Wilmington and New Castle County are advocating for local sales taxes on recreational marijuana as Delaware prepares to launch its cannabis market. Both jurisdictions plan to present resolutions to state lawmakers to approve additional sales taxes on marijuana products sold within their areas.
If implemented, Wilmington could impose a tax of up to 3% on marijuana sales, while New Castle County is considering a higher rate of up to 5%. These local taxes would be in addition to Delaware’s existing 15% state sales tax on marijuana, potentially making Wilmington’s sales tax on cannabis the highest in the region.
The Wilmington City Council is expected to vote next week on a proposal that would allow recreational marijuana businesses to operate primarily in industrial and Riverfront areas. This follows the original timeline for recreational marijuana establishments, which was slated to open in April 2025 but has been delayed due to regulatory holdups.
Local governments have been proactive in establishing regulations regarding where cannabis shops can operate, as state laws permit counties and municipalities to impose restrictions. Approximately one-third of Delaware’s municipalities have already banned marijuana shops entirely. In Wilmington, discussions around these regulations have been contentious, with local leaders expressing concerns about the lack of direct revenue from the cannabis industry.
In 2023, when Delaware legalized recreational marijuana, a 15% state sales tax was introduced, with a portion allocated to the Justice Reinvestment Fund, aimed at addressing the effects of marijuana prohibition. However, local leaders have argued that they should receive direct financial benefits from the new industry.
City Councilman Chris Johnson has proposed the new sales tax resolution, emphasizing that Wilmington should benefit financially from what he describes as a billion-dollar industry. This resolution will be reviewed by the full council on May 1, aiming for approval from state lawmakers by the end of the current legislative session.
New Castle County has joined the push with its own resolution, introduced by County Councilwoman Janet Kilpatrick. She argues that the proposed tax will help offset costs related to public safety and zoning regulations associated with the new industry. The tax could raise additional funds to support resources needed for public safety and community services.
Should both resolutions be approved by state lawmakers, retail marijuana sales in Wilmington and New Castle County could face total tax rates ranging from 18% to 23%. Currently, 59 marijuana business operators have expressed interest in operating in New Castle County, but the tax would only apply to the 14 entities that receive retail licenses.
However, some industry advocates warn that high taxes could drive customers to neighboring states with lower rates and potentially exacerbate the illegal cannabis market. Emily Wilkins, vice president of First State Compassion, a medical marijuana retailer, noted that excessive taxation could harm dispensaries, especially before they even open their doors.
The local government’s decisions on taxing marijuana sales come alongside ongoing discussions about zoning regulations for cannabis establishments. The Wilmington zoning ordinance requires marijuana shops to maintain a distance of at least 300 feet from residential areas and schools, limiting them to specific commercial, manufacturing, and waterfront zones. The intention is to prevent cannabis businesses from encroaching on sensitive locations.
During a recent committee meeting, Johnson stated that the proposed zoning regulations are a balanced approach, reflecting feedback from the community and various stakeholders. This ordinance, along with the sales tax resolution, is set for final votes on May 1.
As Wilmington and New Castle County move forward with their plans, the implications of these taxes and regulations on the local cannabis market will become clearer, particularly as the state grapples with the complexities of integrating a new legal industry.
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