Delaware is set to commence its adult-use cannabis industry through a license application period that opens on September 1, 2024, and closes on September 30, 2024. Importantly, Delaware does permit vertical integration and will allow applicants to submit multiple applications (including one (1) per license type per county). The ultimate selection of winners and losers will be determined by a lottery following a review of certain mandatory documents and disclosures required of all applicants. 

What Types of Licenses Are Available?
The Delaware Office of Marijuana Commissioner (“Commissioner”) is set to open up licensing for a host of different licenses, including:

• Marijuana Cultivation Facility (indoor facility with less than 2,500 sq. ft. or an outdoor facility with a canopy area less than one (1) acre). 
  • 10 social equity licenses. 
  • 10 microbusiness licenses. 
• Marijuana Cultivation Facility (indoor facility with canopy greater than 2,500 sq. ft. or an outdoor facility with canopy area greater than one (1) acre). 
  • 10 social equity licenses
  • 20 open licenses. 
• Marijuana Product Manufacturing Facility. 
  • 10 social equity licenses. 
  • 10 microbusiness licenses. 
  • 10 open licenses. 
• Retail Marijuana Stores. 
  • 15 social equity licenses. 
  • 15 open licenses. 

What is an Open, Social Equity, and/or Microbusiness Applicant?
While most licenses are reserved for “open licenses,” there remain licenses reserved for social equity and microbusiness applicants, who are eligible for reduced licensing and application fees. 

Social equity licenses are limited to applicants that are owned and controlled by one or more individuals who have: 

• Lived in a disproportionately impacted area for 5 of the last 15 years;
• Been convicted of a marijuana-related offense under Delaware law prior to April 23, 2023; or 
• Had a parent, guardian, child, spouse or dependent convicted of a marijuana-related offense under Delaware law prior to April 23, 2023. 

Microbusiness licenses are limited to applicants intending to employ no more than 10 people and, for Marijuana Cultivation Facilities, limited to a canopy area of no more than 2,500 square feet. 

As the name suggests, open licenses are open to anyone who does not qualify as a social equity or microbusiness applicant. 

How Many Applications May I Submit?
Applicants are permitted to be vertically integrated, i.e., as part of the lottery process, an applicant can win cultivation, manufacturing, and retail licenses. However, applicants can submit only one application per license type per county. Delaware has three (3) counties in total. Guidance has also made clear that all applications with duplicative ownership across a single license type in a single county will be disqualified. 

What Materials Must Be Submitted As Part of the Application Process?
From a technical perspective, the Delaware license application requires the submission of operational plans and business information familiar to individuals and companies that have applied for marijuana licenses in other states, including, most recently in Kentucky. These include, but are not limited to, a Comprehensive Business Plan, Safety, Security and Product Diversion Prevention Plan, Operating Plan, and Staff and Employee Training Plan. Each of these items must incorporate the relevant regulatory requirements imposed by the Commission, and the failure to address material elements of these plans can and will result in the Commission denying the application. 

Do I Need Site Control?
No. Applicants are not required to obtain, own, or rent any property or facilities as a requirement to be entered into the lottery. Those selected in the lottery and receiving a conditional license will be required to identify a physical location for their licensed premises and become operational within eighteen (18) months from the date the conditional license is issued. 

How Will the Lottery Work?
The Commissioner will evaluate applications on a pass/fail basis. All applications that meet the criteria for passing will be included in an impartial and random lottery to award the recipients of a conditional license.

Understand that not everyone who applies will make it to the lottery. For instance, the Commission has made clear that it may deny applications (pre-lottery) for any of the following reasons: 

• The application is incomplete in any material detail. 
• The application contains a material misstatement, omission, misrepresentation, or untruth. 
• The Application does not meet the minimum qualifications for the license type. 
• The Application is submitted past the established deadline. 
• The Applicant fails to supply additional information requested by the Commissioner. 
• The Application is found to be materially identical to another application. 
• The Applicant violates license ownership and/or financial interest requirements for the license type.