Opening a cannabis dispensary in Delaware can be a challenging process requiring extensive preparation, regulatory compliance, and finance. However, there can be a sizable opportunity for success in the quickly expanding cannabis market for those prepared to go the extra mile.
Although Delaware is the 22nd state to legalize recreational cannabis, it has taken moves to build an appropriate and regulated medical cannabis economy, despite the challenges of the federal ban on cannabis.
Recreational use legalization in Delaware
Delaware legalized marijuana for recreational use on April 23, 2023, through House Bills 1 and 2.
House Bill 1:
- Makes it legal for people over 21 to own, use, share, and buy up to one ounce of cannabis
- Prevents abuse of the “gifting” provision by making it clear that trading cannabis for non-marijuana items is not permitted
- Prohibits public consumption and cultivation
Under the House Bill 2:
- The newly created Office of Marijuana Control Commissioner, under the Division of Alcohol and Tobacco Enforcement (DATE), would oversee the market
- During the first 16 months of implementation, up to 30 cannabis retail licenses could be granted, with a focus on candidates who can demonstrate a commitment to providing a living
- The bill offers social equity and microbusiness licenses as well as traditional retail, cultivator, manufacturer, and laboratory licenses
- These licenses are reserved for applicants with a majority Delaware resident owner
Let us find out what is required to open a dispensary in Delaware.
We start this by inquiring about how to obtain a dispensary license!
The Office of Medicinal Marijuana (OMM) is responsible for overseeing cannabis industry licensing regulations and Delaware’s patient medicinal marijuana card program. The OMM oversees the patient medical marijuana card program in addition to evaluating and deciding whether to approve licensing requests made by potential cannabis business owners.
You must supply extensive information about your business plan, security plan, and financial health throughout the application process. You can obtain a license from the Delaware Department of Health and Social Service after passing through the lengthy application process.
Let us discover the different types of licenses in Delaware.
Three different types of dispensary licenses are available for cannabis businesses in Delaware:
1. Compassion Centre: Dispensaries authorized to grow, prepare, and distribute medical marijuana to Delaware-registered patients can get this license.
2. Standalone Dispensary: The OMM gives licenses to dispensaries that are solely permitted to sell medical marijuana to the state’s registered patients and are not permitted to grow or process it themselves.
3. Testing Facility: Facilities that, under state rules, test cannabis products for potency and safety get this license.
Each kind of license has its unique conditions and restrictions. Before applying, applicants must carefully read and comprehend the rules for each license type. Additionally, the application process can be lengthy, and fees to pay with each license.
What will it cost you to open a dispensary?
It costs money to start a dispensary in Delaware. A $5,000 biannual, non-refundable license application fee is needed from applicants. A $40,000 license fee is due every two years if certified.
The overall cost to create a dispensary in Delaware can range from $500,000 to $1 million or more. Before starting the application process, prospective dispensary operators should carefully examine these expenditures and create a thorough business plan.
How do you apply for a dispensary license in Delaware?
- You must first be eligible and submit a completed application to the Office of Medical Marijuana (OMM) in Delaware. The OMM only grants a small number of licenses, and the application procedure is very competitive
- The prerequisites for applications change based on the kind of license being sought. The applicant’s business strategy, financial standing, security measures, and prior experience in the cannabis market are all often covered in great length. Additionally, candidates must submit to a criminal background check and show proof of adherence to federal, state, and local zoning regulations
- The OMM will carefully examine the application after it is received and investigate the applicant’s credentials, including a site visit to the potential dispensary location.
- During the review process, the OMM may also require the applicant to provide more information or supporting documentation
- If the application is accepted, a provisional license will be given to the applicant, who must then pass a final inspection before receiving a full license. Considering that the full procedure can take several months to complete, candidates should be ready to commit a sizable amount of time and money to the process
How do you get a recreational dispensary license?
The most important attributes are your business plan, security plan, and financial health that you need to focus on while seeking a dispensary license.
Step 1: Draft a business plan: Creating a workable business plan is an essential step in learning to start a dispensary in Delaware. Your objectives, target market, and financial projections should all be summarized in a thorough business plan.
Analyze the neighborhood market thoroughly, taking into account your rivals, the demographics of your target audience, and the demand for medical marijuana among consumers. Describe the legal and administrative prerequisites for running a dispensary in Delaware, including licensing, adherence to municipal and state zoning regulations, and security standards.
List the main players on your management team, along with their backgrounds, skills, and any legal or consulting services you’ll need to hire. Describe your anticipated launch costs, ongoing operating expenditures, and anticipated revenue sources, such as revenues from medical marijuana sales and any other additional services you intend to sell in Delaware.
Determine and assess any risks, such as prospective regulatory changes, market competition, and financial concerns, that may influence your company’s operations in Delaware.
You may demonstrate your understanding of the market and your capacity to prevail in a cutthroat industry by writing a thorough business plan that addresses all these topics. A strong business strategy can also assist you in obtaining funding and luring investors to operate a dispensary.
Step 2: Have a security plan in place: To prevent theft, diversion, or unauthorized access to medical cannabis, Delaware has strong security requirements that apply to dispensaries. The rules are made to guarantee the security of clients, staff members, and the neighborhood.
The following are some of Delaware’s main security requirements for medicinal marijuana dispensaries:
- Access to the dispensary must be restricted to authorized personnel only, and visitors must always be escorted by an employee
- Dispensaries in Delaware are required to have a fully functional alarm and surveillance system that includes 24-hour recording and monitoring of all areas of the facility, including the parking lot
- Additionally, dispensaries must have a safe location to keep medical marijuana
- Medical cannabis must be transported in a safe vehicle outfitted with an alarm and surveillance system
- Dispensaries are required to have a thorough inventory control system in place to track all medical cannabis products from seed to sale
- Delaware dispensaries are also required to abide by all state laws and report any theft, diversion, or loss of medical cannabis to the appropriate authorities
Step 3: Financial health: Since the cost of starting a dispensary in Delaware can range from $500,000 to $1 million or more, aspirants can consider various funding options available.
- Private Lenders – these companies specialize in canna-businesses and have worked out specially tailored solutions for dispensaries in Delaware
- Online Lenders – online lenders are more yielding than banks and are inclined to work providing funds even if you have bad credit. However, you might attract higher interest rates and less favorable repayment terms
- Angel Investors – Angel investors usually invest in technology startups, but some don’t shy away from the cannabis industry
- Venture Capital Investors – Venture capitalists are firms or funds that invest in early-stage or growing startup companies in Delaware. They often invest large sums of money than angel investors and may be more interested in a hands-on role in the company. In exchange for money and access to their network of contacts in the corporate world, they also demand equity in your project.
- Crowdfunding – Platforms for crowdfunding, like Fundanna enable companies to raise money from many people in exchange for shares or other benefits.
Locate the Best Site in Delaware to Open a Dispensary
Once you have your license, you must locate a suitable area that is zoned for commercial use for your dispensary. You must conduct thorough study on the local zoning laws in the area where you wish to build a dispensary because zoning laws in Delaware differ depending on the municipality.
Dispensaries in Delaware might need to be situated a specific distance away from public places like schools, churches, or other sensitive sites if they want to operate legally. To receive the essential permits and approvals, you must abide by these rules.
License Applications and permits issue: Delaware state has a licensing limit up to 30 dispensaries, 30 manufacturers, 60 growers, and 5 testing labs. Sales in the state are not anticipated to start until August 2024. Homegrown provisions are absent from the bills.
Residents of Delaware can start applying for permits to buy, test, or grow marijuana in 13 months; the first permits will be issued in 14 months.
Tax rates in Delaware: After state lawmakers adopted laws legalizing possession and establishing a tax and regulatory framework, Delaware will impose a 15% sales tax on marijuana.
How much cannabis can an adult possess in Delaware?
The law allows you to have a maximum of one of the following:
- One ounce (28.35 grams) of leaf
- 12 grams or less of hash or other forms of concentrate
- Up to 750 milligrams of pot edibles such as gummies
Opening a dispensary in Delaware is as tough and challenging as in any other state. Though medical marijuana in Delaware was signed in 2011, the journey for legalization of recreational use has been a long one.
The Delaware market is geared to progress in the coming years, and the application process needs serious preparation. Entrepreneurs can mold this developing business and provide safe, high-quality medical and recreational cannabis to Delawareans.