Delaware Legalizes Cannabis

Delaware has joined the ranks of jurisdictions with legal adult-use marijuana, with the recent enactment of two bills by the state’s legislature. House Bill 1 (HB 1) amends Title 16 of the Delaware Code to remove all penalties for the use or possession of marijuana, as long as the amount does not exceed certain statutory quantities. For its part, House Bill 2 (HB 2) establishes a legal marijuana industry. Both initiatives were sponsored by Rep. Ed Osienski, a Democrat, and approved largely along party lines.

The approval of these legislative initiatives has taken place without the signature of Gov. John Carney, also a Democrat, and a vocal opponent of adult-use legalization. Despite “remain[ing] concerned about the consequences of a recreational marijuana industry in [the] state,” Gov. Carney chose not to veto the bills, opining that Delawareans had “spent far too much time focused on this issues when [they] face more serious and pressing concerns every day.”

Legalizing cannabis in Delaware

Possession of one ounce or less of marijuana (“personal use quantity”) was decriminalized in Delaware in 2015, but was subject to a civil penalty of $100 until the enactment of HB 1. This bill refined the definition of personal use quantity to include 12 grams or less of concentrated cannabis, and cannabis products containing 750 miligrams or less of Delta-9 THC. The new also excludes items used, or intended primarily for use, with marijuana from the application of Delaware’s drug paraphernalia statute.

Despite the enactment of the new laws, it still constitutes a misdemeanor in Delaware to possess marijuana in amounts that exceed the personal use quantity. Moreover, public consumption remains prohibited. In addition, growing cannabis in the First State without a license is still unlawful, even for personal use.

Establishing a cannabis industry in Delaware

For its part, HB 2 creates the Delaware Marijuana Control Act. The Act calls for a regulated marijuana sector whose products are “tested, labeled, and subject to additional regulations to ensure that consumers are informed and protected.” This underscores a point we have made more than once in these pages regarding the insufficiency of decriminalization-only as a cannabis policy. As we have explained, the absence of a legal, regulated industry “prevents the state from engaging in constructive regulation geared to promote health and safety (such as ensuring cannabis products are properly labeled).” It also prevents taxation of marijuana-related activities: The Act establishes a 15% levy on retail sales of marijuana.

The Act provides for licensing of certain activities involving marijuana, including retail, cultivation and processing. Delaware authorities are to issue up to 30 retail licenses, 30 manufacturing licenses, 60 cultivation licenses and five testing licenses, subject to the existence of a sufficient number of qualified applicants. Considering Delaware’s small size (2,489 square miles) and population (just over one million), those seem like generous allotments: Perhaps legislators are counting on more than a few customers driving down from Pennsylvania, the only one of the states bordering Delaware without legal adult-use cannabis at this stage (downtown Philadelphia is about 23 miles from the Delaware border).

Social equity and microbusiness applicants

Special provisions are made under the Act for social equity and microbusiness applicants, including discounted application fees. One-third of the cultivation and manufacturing licenses, one-half of the retail licenses, and two out of the five testing licenses are reserved for social equity applicants. Current and former residents of a Delaware “disproportionately impacted area” (one with high rates of marijuana-related arrests, conviction, and incarceration) are eligible for social equity applicant status, as are those convicted for marijuana-related offenses and their families, with some caveats.

Turning to microbusiness applicants, the principal criteria for eligibility is that the business in question does not intend to employ more than ten persons. There are also restrictions on the size of the cannabis plant grow canopy and the total number of marijuana plants the business will possess on a monthly basis. A total of 20 cultivation licenses and ten manufacturing licenses are reserved for microbusiness applicants.

Looking ahead

With the enactment of these two marijuana bills, Delaware becomes the 22nd state to legalize adult-use marijuana. Factoring in the District of Columbia and the U.S. territories of Guam, the Northern Marianas and the U.S. Virgin Islands, more than half of all U.S. jurisdictions now have legal recreational marijuana (as well as certain Native American tribes). As we celebrate the Small Wonder’s step forward, we should take a moment to applaud Gov. Carney for his common sense approach. If only all governors were as reasonable.

AUTHOR

Fred Rocafort

Fred leads Harris Bricken’s intellectual property practice and is the coordinator of the firm’s international team. Much of Fred’s practice consists of helping cannabis businesses protect their brands. He also works with entrepreneurs and companies entering the Web3 space, a new frontier for IP law. Prior to joining Harris Bricken, Fred worked overseas for more than a decade, in both government and private sector roles. Fred is a regular contributor to the award-winning China Law Blog and Canna Law Blog. Fred began his career overseas as a U.S. consular officer in Guangzhou, China, where he advocated for fairer treatment of American companies and citizens in China and for stronger intellectual property rights enforcement. After entering the private sector, Fred worked at a Shanghai law firm as a foreign legal advisor and later joined one of the oldest American law firms in China, helping foreign companies navigate the Chinese legal environment. He also led the legal team at a Hong Kong-based brand protection consultancy, spending most of his time out in the field, protecting clients against counterfeiters and fraudsters in Greater China, Southeast Asia and Latin America. In addition to his IP work, as a native Spanish speaker, Fred works closely with different Harris Bricken teams on Latin America and Spain matters. Fred also provides advice to cannabis industry participants and other businesses on import and export transactions. Fred is an ardent supporter of FC Barcelona—and would be even in the absence of Catalan forebears who immigrated to Puerto Rico in the mid-1800s.

Source https://harrisbricken.com/cannalawblog/delaware-legalizes-cannabis/

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