Last month, legislators in Delaware approved a measure that would allow medical cannabis licensees in the state to apply for conversion licenses to cultivate and sell recreational marijuana. Governor John Carney is expected to sign the measure in the coming weeks.
The recently approved measure was sponsored by Representative Ed Osienski, who revealed that cultivation was the most difficult pathway to use to enter the marijuana industry. This, Osienski explained, was because of the larger investments needed to cover the needed infrastructure, such as ventilation and lighting as well as the need for more time for cultivation.
This was why the state had decided to go down the path that would fill the current gap, as it was less demanding. Legislators had decided that this would be done by allowing those who already had facilities and licenses to be able to cultivate marijuana and manufacture products like gummies.
Issuance of these conversion licenses is set to begin in November, with Rob Coupe noting that if the measure hadn’t been approved, retail sales would’ve had to launch in late 2026. It had been expected that applicants who obtain the new growing licenses would take about 12 months longer to launch their operations, and also to cultivate crops for retail sale.
The new course taken by the state establishes faster pathways though, allowing the adult-use market to become operational faster and making cannabis legally available to the general public. The state expects that conversion licenses will generate a little more than $4 million in application fees, which shall be directed to a fund for social-equity applicants. These applicants are set to be awarded 47 of the conversion licenses, which total 125.
Currently, growing licenses go for $200,000 apiece. Parties that want to obtain a license to manufacture, test or retail cannabis have to part with an additional $100,000.
Legislators also allocated another $2 million into this fund, which is to be awarded to aspiring social-equity marijuana entrepreneurs. For these entrepreneurs to be eligible, they are required to own no less than 51% of the business and meet one of the following criteria:
- has/had a spouse, parent, child, dependent or legal guardian who was convicted of a cannabis crime.
- been convicted of a cannabis-related offense. This excludes those who sold the drug to a minor or sold more than 11 pounds of marijuana.
- lived for no less than five of the last ten years in an area that was disproportionately affected by the war on drugs.
Basically, these are targeted areas that have seen high numbers of arrests related to cannabis in the last decade. Applicants can cross check to see if their addresses are in these targeted areas on the state’s website. The state’s social-equity program is focused on creating opportunities for individuals and/or communities that were oppressed by marijuana prohibition.
The entire cannabis industry, including brands such as Tilray Brands Inc. (NASDAQ: TLRY) (TSX: TLRY), will be hoping that the adult-use market in Delaware gets off to a good start and avoids the hiccups that have plagued some markets, including New York state.
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