How to Open a Dispensary in Delaware 2024

Achieving regulatory compliance, securing licenses, and crafting a robust business plan are essential steps for opening a cannabis dispensary in Delaware. As cannabis laws continue evolving across the United States, many entrepreneurs are seeking entry into this rapidly growing industry. In Delaware, medical marijuana has been legal since 2011. 

With the recent legalization of recreational marijuana under the Delaware Marijuana Control Act, which encompasses House Bills 1 and 2, the regulatory framework has expanded. Recreational marijuana sales and distribution are expected to commence in late 2024, offering new opportunities for entrepreneurs to enter this burgeoning market within a structured legal environment.​

For those seeking guidance on how to open a dispensary in Delaware in 2024, this guide from IndicaOnline offers valuable insights. We provide a comprehensive overview of the steps necessary to obtain a dispensary license in Delaware, including the application process, social equity considerations, and compliance requirements.

How to Get a Dispensary License in Delaware

The regulation of cannabis business licensing and the medical marijuana card program for patients in Delaware is managed by the Office of Medical Marijuana (OMC). The OMC evaluates the licensing applications submitted by potential cannabis business owners, determines their approval, and oversees the medical marijuana card program for patients.

Types of Delaware Dispensary Licenses

Delaware offers several types of licenses for marijuana businesses, including:

• Social Equity Licenses: These are prioritized for applicants from disproportionately impacted areas or individuals with past marijuana-related offenses, ensuring at least 51% ownership and control by eligible individuals.
• Microbusiness Licenses: Intended for small operations with limited grow canopy areas and a maximum of ten employees. At least 51% of ownership must be by Delaware residents.
• Open Licenses: For businesses not qualifying under social equity or microbusiness categories, covering cultivation, manufacturing, retail, and testing centers.

Application Process

• Business Plan: Develop a comprehensive business plan that includes an annual budget, pro forma financial statements, safety and security plans, and operational procedures. Address diversity goals and employee welfare.
• Documentation: Gather all necessary documentation, including proof of Delaware residency for applicable owners and any criminal, civil, or regulatory history.
• Timing: Applications will be accepted starting September 1, 2024​ 
• Application Contents: Submit your business plan, ownership information, compliance strategies, and other required documentation to the Office of Medical Marijuana.

Review and Evaluation:

• Criteria: The OMC evaluates applications based on the business plan, the experience and expertise of the applicants, the suitability of the proposed location, and the ability to comply with state regulations. 
• Social Responsibility: Emphasize plans to recruit and hire from within impacted communities and ensure fair wages and benefits for employees.

Approval and Compliance:

• Issuance of Licenses: Once the approved applicants have received their licenses, they must adhere to regulations regarding cultivation, manufacturing, testing, and retail operations. Compliance with health and safety standards and regular audits is mandatory.

Note: For further information, refer to the Delaware Office of the Marijuana Commissioner, the Delaware Department of Safety and Homeland Security, and the full text of the Delaware Marijuana Control Act.

Social Equity Program in Delaware

The Social Equity Program in Delaware is designed to promote inclusion and provide opportunities for individuals and communities disproportionately affected by past marijuana laws. The program targets individuals from inordinately impacted areas or those with previous marijuana-related offenses, excluding severe crimes. To be eligible, qualifying individuals must hold at least 51% ownership and control of the business. These individuals should have lived in a disproportionately impacted area for at least five of the preceding ten years or have a personal history of marijuana-related offenses.

Benefits and Support

The Social Equity Program offers several benefits to qualifying applicants, including:

• Reduced Fees: Social equity applicants pay a reduced application fee of $1,000, compared to the standard $5,000 fee. Licensing fees are also reduced by 50% for social equity businesses​.
• Technical Assistance: The OMC provides technical assistance to social equity applicants, including guidance on completing the application process, developing business plans, and ensuring regulatory compliance.
• Priority Review: Applications submitted under the Social Equity Program are given priority review to expedite the licensing process, helping these businesses to start operations sooner​.

Objectives

The primary objectives of the Social Equity Program include:

• Promoting Diversity: Encouraging diverse ownership and participation in the cannabis industry by supporting individuals from marginalized communities.
• Economic Empowerment: Providing economic opportunities to individuals and communities disproportionately impacted by the criminalization of marijuana.
• Community Reinvestment: Reinvesting resources into communities adversely affected by previous drug policies to foster development and economic growth.

Application Process

Applicants must submit detailed documentation to prove their eligibility, including proof of residency in impacted areas and evidence of past marijuana-related offenses. The OMC evaluates these applications rigorously to ensure compliance with program requirements and maintain the initiative’s integrity.

Additionally, IndicaOnline provides a social equity program designed to promote fair ownership and employment opportunities in the cannabis industry.

Timelines for Dispensary License Applications in Delaware

The OMC has established specific timelines for applying for and issuing various marijuana business licenses in 2024. Here are the key dates and details for the dispensary license application process:

Regulation Adoption

• July 2024: The OMC will adopt the regulations required to administer the licensing of recreational marijuana businesses. This sets the framework for how the licensing process will be conducted.
• License Application Acceptance
• September 1, 2024: The OMC will begin accepting applications for all marijuana business licenses. Potential applicants must submit their applications to be considered for a license by this date.

Cultivation Facility License Issuance

• November 1, 2024: The OMC will start issuing up to 60 Cultivation Facility Licenses. These licenses will allow businesses to cultivate marijuana legally within the state.

Product Manufacturing License Issuance

• December 1, 2024: Up to 30 Product Manufacturing Licenses will be issued. These licenses permit businesses to manufacture marijuana products, including edibles, concentrates, and other cannabis-derived items.

Retail and Testing Facility License Issuance

• March 1, 2025: The OMC will issue up to 30 Retail Licenses and up to 5 Testing Facility Licenses. Retail licenses allow for the sale of marijuana products to consumers while testing facility licenses are for businesses that will test marijuana products for safety and quality.

How Much Does It Cost to Open a Dispensary in Delaware?

The cost of opening a marijuana dispensary in Delaware ranges from $500,000 to over $1 million, depending on its location and size. The typical costs a business owner may incur include:

• Lease: Monthly rent for a dispensary in Delaware ranges from $2,500 to $7,000, depending on the size and location of the property.
• Application Fee: A biannual, non-refundable license application fee of $5,000 is required for all establishments. This fee is reduced to $1,000 for social equity applicants and $3,000 for microbusinesses.
• License Fee: A biennial license fee of $40,000 must be paid by all dispensaries.
• Operational Costs: Annual operational costs average between $110,000 and $120,000.
• Inventory Costs: Inventory costs vary based on stock and store size, typically ranging from $50,000 to $100,000.
• Marketing and Advertising: Depending on the chosen channels, marketing and advertising costs can run from $5,000 to $20,000.
• Security: A security system can cost between $10,000 and $50,000, depending on the size of the dispensary.
• Staffing Expenses: Annual wage costs for staff come in at $100,000 to $200,000, depending on the number of employees.

Miscellaneous Costs: Additional costs include insurance, legal fees, taxes, accounting services, and utilities. These expenses can vary widely based on location and business needs, making careful budgeting essential.

How to Draft a Business Plan for Your Dispensary in Delaware

Drafting a comprehensive business plan is a critical step in obtaining a dispensary license in Delaware. A well-prepared business plan not only demonstrates your readiness to run a successful cannabis business, but it also meets the regulatory requirements set by the OMC. Here are the key components to include:

• Executive Summary

Begin with an executive summary outlining your business objectives, mission statement, and an overview of your business model. This section should provide a concise snapshot of your dispensary’s goals and operational strategies.

• Market Analysis

Conduct a thorough market analysis to understand the local cannabis market, including customer demographics, market demand, and competitive landscape. Identify your target audience and analyze your competitors to highlight your dispensary’s unique value proposition.

• Business Structure and Management

Detail the ownership structure of your dispensary, including information about the owners, their roles, and their qualifications. Include organizational charts showing the hierarchy and management team. Highlight any relevant experience or expertise contributing to the business’s success.

Cannabis Taxes in Delaware

The state of Delaware charges a 15% tax on all sales of recreational marijuana products at retail stores, but it is important to note this tax does not apply to medical marijuana, which remains untaxed. The responsibility for collecting this revenue falls on the marijuana dispensaries themselves, and they are required to submit the money collected to the Delaware Department of Finance.

Regulatory Compliance for Delaware Dispensaries

• Licensing Requirements:

All dispensaries must obtain a valid license from the OMC. The application process involves submitting detailed information about the business, including ownership, security measures, and financial records.

• Patient Verification:

Dispensaries must verify the eligibility of patients through the state’s medical marijuana registry, which ensures that only registered patients can purchase cannabis products.

• Product Testing and Labeling:

All cannabis products must undergo rigorous testing for potency and contaminants. According to Delaware state regulations, THC levels must be accurately reported. Products must also be labeled with accurate information on THC and CBD content, as well as any potential allergens.

• Seed-to-Sale Tracking:

Dispensaries are required to use a seed-to-sale tracking system to monitor the lifecycle of cannabis products from cultivation to sale, which helps prevent diversion and ensures traceability. Delaware uses the BioTrackTHC system for this purpose.

• Record Keeping and Reporting:

Detailed records of all transactions, inventory, and patient interactions must be maintained and reported regularly to the Delaware OMC. IndicaOnline provides an advanced reporting system that allows infinite report customization.

Find the Right Location to Open a Dispensary in Delaware

Opening a dispensary in Delaware involves multiple steps, one of the most critical being the selection of an appropriate location. This requires compliance with specific zoning laws and regulations that vary by municipality. Below is a detailed guide on how to find a suitable location for your dispensary in Delaware, including the key zoning requirements and considerations.

Zoning Regulations

• Commercial Zoning:

Dispensaries in Delaware must be located in areas zoned for commercial use. Each municipality has its own zoning ordinances, so it’s essential to research the specific regulations in the area where you plan to open your dispensary.

• Distance Requirements:

All locations for compassion centers or cultivation sites must be at least 500 feet away from the property line of any existing public or private school. If you haven’t picked an exact address yet, your application should describe the general area where you plan to set up your center or cultivation facility, along with a timeline for its proposed date of establishment.

Delaware Security Regulations

In Delaware, dispensaries must adhere to stringent security regulations to prevent theft, diversion, and unauthorized access to medical cannabis. These aim to protect patients, employees, and the surrounding community.

Key security regulations for medical cannabis dispensaries in Delaware include:

• Alarm and Surveillance Systems:

Dispensaries must install and maintain a fully operational alarm and surveillance system, which must provide 24-hour recording and monitoring of all areas of the facility, including the parking lot. The surveillance system must include high-definition cameras positioned to capture clear images of individuals and activities. The recorded footage should be stored securely and be accessible for a specified period, as mandated by state regulations.

• Access Control:

Access to the dispensary is restricted to authorized personnel only, and visitors must be escorted by an employee at all times. To prevent theft or diversion, dispensaries must also have secure storage areas for medical cannabis which should be locked and monitored continuously.

• Background Checks:

All employees and owners must undergo a criminal background check before being hired. Background checks are conducted by the Delaware State Police or an authorized agency, and the results must be reviewed, and the persons must be cleared before employment can commence.

• Secure Transportation:

Medical cannabis must be transported in a secure vehicle equipped with an alarm and surveillance system. The transportation protocols should include secure packaging, verified routes, and strict chain-of-custody procedures to prevent loss or theft during transit. 

IndicaOnline’s cannabis delivery software automatically tracks all delivery activities. This means it captures every step of the process, from the moment a courier picks up an order to when it’s delivered to the customer.

How to Get Funding to Open a Dispensary in Delaware

In Delaware, national banks and federally regulated financial institutions are often reluctant to work with cannabis companies due to the legal risks associated with the industry, which remains illegal at the federal level. However, several alternative funding options are available for opening a dispensary:

• Private Lenders:

Private lenders specializing in cannabis businesses offer tailored financial services for dispensaries in Delaware. These lenders understand the unique needs of the cannabis industry and provide funding with terms suited to these businesses.

• Online Lenders:

Online lenders are generally more flexible than traditional banks and may work with you even if you have poor credit. Be aware these lenders often charge higher interest rates and may offer less favorable terms compared to traditional financial institutions.

• Angel Investors:

Angel investors typically invest in startups, including those in the cannabis industry. They provide funding in exchange for equity and often offer mentorship and business connections to help your dispensary grow.

• Venture Capital Investors:

Venture capitalists invest in early-stage or growing companies and may provide larger sums of money than angel investors. They usually take an active role in the business and demand equity in return for their investment and access to their network of contacts.

• Crowdfunding:

Crowdfunding platforms, such as Fundanna, allow businesses to raise money from a large number of individuals in exchange for equity or other rewards. This can be an effective way to gather the necessary funds while engaging with potential customers and supporters.

FundCanna partners with IndicaOnline POS Software to enhance access to working capital.

Navigating the Regulations for Dispensary Success

Opening a cannabis dispensary in Delaware is a complex process that demands careful planning, strict regulatory compliance, and substantial funding. Despite these challenges, there is significant potential for success in Delaware’s expanding medical cannabis market.

The federal prohibition of cannabis presents distinct hurdles for cannabis businesses, but Delaware has made considerable strides in creating a well-regulated and robust medical cannabis industry. By staying informed about the latest regulations and requirements and by exploring various funding and support options, entrepreneurs can play a pivotal role in this emerging industry, providing safe, high-quality medical cannabis products to patients in need.

To ensure compliance with all necessary regulations and requirements, dispensaries should consult regularly with legal and security experts and stay current with any updates or changes in the law.