Delaware releases proposed rules for adult-use marijuana sales

Marijuana operators, other stakeholders and the general public in Delaware have until June 3 to weigh in on a litany of proposed business rules and regulations related to the rollout of adult-use sales next year.

The regulations, issued last week, cover a variety of topics, including retail, cultivation, processing and testing protocols, applications requirements, and security and safety measures.

The Office of the Marijuana Commissioner (OMC), the state’s chief cannabis regulator, aims to approve the rules by mid-July and open the licensing application window as early as September, the Wilmington-based Delaware Business Times reported.

In Delaware, as in nearly every other regulated market, operators will be required to follow all marijuana plants and products from seed to sale through a dedicated tracking system selected by the OMC.

Applicants are also required to complete financial and background investigations, including proof of fingerprinting, as well as state and federal criminal record checks.

Under the proposed rules, applicants awarded conditional licenses must identify a physical location for the business, gain approval from regulators for that spot and become operational within 18 months.

Interestingly, marijuana cultivation sites must have an environmental and sustainability plan that includes efforts to minimize operational impact and minimize water usage.

Some rules could be challenging

The proposed rules include several restrictions and bans that will likely challenge marijuana operators.

While single-serve edibles and beverages may contain up to 10 milligrams of THC, the total package can hold only 50 milligrams of THC.

Tinctures, however, can contain up to 300 milligrams of THC per package.

Other product packaging and design restrictions include:

Shapes, colors, or characters identical or similar to commercial candy or cartoon characters.
Anything likely to appeal to children, such as bright, cartoonlike colors, shapes associated with children’s products or characters from children’s media.
Branding elements, graphical imagery or multiple colors except for minor manufacturing or regulatory markings as well as other essential elements such as tamper-proof features or informational text.
Neon colors.
Imitations or resemblance to any existing branded consumer product.
Cartoons, cartoonlike fonts, caricatures, fruit, human or animal shapes.
Depictions of a celebrity or celebrity likeness.
Images of minors or product descriptions associated with minors or marketed to minors.

Packaging must include certain warnings regarding use, indicate they’re adult-use products and list the phone number for Delaware’s Poison Control Center.

In a costly and potentially time-consuming requirement, all marijuana businesses must undergo an annual financial audit conducted by an independent auditing firm and submit those documents to the OMC with an annual report.

Delivery of products to adult-use consumers is prohibited.

Product samples are also banned.

Retailers can petition regulators to allow deli-style shopping of flower.

Marketing constraints

Billboard advertising is prohibited.

Any ads on posters, handbills, signage or other visual media cannot be located or viewed within 500 feet of a school, day care center, church or other frequent gathering place for minors.

Ads on radio, TV, online or on mass-transit vehicles are restricted unless subscribers are 21 or older or have solicited marijuana advertising or marketing materials.

Depicting consumption of marijuana and related products, as well as cannabis leaf imagery are also prohibited.

The OCM will implement a lottery to award a minimum of 125 business licenses, with at least 47 earmarked for social equity applicants, according to the Delaware Business Times.

Under the proposed rules, a social equity license winner is prohibited from transferring the permit for three years.

The OMC has indicated it could issue:

60 cultivation licenses by Nov. 1.
30 manufacturing licenses by Dec. 1.
30 retail and five testing lab licenses by March 2025.

About a year ago, Delaware became the 22nd state in the U.S. to legalize adult-use marijuana.

The legislation included a 15% retail tax on cannabis purchases.

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.