Topics

General Tax Questions

For Consumer

For Marijuana Establishments

Enforcement

General Tax Questions

What is Delaware’s Retail Marijuana Tax rate?

Delaware’s Retail Marijuana Tax rate is 15%. A tax of 15% is imposed on the retail sales price of any marijuana product sold in Delaware. This tax is rounded up to the next whole cent.

Who pays the Retail Marijuana Tax?

The Retail Marijuana Tax is imposed upon the consumer of marijuana products at the point of sale. The tax is remitted to Delaware by the retail marijuana store licensee who acts as a taxpayer in trust of Delaware tax revenue paid by marijuana consumers.

What if I purchase marijuana for medicinal use?

If the consumer provides a valid medical marijuana registry identification card at the time of purchase, the Retail Marijuana Tax is not charged.

Are there any other exemptions from the Retail Marijuana Tax?

No, only consumers who provide a valid medical marijuana registry identification card at the time of purchase are exempt from the Retail Marijuana Tax.

 Where can I find out more information about the total amount of Retail Marijuana Tax collected?

For more information on marijuana tax data, please see the information provided by the Department of Finance at The Transparency Project: Delaware

 

For Consumers

Can I buy my marijuana in another state and bring it into Delaware?

Marijuana remains illegal under federal law, and you may not carry or transport marijuana over state lines. It remains illegal to leave (or enter) Delaware with any marijuana products – medical or adult-use (non-medical) products. Mailing marijuana in or out of the State is also illegal.

Is everything sold at a retailer subject to the Retail Marijuana Tax?

No. Any items sold by a retail marijuana store that are not considered marijuana products as defined in Title 4 of the Delaware Code are not subject to the Retail Marijuana Tax.

 

For Marijuana Establishments who have been approved by the Office of Marijuana Commissioner

Which marijuana establishments are required to obtain a Delaware business license?

All marijuana establishments will be required to obtain a business license to conduct a trade or business in the State of Delaware per Title 30 chapter 21. A business license issued by the Delaware Division of Revenue must be obtained at the time business commences in Delaware and is a requirement in the marijuana license application.

The current licenses issued by the Office of the Marijuana Commissioner translate into the following business licenses:

OMC License	Revenue License
Testing	General Services
Cultivation	Wholesale
Manufacturing	Food Processor
Manufacturing	Manufacturers
Retailer	Retail Sales

 

Manufacturing license requirements will depend on the specific products manufactured. For more information, review Title 30 §2701(2) and §2901(21)a.2. to determine the appropriate license.

For more information on the basics of business formation and licensing in Delaware, please refer to DOR’s primer on the subject:

https://revenue.delaware.gov/business-tax-forms/doing-business-in-delaware/

 

What are the penalties for failure to obtain business license?

Failure to obtain or renew a business license is subject to a $200 penalty beyond the standard license fee.

Office of the Marijuana Commissioner license applications will not be considered without a DOR business license. Failure to renew your business license may result in reporting of tax delinquency to the Office of the Marijuana Commissioner and further penalties at the Marijuana Commissioner’s discretion and including the potential denial of a Marijuana Establishment license renewal.

 

What is the penalty for failure to pay the marijuana tax due?

The standard penalty for failure to pay tax in Delaware applies to the Retail Marijuana Tax. This penalty is 1% of the amount of tax owed if the failure is for not more than 1 month, with an additional 1% for each additional month or fraction thereof during which such failure continues, not exceeding 25%. Furthermore, failure to pay tax or penalty due timely will result in interest which accrues for 0.5% of any unpaid tax, penalty, or additional amounts owed if the payment is not more than 1 month late, with an additional 0.5% for each additional month or fraction thereof during which such failure continues.

In addition to the failure to pay penalty, a failure to file penalty also applies to the Retail Marijuana Tax. This penalty is 5% of the amount of tax owed if the failure is for not more than 1 month, with an additional 5% for each additional month or fraction thereof during which such failure continues, not exceeding 50%. Interest on an underpayment as described above also applies to failure to file penalties.

How do I file my Retail Marijuana Tax returns with the Department?

Returns and remittances must be filed electronically via the Delaware Taxpayer Portal (tax.delaware.gov). All returns and remittances must be paid monthly. The due date for any month’s return is the 15^th day of the following month or the next business day if State offices are closed on the 15^th.

Can the Retail Marijuana Tax be paid in cash?

No. Delaware Marijuana Regulations, Retail Marijuana Tax due to the State of Delaware reported on the retail marijuana tax form shall be verified, computed, and paid electronically on the Delaware Taxpayer Portal. 4 Del. Admin. C. § 5001-14.4

DOR will not accept cash payment. Attempts to make cash payments will not be considered in the assessment of failure to pay penalties or interest calculations as they impact Retail Marijuana Tax accounts.

How do I file a refund for overpaid tax?

Overpayment claims are included as part of the monthly Retail Marijuana Tax form and will be credited as an offset against future tax liabilities.

Can I claim the cost of doing business as a deduction against Delaware Personal or Corporate Income Taxes?

Yes. While the IRS prevents federal income taxpayers involved in the marijuana business from deducting ordinary and necessary business expenses, Delaware tax forms will allow these deductions separately. In the event federal laws or regulations change such that the deduction for ordinary and necessary business expenses is allowed by the IRS, the existing Delaware deduction will be voided to prevent double deductions.

Why does my business pay the Retail Marijuana Tax if the tax is imposed on the consumer?

The Retail Marijuana Tax is a “trust fund tax” where a person or business collects a tax for the State to satisfy the liability owed by another party in a transaction. Delaware’s tax on marijuana consumers will be held in trust by marijuana retailers until the tax is paid.

What is a responsible party and how does it relate to Retail Marijuana Taxes?

In the case of trust fund taxes like the Retail Marijuana Tax, individuals, including those who, as a matter of status or authority, are responsible to collect and account for a tax because of significant control over a company’s finances and satisfaction of a company’s debts are considered “responsible parties”.  These individuals are personally liable for the payment of the Retail Marijuana Tax and may be subject to additional penalties if they are deemed to have willfully evaded remittance of a company’s trust fund tax liabilities.

Can a nonprofit charitable, educational, or religious organization make exempt purchases of cannabis or cannabis products to be used for raising funds?

No. Organizations must be licensed by the Office of the Marijuana Commissioner to sell or distribute marijuana products. Nonprofit organizations cannot purchase and resell marijuana to raise funds, or otherwise distribute marijuana for fundraising purposes.

 

Enforcement

Which agencies regulate marijuana in Delaware?

Adult-use marijuana is regulated by the Office of the Marijuana Commissioner (OMC) and enforced by the Division of Alcohol and Tobacco Enforcement in Delaware. The Division of Revenue works in concert with OMC on tax and licensing obligations and alongside the Division of Weights and Measures and the Division of Public Health when regulatory efforts require input from these fields of expertise.

 

Are Retail Marijuana Tax records subject to inspection during normal business hours?

Yes. The Division of Revenue may examine all Retail Marijuana Tax records, including point of sale records and machinery, at any time during the Division of Revenue’s regular business hours and may review seed-to-sale documentation at any time from Delaware’s mandatory seed-to-sale tracking system. Examinations may occur independently or in conjunction with other regulatory authorities.