4 Del. Admin. Code § 5001-4.0

Current through Reigster Vol. 28, No. 6, December 1, 2024

Section 5001-4.0 - Application Process and Issuance of Licenses

4.1 Application requirements

4.1.1 An applicant must submit an application for a license on the form made available by the Commissioner.

4.1.2 An applicant may not apply for, may not be issued, and may not renew any license that would result in the applicant, or a person with a financial interest in that application or license under Title 4 of the Delaware Code, owning or operating more than 1 marijuana establishment of the same license type (cultivation, manufacture, retail, or testing) in a single county.

4.1.2.1 An applicant is not prohibited from applying for and being issued or renewed more than 1 license in a single county, provided that each license is of a different license type.

4.1.2.2 This section does not apply to converted medical licenses.

4.1.3 The Commissioner does not require an applicant to obtain or own any property or facility to operate a marijuana business prior to conditional licensing.

4.1.4 The Commissioner may verify an applicant's status as a social equity applicant at any time prior to entry into the lottery and require the applicant to submit supporting documentation. Any information an applicant submits in support of their social equity status is considered part of the application and is subject to verification by the Commissioner.

4.2 Minimum qualifications

4.2.1 The Commissioner shall determine whether a submitted application meets the minimum qualifications for the lottery by reviewing the applicant's materials required by 4 Del.C. § 1331. The Commissioner also requires that:

4.2.1.1 Applicants provide a description of their plan to comply with guidance pertaining to marijuana issued by the Financial Crimes Enforcement Network under the Bank Secrecy Act (31 U.S.C. § 5311 et seq.), which may be demonstrated by submitting letters regarding the applicant's banking history from banks or credit unions that certify they are aware of the business activities of the applicant in any state where the applicant has operated a business related to personal use or medical marijuana. An applicant who does not submit the information about a plan of compliance with the Bank Secrecy Act shall not be disqualified from consideration.

4.2.1.2 For marijuana cultivation facility license and marijuana product manufacturing facility license applicants only: quality assurance plan with written policies and procedures for a comprehensive quality assurance program.

4.2.1.3 The Commissioner may require an applicant, or any individual or entity that holds an ownership interest in or control of the applicant, to complete an attestation demonstrating the applicant meets the requirements for the license established in 4 Del.C. § 1331.

4.2.1.4 Additional minimum qualifications may be established by the Commissioner and published on its website at https://omc.delaware.gov.

4.2.2 Applicants must remit a nonrefundable application fee as set forth in 4 Del.C. §§ 1331, 1337, and 1341. The Commissioner may adjust the application fees annually for inflation.

4.2.3 The Commissioner may determine that a completed social equity license application may be entered into an open license lottery for the applicable license type without payment of any additional application fees.

4.3 Application review process

4.3.1 The Commissioner will announce the application period at least 10 business days prior to the acceptance of applications. The announcement will include:

4.3.1.1 Types and number of licenses available; and

4.3.1.2 The date the application period begins.

4.3.2 The Commissioner will accept applications for 30 calendar days.

4.3.3 The responsibility for demonstrating the minimum qualifications set forth in Title 4 of the Delaware Code and in this regulation rests on the applicant.

4.3.4 The Commissioner may deny an application for any of the reasons listed in 4 Del.C. § 1354 and where the application:

4.3.4.1 Is incomplete in any material detail;

4.3.4.2 Contains a material misstatement, omission, misrepresentation, or untruth;

4.3.4.3 Does not meet the minimum qualifications for the license type;

4.3.4.4 Is not submitted by the established deadline; or

4.3.4.5 Fails to provide additional information requested by the Commissioner.

4.3.5 The Commissioner may award fewer licenses than authorized under law in any licensing round if there are an insufficient number of qualified applicants.

4.3.6 The Commissioner will notify all applicants by email whether they met the minimum qualifications and will be placed in the lottery.

4.4 Lottery

4.4.1 Applicants determined by the Commissioner to meet the minimum qualifications will be entered into a lottery. The lottery will be conducted in an impartial and random manner, with the format of the lottery being determined by the Commissioner.

4.4.2 No more than 10 business days following the lottery, the Commissioner will inform all applicants by email whether they were selected for the lottery.

4.4.3 The Commissioner may request any additional information or supporting documentation from an applicant selected in the lottery necessary to verify aspects of the application, including additional information and supporting documentation related to the ownership and control of the applicant.

4.4.4 The Commissioner may deny issuing a conditional license or an active license to an applicant selected in the lottery if:

4.4.4.1 The applicant fails to provide any additional information or supporting documentation within 10 business days of being notified that a correction needs to be made; or

4.4.4.2 Additional information or supporting documentation submitted by the applicant demonstrates the applicant is not eligible for a conditional or active license.

4.5 Selected applicant and supplemental license application requirements

4.5.1 A selected applicant must complete a supplemental license application in a format prescribed by the Commissioner.

4.5.2 Selected applicants are granted a period of 30 days from the date of notification of selection from the Commissioner to complete a supplemental license application and pay applicable licensing fees.

4.5.3 A selected applicant is required to:

4.5.3.1 Undergo a criminal background check in accordance with 4 Del.C. §1345;

4.5.3.1.1 Applicants must follow all criminal history records check guidance provided by the Commissioner, including fingerprinting and state and federal criminal history records checks;

4.5.3.1.2 For applicants that are business entities, fingerprinting and criminal history record checks are required for every owner, officer, director, and employee; and

4.5.3.1.3 The applicant is responsible for all costs associated with fingerprinting and criminal history record checks.

4.5.3.2 Undergo a comprehensive financial background investigation under direction of the Commissioner and authorize the release of financial and background information from all financial institutions, fiduciaries, and other entities, exempting them from any contractual, statutory, or common law confidentiality obligations, to aid in assessing the applicant's capability to operate a marijuana establishment;

4.5.3.3 Submit a Certificate of Tax Clearance for responsible persons;

4.5.3.4 Describe all civil litigation or any settled or closed legal action over the past 3 years to which the applicant, its parent, affiliate, holding, or any subsidiary is or was a party whether in this state or in another jurisdiction.

4.5.3.5 Disclose whether the applicant or any affiliate, intermediary, subsidiarity or holding company ever had any license application, license, permit, or other authorization issued by a government agency in this state or any other jurisdiction denied, suspended, or revoked in the last ten years.

4.5.3.6 Execute waiver provided by the Commissioner to permit any governmental authority in any jurisdiction to share with the Commissioner and the Division all data the selected applicant has previously provided to other jurisdictions in connection with a marijuana-related license, as well as any information those jurisdictions have gathered during their investigations of the selected applicant;

4.5.3.7 Submit verification provided by the Commissioner for any information or supporting documentation submitted with the application;

4.5.3.8 Provide the municipality or county within which the selected applicant intends to operate; and

4.5.3.9 Provide any additional information required by the Commissioner.

4.5.4 If a selected applicant fails to meet the requirements in subsection 4.5.3 of this regulation within the 30-day period, the Commissioner may extend this period provided that the applicant demonstrates a good faith effort towards completion. Should the Commissioner deny the extension request, or the selected applicant remains unable to meet the requirements outlined in subsection 4.5.3 of this regulation, the Commissioner is authorized to cancel the application.

4.5.5 The applicable licensing fees are set forth in 4 Del.C. §§ 1331- 1334, 1337, and 1341, and are payable to the Office of the Marijuana Commissioner biennially.

4.5.6 Upon successful completion and approval of the application and payment of licensing fees, the applicant will be granted a conditional license pursuant to 4 Del.C. §§1345.

4.5.7 Prior to the issuance of a conditional license, the applicant may not:

4.5.7.1 Purchase, possess, cultivate, manufacture, or sell marijuana or marijuana products;

4.5.7.2 Transfer any ownership interest that causes a change in the individual or entity that holds the controlling ownership interest;

4.5.7.3 Transfer control; or

4.5.7.4 Transfer an ownership interest that causes the conditional social equity licensee to no longer meet the social equity applicant definition.

4.6 Issuance of conditional license

4.6.1 Any applicant who receives a conditional license must identify a physical location for the licensed premises and become operational within 18 months from the date the conditional license is granted. The proposed licensed premises must be approved by the Commissioner.

4.6.2 If the applicant is unable to begin operations meeting all criteria established by the Commissioner within 18 months of issuance of the conditional license, the Commissioner may extend the period to become operational if the conditional licensee demonstrates good faith efforts to begin operations. If the Commissioner denies the extension of the conditional license or the licensee is unable to become operational, the Commissioner must rescind the conditional license.

4.7 Termination of a conditional license. The Commissioner may terminate a conditional license if a conditional licensee or any individual or entity included in the application:

4.7.1 Has been convicted of or pleaded nolo contendere to a crime involving moral turpitude, whether or not any appeal or other proceeding is pending to have conviction or plea set aside;

4.7.2 Fraudulently or deceptively attempts to obtain a license;

4.7.3 Is ineligible to hold an ownership interest in or control of a business licensed under subsection 4.1.2;

4.7.4 Fails to reveal any material fact pertaining to the temporary licensee's qualification for a license;

4.7.5 Fails to submit a complete supplemental license application;

4.7.6 Fails to convert to an active licensee;

4.7.7 Violates this regulation;

4.7.8 Is not registered or in good standing with the Division of Corporations; or

4.7.9 Has taxes in arrears in any jurisdiction.

4.8 Issuance of an active license. A conditional license will convert to an active license as provided in 4 Del.C. §1346. The Commissioner also requires:

4.8.1 Submission and subsequent approval of final safety, security, theft or diversion, and operations plans by the Commissioner;

4.8.2 Payment of any fees or costs associated with obtaining a background check;

4.8.3 Submission of an attestation signed by a bona fide labor organization stating that the licensee has entered into a labor peace agreement with the bona fide labor organization;

4.8.4 Submission of a form, provided by the Commissioner, which demonstrates compliance with all local laws including local zoning, fire codes and building codes;

4.8.5 Identifying and demonstrating legal control of the proposed site, through lease, purchase, or other means, for the marijuana business; and

4.8.6 A completed full inspection of the proposed site premise by the Commissioner and the Division.

4.9 Retention of applications

4.9.1 Upon notification that an applicant was not selected by the lottery, the applicant may request the Commissioner retain the application for subsequent application periods within 1 year.

4.9.2 The Commissioner may contact an applicant with a retained application for any additional information required for subsequent application periods.

4.9.3 Any application retained by the Commissioner that meets the requirements of a subsequent application period within the 1-year retention period shall be automatically entered into a subsequent application period if the applicant has properly updated the application.

4.9.4 The Commissioner may not enter a retained application into a subsequent application period if:

4.9.4.1 Any individual included in the application is in violation of ownership restrictions Title 4 of the Delaware Code or this regulation; or

4.9.4.2 Any individual associated with the application has been found to be in violation of Title 4 of the Delaware Code or this regulation.

4.10 Grounds for refusal of a license

4.10.1 The Commissioner shall consider the convictions listed in 4 Del.C. § 1354 as grounds for refusal of a license.

4.10.2 The Commissioner may refuse to license an applicant if a substantial objection is presented pursuant to 4 Del.C. § 1354.

4.10.3 An applicant must meet each of the following requirements, as applicable:

4.10.3.1 Except as otherwise provided in this Section, if the applicant is a business entity, every owner, officer, and director of the business entity who holds more than 10% of the outstanding issued shares must meet each of the requirements of this Section.

4.10.3.2 The applicant must be at least 21 years of age. If the applicant is a business entity, then every owner, officer, and director of the business entity must be at least 21 years of age.

4.10.3.3 The applicant must submit to a criminal history record check in accordance with the requirements in 4 Del.C. §1347 and this regulation.

4.10.3.4 The applicant must fully complete all forms required by the Commissioner and may not knowingly or recklessly make a false statement of material fact to the Commissioner. The Commissioner may cancel a license pursuant to 4 Del.C. § 1331 and this regulation if subsequent to the issuance of the license, the Commissioner determines the licensee knowingly or recklessly made a false statement of material fact to the Commissioner.

4 Del. Admin. Code § 5001-4.0

28 DE Reg. 226 (9/1/2024) (Final)