of the following criteria:
- Was convicted of or adjudicated delinquent of a marijuana-related offense under Delaware law prior to April 23, 2023, with the exception of delivery to a minor or any offense involving a Tier 3 quantity of marijuana as defined in § 4651C of Title 16.
- Had a parent, legal guardian, child, spouse, or dependent who was convicted of or adjudicated delinquent for a marijuana-related offense under Delaware law prior to April 23, 2023, with the exception of delivery to a minor or any offense involving a Tier 3 quantity of marijuana as defined in § 4651C of Title 16.
Microbusiness License
A microbusiness applicant is an applicant for a marijuana cultivation facility license or a marijuana product manufacturing license who meets all the following criteria:
- Indoor facility with a cannabis plant grow canopy area less than or equal to 2500 square feet or an outdoor facility with a cannabis plant grow canopy area less than or equal to 1 acre.
- Intends to employ no more than 10 employees.
Open Licenses
Open Licenses are business that will not fall into the Social Equity or Microbusiness categories. Open licenses will be available for Cultivation, Manufacturing, Retail, and Testing Centers.
Eligibility Requirements
Eligibility varies depending on the type of license you’re applying for:
Social Equity Applicants
- Must have lived in a disproportionately impacted area for 5 of the last 15 years
- Or been convicted of a marijuana-related offense prior to April 23, 2023
- Or had a close family member convicted of a marijuana-related offense prior to April 23, 2023
Microbusiness Applicants
- Must employ no more than 10 people
- Canopy area must not exceed 2,500 square feet
Required Documentation
Preparing a strong application requires thorough documentation. Be ready to submit:
- A comprehensive business plan (including budget and pro forma financials)
- Safety, security, and product diversion prevention plan
- Detailed operating plan
- Staff and employee training plan
- Environmental and sustainability plan
- Quality assurance plan
- Valid Delaware business license
- Government-issued ID
- Social equity verification document (if applicable)
The Application Process
- Prepare all required documents meticulously
- Submit your application through the state’s online portal
- Pay the necessary application fees
- Pass the initial review (conducted on a pass/fail basis)
- If successful, enter the lottery for license selection
- If selected, submit a supplemental application within 30 business days
- Complete background checks and financial investigations
- Await final approval from the Commissioner
Post-Selection Requirements
If you’re fortunate enough to be selected, be prepared for these next steps:
- Submit final versions of all plans
- Pass a criminal background check
- Complete a comprehensive financial background investigation
- Provide a Certificate of Tax Clearance
- Identify a physical location for your licensed premises
- Become operational within 18 months of receiving your conditional license
Submit Final Versions of All Plans:
- This includes your business plan, security plan, operating plan, training plan, environmental plan, and quality assurance plan.
- These plans should be refined versions of what you submitted initially, incorporating any feedback or additional details requested by the Office of Marijuana Commissioner.
- Ensure all plans are comprehensive, realistic, and compliant with state regulations.
- Pass Criminal Background Check:
- All owners, investors, and key employees must undergo a thorough criminal background check.
- This typically involves fingerprinting and a review of state and federal criminal records.
- Minor offenses may not disqualify you, but any drug-related or felony convictions could be problematic.
- Pass Comprehensive Financial Background Investigation:
- This step involves a deep dive into your financial history and the sources of your funding.
- You’ll need to provide detailed financial statements, tax returns, and information on all funding sources.
- The state wants to ensure that all funds are from legitimate sources and that you have the financial capacity to operate the business.
- Provide Certificate of Tax Clearance:
- This document, obtained from the Delaware Division of Revenue, certifies that you’re in good standing with state tax authorities.
- It confirms that you’ve filed all required tax returns and paid all taxes due.
- You may need to resolve any outstanding tax issues before receiving this certificate.
- Identify Physical Location for Licensed Premises:
- You must secure a location for your cultivation facility that complies with all zoning laws and local regulations.
- The location should meet all security requirements outlined in state regulations.
- You’ll need to provide proof of ownership or a lease agreement for the property.
- The site must also comply with all building codes and pass inspections from relevant authorities.
- Become Operational Within 18 Months:
- This is a critical deadline. You have 18 months from receiving your conditional license to become fully operational.
- During this time, you must:
- Complete any necessary construction or renovations to your facility
- Install all required equipment and security systems
- Hire and train staff
- Implement your operating procedures
- Pass all final inspections from the Office of Marijuana Commissioner
- Failure to meet this deadline could result in the revocation of your license.
Additional Considerations:
- You may be required to attend training sessions or workshops organized by the state.
- Regular check-ins or progress reports to the Office of Marijuana Commissioner may be necessary during the 18-month period.
- Be prepared for unannounced inspections once you begin operations.
- Ensure you have all necessary local permits and approvals in addition to your state license.
Tips for Success
- Start preparing your documents early to ensure completeness and accuracy
- Consider hiring a cannabis consultant familiar with Delaware regulations
- Focus on creating comprehensive and compliant plans
- Ensure all team members meet the eligibility requirements
- Be prepared for the significant financial requirements of starting and operating a cultivation facility
Seed to Sale Software Requirements
For Delaware cannabis cultivation licensees, the seed-to-sale software will need to include several key components to ensure compliance with state regulations:
- Cultivation Tracking:
- Plant tagging and unique identifiers for each plant
- Growth stage monitoring
- Nutrient and pesticide application logging
- Harvest data recording
- Inventory Management:
- Real-time inventory tracking
- Batch and lot number assignment
- Product categorization (flower, concentrates, edibles, etc.)
- Waste management and disposal logging
- Processing and Manufacturing:
- Extraction process documentation
- Ingredient tracking for infused products
- Batch testing results integration
- Transportation and Transfer:
- Chain of custody documentation
- Transfer manifests generation
- Route tracking
- Sales and Dispensing:
- Point-of-sale integration
- Patient/customer verification
- Purchase limit tracking
- Sales reporting
- Compliance Reporting:
- Automated state reporting capabilities
- Customizable reports for internal audits
- Real-time data access for state regulators
- Security Features:
- User access controls and permissions
- Audit trails for all system activities
- Data encryption and secure storage
- Integration Capabilities:
- Ability to interface with state-mandated tracking systems (BioTrack in Delaware’s case)
- Integration with other business software (accounting, HR, etc.)
- Quality Control:
- Lab test result tracking
- Product recall management
- Expiration date monitoring
- Financial Tracking:
- Sales data integration
- Tax calculation and reporting features
The software should be designed to meet Delaware’s specific regulatory requirements, including any unique identifiers or reporting formats mandated by the state. It’s crucial for cultivators to choose a system that is not only compliant with Delaware regulations but also user-friendly and scalable to accommodate business growth.
Remember to regularly update the software to stay in line with any changes in state regulations and to maintain robust data security measures to protect sensitive information.
Several seed-to-sale software options are suitable for cannabis cultivation businesses in Delaware, meeting the state’s specific requirements:
- BioTrackTHC: This is the official state-mandated system for Delaware’s medical cannabis program. It offers:
- Real-time inventory tracking
- Compliance with state regulations
- Integration with point-of-sale systems
- Customizable reporting features
- Flourish Software: Although not specifically mentioned for Delaware, it offers integration with BioTrack and provides:
- Comprehensive seed-to-sale tracking
- Automated compliance features
- Inventory management
- Financial tracking
- MJ Freeway: Another option that includes:
- POS functionalities
- Compliance with state requirements
- Multi-location account linking
When choosing a seed-to-sale software, consider factors such as:
- Compatibility with Delaware’s specific regulations and BioTrack system
- Ease of use and user interface
- Reporting and analytics capabilities
- Customer support and training options
- Scalability for potential future industry expansion
(14) Health and safety regulations and standards for the manufacture of marijuana products by marijuana establishments consistent with other Delaware requirements for food, including all of the following:
a. Prohibition of the manufacture of products that look like candy or cartoon characters.
b. Restrictions or prohibitions on additives to marijuana and marijuana-infused products, including additives that are toxic, designed to make the product more addictive, or designed to make the product more appealing to children, but not including common baking and cooking items.
c. Standards for the safe manufacture of marijuana extracts and concentrates.
d. Requirements for random sample testing, including the manner and frequency of testing, to ensure quality control, including by ensuring that marijuana and marijuana-infused products are accurately labeled for potency. The testing analysis must include testing for: residual solvents, poisons, or toxins; harmful chemicals; dangerous molds or mildew; filth; harmful microbials such as E. coli or salmonella; and pesticides.
§ 1334. Marijuana cultivation facility licenses.
(a) A marijuana cultivation facility license may be issued only to a person who cultivates retail marijuana for sale and distribution to licensed retail marijuana stores, marijuana products manufacturing licensees, or other marijuana cultivation facilities under the terms and conditions of this chapter. A license issued under this section is valid for 2 years. Each application for a marijuana cultivation facility license must contain all of the following:
(1) The application materials required by the Commissioner, including the location where the marijuana cultivation facility will operate.
(2) The application fee in an amount determined by the Commissioner.
(3) Materials required by § 1331(3) and (4) of this title.
(b) (1) A marijuana cultivation facility shall pay the Commissioner biennially for a marijuana cultivation facility license as set forth in this subsection. A marijuana cultivation facility licensee must renew the license biennially by paying the fee set forth in this subsection and by providing documentation of a labor peace agreement.
(2) The license fee is based on the cannabis plant grow canopy area, which is calculated as follows:
a. Square footage of a cannabis plant grow canopy area is measured horizontally starting from the outermost point of the furthest plant in a cannabis plant grow canopy area and continuing around the outside of all plants located within the cannabis plant grow canopy area.
b. If a vertically-tiered or shelving system is included in the cultivation area, the surface area of each tier or shelf must be included in calculating the cannabis plant grow canopy area. Vertical tiers or shelving systems may not exceed 24 feet in height.
c. A cannabis plant grow canopy area is the total square feet of space used by a cannabis cultivator for the production of flowering plants and does not include areas exclusively used for harvesting, drying, curing, packaging, labeling, or storing cannabis.
(3) a. For an indoor facility with a cannabis plant grow canopy area less than or equal to 2,500 square feet or for an outdoor facility with a cannabis plant grow canopy area less than or equal to 1 acre, the fee is $2,500.
b. For an indoor facility with a cannabis plant grow canopy area equal to or between 2,501 and 7,500 square feet or for an outdoor facility with a cannabis plant grow canopy area equal to or between 1.1 and 2.5 acres, the fee is $5,000.
c. For an indoor facility with a cannabis plant grow canopy area between 7,501 and 10,000 square feet or for an outdoor facility with a cannabis plant grow canopy area equal to or between 2.6 and 5 acres, the fee is $7,500.
d. For an indoor facility with a cannabis plant grow canopy area equal to or greater than 10,001 square feet or for an outdoor facility with a cannabis plant grow canopy area equal to or greater than 5.1 acres, the fee is $10,000.
(c) A marijuana cultivation facility shall track the marijuana it cultivates from seed or immature plant to sale pursuant to subsection (a) of this section.
(d) A marijuana cultivation facility must provide a sample of its products to a facility that has a marijuana testing facility license for testing and research purposes as required by regulations adopted under this chapter. A marijuana cultivation facility shall maintain a record of what was provided to the testing facility, the identity of the testing facility, and the testing results.
(e) Marijuana or marijuana products may not be consumed on the premises of a marijuana cultivation facility.
(f) No marijuana cultivation facility license may be issued for an indoor facility with a cannabis plant grow canopy area exceeding 12,500 square feet or for an outdoor facility with a cannabis plant grow canopy area exceeding 7.5 acres unless additional tiers are created by the Commissioner under subsection (h) of this section.
(g) At the time of renewal under subsection (b) of this section, a marijuana cultivation facility licensee may request a 1-tier increase in size each renewal period, as long as an updated safety, security and prevention of diversion plan is provided as required under § 1331(3)c. of this title.
(h) The Commissioner may create additional tiers under subsection (b) of this section anytime after August 1, 2025, if demand requires additional tiers.
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