Cannabis Business in Delaware

The state of Delaware has established a comprehensive framework for its cannabis industry, which includes both medical and adult-use recreational marijuana, with the latter officially launching sales on August 1, 2025. The industry is designed to generate tax revenue, eliminate the illegal market, and promote public safety and individual freedom.

Legal Framework and Oversight

The Delaware Marijuana Control Act, enacted in 2023 through House Bill 1 and House Bill 2, legalized adult-use recreational marijuana for individuals 21 years of age or older. This legislation also established the Office of the Marijuana Commissioner (OMC), which is the primary agency responsible for regulating the recreational marijuana industry in Delaware. The OMC's responsibilities include:

• Establishing comprehensive rules and guidelines.
• Defining licensing requirements and operational standards.
• Managing the licensing process.
• Addressing complaints.
• Safeguarding public health and deterring underage usage.

The Division of Alcohol and Tobacco Enforcement is responsible for conducting inspections and enforcement activities to ensure compliance with Title 4 of the Delaware Code and the Commissioner's regulations.

The Commissioner is also required to submit an annual report to the Governor and General Assembly detailing statistics on marijuana regulation, including the number of licenses issued and cancelled, sales amounts, and diversity statistics among marijuana establishments.

Licensing Process and Types

The OMC officially began accepting applications for all license types on August 19, 2024, with the application period closing on September 30, 2024. A total of 1,269 paid license applications were received, exceeding initial projections and generating over $4 million in fees.

There are several types of licenses available for marijuana establishments:

• Marijuana Cultivation Facility License: For cultivating, preparing, packaging, and selling marijuana to other facilities but not directly to consumers. Up to 60 cultivation licenses are to be issued, with issuance beginning November 1, 2024.
• Marijuana Product Manufacturing Facility License: For purchasing marijuana, manufacturing products, and selling them to other manufacturing facilities and retail stores, but not to consumers. Up to 30 manufacturing licenses are to be issued, with issuance beginning December 1, 2024.
• Retail Marijuana Store License: For purchasing marijuana and products from cultivation and manufacturing facilities and selling them to consumers. Up to 30 retail licenses are to be issued, with issuance beginning March 1, 2025.
• Marijuana Testing Facility License: For testing marijuana for potency and contaminants. Up to 5 testing lab licenses are to be issued, with issuance beginning March 1, 2025.

The licensing process involves a non-refundable application fee (ranging from $1,000 to $5,000, depending on the license type and category). Licenses are valid for two years and require biennial renewal fees.

Key criteria for applicants include a comprehensive business plan, experience, safety and security plans, operational plans, and a social responsibility plan detailing diversity goals. Licenses can be revoked for ownership requirement violations or serious regulatory/law breaches.

For categories where applications exceeded available licenses, such as the Retail category, a public lottery is conducted to select applicants. Some categories, like Open Testing Lab, Social Equity Testing Lab, Micro Manufacturing for Sussex County, and Micro Cultivation for New Castle County, did not require a lottery because the number of applications was equal to or less than the available licenses.

Social Equity and Microbusiness Provisions

Delaware's legalization efforts include social equity provisions aimed at creating opportunities for communities disproportionately impacted by past marijuana laws. This program works by:

• Reserved Licenses: A specific portion of licenses across all types is designated for social equity applicants. For example, 15 of the 30 retail licenses and 30 of the 60 cultivation licenses are reserved for social equity applicants.
• Reduced Fees: Qualified social equity applicants benefit from discounted application fees ($1,000) and biennial license fees (40% of the applicable open license fee).
• Community Investment: Seven percent of tax revenue from marijuana sales is allocated to a Justice Reinvestment Fund. This fund supports programs focused on restorative justice, workforce development, reducing reliance on incarceration, and technology for civil rights restoration and expungement.
• Eligibility: A social equity applicant is a Delaware resident with at least 51% ownership and control by individuals who have resided for at least 5 of the preceding 15 years in a disproportionately impacted area, or by individuals with a marijuana-related conviction or adjudication of delinquency under Delaware law (with exceptions for certain offenses), or who had a close family member with such a conviction.

Microbusiness licenses are available for cultivation facilities and product manufacturing facilities that meet specific size criteria (indoor facility with a cannabis plant grow canopy area less than or equal to 2,500 square feet or an outdoor facility less than or equal to 1 acre) and intend to employ no more than 10 employees.

Transition of Medical Marijuana Providers to Recreational Sales

Transition and Market Activity In 2024, the General Assembly enacted House Bill 408, which created a temporary conversion license pathway for existing medical marijuana compassion centers to transition into the adult-use market.

These conversion licenses came with significant costs ($200,000 for cultivation and $100,000 for manufacturing or retail), which generated $4 million in funding to support social equity applicant start-up grants. This allowed medical marijuana conversion licensees to begin recreational sales on August 1, 2025.

Delaware's medical marijuana program, established in 2011, served almost 14,000 patients in Fiscal Year 2023, with total sales exceeding $53.8 million. In December 2023 alone, recreational cannabis sales reached $5.2 million.

Hemp and CBD Regulations

Hemp is legal in Delaware and regulated by the Delaware Department of Agriculture (DDA). Hemp-derived products with a THC concentration of 0.3% or less are legal. The DDA manages the licensing process for growing, processing, and handling hemp.

CBD oil is legal in Delaware. Hemp-derived CBD oil with 0.3% THC or less is widely available, and there are no state-imposed possession limits for it. CBD oil derived from marijuana, with higher THC concentrations, is legally accessible to registered medical marijuana patients from licensed dispensaries (compassion centers) under the Delaware Medical Marijuana Act.

Recreational marijuana legalization allows adults aged 21 and older to possess marijuana-derived CBD oil without a doctor's prescription. While there are no age restrictions for buying hemp-based CBD, some stores may limit sales to individuals 18 or older. Drug tests typically detect THC metabolites, so hemp CBD products with only trace amounts of THC generally do not result in a positive drug test, but marijuana CBD products with higher THC may.