House Bill 2
152nd General Assembly (Present)
Enact w/o Sign 4/27/23
No action taken by Governor within prescribed time frame
AN ACT TO AMEND TITLES 4, 11, 16, AND 30 OF THE DELAWARE CODE RELATING TO CREATION OF THE DELAWARE MARIJUANA CONTROL ACT.
The Delaware Marijuana Control Act regulates and taxes marijuana for recreational use in much the same manner as alcohol. It creates a framework for production, manufacture, and sale in a legal recreational marijuana industry. Section 1: Amends Chapter 47 of Title 16 to provide that the offenses and penalties under Uniform Controlled Substances Act do not apply to marijuana-related conduct allowed under the Delaware Marijuana Control Act or the Delaware Medical Marijuana Act, Chapter 49A of Title 16. Section 2: Amends § 4902A of Title 16 so that the definition of a registered safety compliance facility includes not just marijuana produced for medical use but also marijuana produced under the Delaware Marijuana Control Act. Section 3: Amends Chapter 4 of Title 4 to expand the Division of Alcohol and Tobacco Enforcement’s duties and powers to the Delaware Marijuana Control Act. Section 4: This sectioni s the Delaware Marijuana Control Act. Subchapter I contains definitions and general provisions. Where definitions or analogous provisions exist in the Delaware Code, the definitions are referenced and the language from existing statutes is used. This section of the Act permits individuals over age 21 to possess, use, purchase, or transport 1 ounce (28 grams) or less of marijuana, no more than 5 grams of which may be concentrated, if the individuals are in compliance with this chapter. It permits the operation of marijuana businesses if they operate under licenses granted under Chapter 49A of Title 16, but imposes the same limits on hours and holiday sales as apply to sales of alcohol. It prohibits the use of marijuana in public, by drivers or passengers in vehicles, and prohibits the smoking of marijuana anywhere that smoking tobacco or e-cigarettes is not permitted. Marijuana may not be sold in an establishment licensed to sell alcohol. It delineates the rights of property owners with respect to marijuana possession and consumption. There are specific provisions imposing the same penalties as with alcohol sales, for individuals under the age of 21 using false identification to purchase marijuana, and for businesses that fail to verify the age of marijuana consumers. This Act creates the Delaware Marijuana Control Act Oversight Committee. This Oversight Committee will coordinate the implementation of this Act with the Medical Marijuana Program, the Division of Public Health, the Division of Substance Abuse and Mental Health, and the public. The Oversight Committee will review the effectiveness of the Delaware Marijuana Control Act in regard to the safe operation of facilities licensed under this Act, the impact of this Act on public safety, and the impact of this Act on public health. The Commissioner must submit an annual report to the Governor and the members of the General Assembly setting forth all matters of interest and all statistics concerning marijuana regulation and control in the State including: the number of licenses of each variety issued with the State; including the name and address of each person licensed to cultivate, manufacture, or sell marijuana or marijuana products in the State; the amount of marijuana and marijuana products sold within the State; the number of licenses of each kind granted and the number cancelled during the year, and the outcomes and effective of the issuance of social equity licenses. Subchapter II creates the position of Marijuana Commissioner and an Appeals Commission. The Commissioner has the power to grant licenses for marijuana establishments, establish health and safety regulations for marijuana cultivation, regulate distribution, and hear complaints regarding establishments licensed under this Act. The Commissioner must consult with the Division of Alcohol and Tobacco Enforcement before adopting or establishing policies that concern enforcement. Finally, they must coordinate with the Division of Small Business, Development, and Tourism so that potential businesses licensed under this Act have access to programs, particularly those that support small businesses owned by minorities, women, and veterans. Subchapter III sets up the regulations and licenses under the Delaware Marijuana Control Act. The Marijuana Commissioner has the authority to adopt regulations to implement this Act and include specific requirements that marijuana establishments must meet to obtain licenses. Regulations must require that products containing marijuana use a symbol and a standard measurement to be used on all marijuana products so they are easily identified as containing marijuana and consumers can identify the amount of marijuana in different products; be in opaque, child-resistant packaging; and contain a warning label explaining evidence-based harms from consuming marijuana, including the impact on developing brains. The regulations must also contain security requirements, testing requirements, advertising restrictions, and require that food products comply with State food safety laws. There are separate licensing requirements for retail marijuana stores, marijuana testing facilities, marijuana cultivation facilities, and marijuana product manufacturing facilities. Licensing requirements also differ between open licenses, social equity licenses, and microbusiness licenses. There is a $10,000 biennial fee for most open licenses, with reduced licensing fees for microbusinesses and social equity licenses. Cultivation licenses are determined by square footage of the grow canopy area. As part of the competitive scoring process the Commissioner will use to determine which applicant may obtain licenses to operate each type of marijuana establishment, applicants for open licenses will submit a business plan, an environmental and sustainability plan, as well as attestations affirming that (1) the applicant has a labor peace agreement with a bona fide labor organization. Subchapter III also establishes the criteria for a social equity applicant and requires the Commissioner to develop financial and technical assistance programming to aid social equity applicants. It also establishes the criteria for a microbusiness license. Subchapter IV contains provisions relating to local control, procedural requirements for licenses and renewals, and hearings and appeals related to licenses. Subchapters VI and VII provide the Commissioner the authority to refuse approval of changes in the ownership, officers, or directors, financial interest or lease in connection with any license. The subchapter also details the requirements when there is a change in ownership of a license or licensee, a change in officers and directors, and changes in the financial interest of a license or licensee. Subchapter VIII deals with taxation and creates the Marijuana Regulation Fund and the Justice Reinvestment Fund. The Regulation Fund will consist of fees collected, penalties imposed, and taxes collected under this Act. It creates the marijuana control enforcement tax on retail marijuana in the amount of 15%. 7% of the tax revenue collected will be allocated to the Justice Reinvestment Fund, under the management of the Department of Justice where it will be used for projects to improve quality of life for communities most impacted by the prohibition of marijuana and “war on drugs” era policies. This subchapter also provides for an annual audit of the Office of the Commissioner. Section 5: Creates a State tax deduction for corporations for all ordinary and necessary expenses paid or incurred by a marijuana establishment to reflect the inability of a business licensed under this Act to deduct these expenses from federal taxes and thus state taxes. This creates a more level playing field with other businesses. Section 6: Creates a State tax deduction of ordinary and necessary business expenses for pass through entities operating under this Act. Section 7: Allows the Director of Revenue to enter into an agreement with the Marijuana Commissioner for the inspection of any tax return. Section 8: Exempts marijuana taxes paid or payable to the state from the gross receipts tax. Section 9: Removes possession of marijuana from the list of activities that prohibits a person from at the same time possessing a handgun. Section 10: Makes the provisions of the bill severable. Section 11: Requires regulations required under new § 1331 of Title 4 to be adopted no later than one year from this bill’s effective date. Section 12: Requires the Controller General to send a notice to the Registrar of Regulations when funds have been appropriated to implement this Act. Section 13: Provides that the bill is effective upon the later of the publication of the notice under Section 13 or its enactment.