Delaware Cannabis Startup Guide

Starting a cannabis company in Delaware? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in a Delaware cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.

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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Delaware?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in Delaware

Since SB 17 passed in 2011, Delaware adults can possess up to 6 ounces of cannabis if they have a certification from a doctor. More than 16,000 patients have registered for medical marijuana use. Growing marijuana at home is illegal, as is recreational use. The state’s not-for-profit dispensaries are called “compassion centers,” and sales at Delaware’s compassion centers could be as high as $70 million in 2021.

Cannabis business license types

Delaware issues licenses for two broad categories of medical cannabis businesses: “compassion centers” (dispensaries) and “safety compliance facilities” (testing labs).

Compassion centers: These are vertically integrated not-for-profit businesses that grow, process, and sell medicinal cannabis to patients. In Delaware, licensed compassion centers can also manufacture, transport, and deliver marijuana. Products may include items like edibles, capsules, and oils.

Safety compliance facility: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. These labs use methods like liquid or gas chromatography to analyze products for CBD and THC content, pesticides, terpenes, bacteria, fungi, and heavy metals, to name a few. Safety compliance facilities in Delaware may also train others on security, cultivation, packaging, and more.

Ancillary business: If you don’t want to grow, test, or sell cannabis in Delaware, there are plenty of other ways to be part of the state’s cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!


Fees and other barriers to entry


Local governments may forbid cannabis companies or certain locations, so check city and county regulations.

Application fees: Applying for a cannabis business license in Delaware costs $5,000.

License fees: It’s $40,000 for a medical marijuana business license in Delaware.

Tracking: You must use the state-mandated seed-to-sale inventory tracking system for cannabis, which is BioTrackTHC (more info here).

Background check: Owners, board members, and employees have to undergo a criminal background check and must not been convicted of an excluded felony offense or drug misdemeanor within the last five years. An excluded felony is a violent crime or controlled substance-related crime.


Do you need a cannabis business plan in Delaware?

A business plan is not required to get a medical marijuana business license in Delaware, but it will certainly make the process easier. Your application already has to include details on your location, proposed bylaws, production methods, and your management team’s qualifications and expertise, some of which naturally overlap with a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan


Here’s what an Delaware marijuana business plan should include:

  • Product/service description: What’s unique about your dispensary? Be as specific as you can. Which strains of flower and which products will you sell?

  • Market research: How many people live within five miles? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team, such as your medical director. Obviously include cannabis industry experience, but don’t worry if you don’t have any. Highlight leadership skills, customer service, and business development experience in other industries.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. It’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Delaware-specific requirements: Include any details that Delware requires about your security system, product tracking, secure product transport, waste plan, and other aspects of your business.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Delaware cities and towns are still in the process of determining their cannabis regulations. Google your city or municipality name and “cannabis regulations” or “marijuana laws” . If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.

Helpful Links

 

Get expert help


Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:

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