Delaware HB 98 (2025): CBDT Framework Analysis

Hemp-Derived THC Regulation (Withdrawn)

The Silent Majority 420 | November 2025

Analysis using the Consumer-Driven Black Market Displacement (CBDT) Framework. View validation data on Harvard Dataverse. Stay up to date with the Cannabis Legislation Tracker.

Bill Summary

Bill: HB 98 State: Delaware Status: Withdrawn June 2025 (passed committee, pulled before floor vote) Sponsor: Rep. Debra Heffernan (D-Bellefonte) Expected return: 2026 legislative session

What it would have done: HB 98 aimed to close Delaware's hemp loophole by restricting sale of intoxicating hemp-derived THC products. The bill went through multiple iterations:

Original version (May 2025):

• Restricted consumable hemp products (edibles, gummies, tinctures, smokable flower) to licensed marijuana dispensaries only
• Routed THC-infused beverages through Delaware's three-tier alcohol system (package stores only)
• Banned direct-to-consumer hemp THC sales
• Required testing through State Public Health Lab or authorized cannabis testing facilities
• Added $1.00 tax per 12-ounce container

Substitute version (June 2025):

• Split into two bills—beverages only in 2025, edibles deferred to 2026
• Reduced container tax to $0.50
• Limited THC content to 10mg per container
• Maintained three-tier alcohol distribution requirement
• Prohibited bars, restaurants, and microbreweries from serving THC drinks on-premises

Why it was withdrawn: Opposition from three directions:

1. Hemp/CBD retailers argued the bill would "put us out of business" by eliminating their primary product category
2. Consumer advocates feared the bill would inadvertently ban non-intoxicating CBD products
3. Time constraints prevented adequate stakeholder consensus before session end

Rep. Heffernan committed to bringing revised legislation in 2026 after additional stakeholder discussions with Marijuana Commissioner Joshua Sanderlin.

The Hemp Loophole Problem

The 2018 federal Farm Bill created unintended consequences by defining "hemp" as cannabis containing ≤0.3% THC by dry weight. Entrepreneurs discovered methods to chemically convert non-intoxicating CBD into intoxicating delta-8, delta-9, and delta-10 THC—products that are functionally identical to marijuana but legally classified as "hemp."

Delaware's current situation:

• Hemp-derived THC products available at gas stations, smoke shops, convenience stores, CBD retailers, bars, and restaurants
• No age verification requirements (products accessible to minors)
• No testing requirements (unknown potency, potential contaminants)
• No labeling standards (inconsistent dosing information)
• No state oversight or licensing

Scale of the problem:

• 300+ cannabis-related emergency room visits in Delaware in 2024
• School resource officers report confiscating hemp THC products "almost every day"
• Products sold at prices significantly below licensed dispensary pricing
• Delaware Division of Alcohol and Tobacco Enforcement monitoring but lacks clear regulatory authority

Impact on legal market: Every hemp THC sale at a gas station is a transaction the legal dispensary system doesn't capture. When a consumer can purchase a 10mg THC gummy at a convenience store for $3–5 without age verification, they have no incentive to drive to a dispensary and pay $8–12 for a tested, regulated equivalent.

CBDT Variable Analysis

The CBDT Framework evaluates cannabis policy through five weighted variables. HB 98 would have affected three:

Price Competitiveness (4.0× weight): +0.10 to +0.15

Mechanism: HB 98 wouldn't lower dispensary prices, but it would eliminate the low-cost unregulated competitor.

Currently, Delaware consumers face this choice:

• Licensed dispensary: $8–12 per 10mg edible, tested, regulated, 15% tax
• Gas station hemp product: $3–5 per claimed 10mg, untested, unregulated, no cannabis tax

By restricting hemp THC products to dispensaries (edibles) and package stores (beverages), HB 98 would have forced consumers choosing intoxicating products into regulated channels. The relative price disadvantage of legal cannabis decreases when the cheap unregulated alternative disappears.

Framework interpretation: The CBDT Price variable measures legal market competitiveness against all alternatives—including quasi-legal hemp products. Removing the hemp loophole effectively improves legal market price positioning without changing actual dispensary prices.

Product Safety (1.2× weight): +0.10 to +0.15

Mechanism: HB 98 mandated testing through State Public Health Lab or authorized cannabis testing facilities.

Current hemp products carry significant safety concerns:

• No potency verification (products may contain more or less THC than labeled)
• No contaminant screening (pesticides, heavy metals, residual solvents)
• No manufacturing standards (inconsistent production quality)
• No packaging requirements (child-resistant containers not mandated)

By requiring dispensary-grade testing, HB 98 would have aligned hemp product safety with existing marijuana regulations. Consumers would gain confidence that labeled dosing is accurate and products are free from harmful contaminants.

Framework interpretation: The Safety variable captures consumer trust in legal product quality. When untested alternatives exist, safety-conscious consumers may still choose legal channels, but casual consumers may not perceive the difference. Eliminating untested alternatives strengthens the safety value proposition of the legal market.

Enforcement (0.6× weight): +0.15 to +0.20

Mechanism: HB 98 created clear regulatory authority and distribution channels.

Currently, Delaware's enforcement posture toward hemp THC is ambiguous:

• Division of Alcohol and Tobacco Enforcement monitors but lacks explicit statutory authority
• No licensing requirement for hemp THC retailers
• No penalties for selling to minors (beyond general retail laws)
• No product registration or track-and-trace

HB 98 would have established:

• Clear regulatory jurisdiction (OMC for edibles, Alcohol Beverage Control for drinks)
• Licensed distribution channels (three-tier system for beverages)
• Age verification requirements (21+)
• Product registration and testing mandates
• Enforcement mechanisms with defined penalties

Framework interpretation: The Enforcement variable measures regulatory capacity to address illicit competition. HB 98 would have transformed hemp THC from a regulatory gray zone into a defined enforcement target. Products outside licensed channels become clearly illegal rather than ambiguously tolerated.

Quantified Market Share Impact

If HB 98 Had Passed

Projected CBDT score improvement: +0.35 to +0.50

Calculation:

• Price: +0.10 to +0.15 × 4.0 weight = +0.40 to +0.60
• Safety: +0.10 to +0.15 × 1.2 weight = +0.12 to +0.18
• Enforcement: +0.15 to +0.20 × 0.6 weight = +0.09 to +0.12
• Total weighted impact: +0.61 to +0.90

Predicted market share improvement: +3 to +5 percentage points

Delaware's current 45–50% legal share could have improved to 48–55% with HB 98 implementation—not through dispensary optimization, but through elimination of quasi-legal competition.

Without HB 98 (Current Status)

Delaware's hemp loophole remains open. Licensed dispensaries compete against:

• Unregulated hemp products at convenience stores
• Untested products at smoke shops
• THC beverages at bars and restaurants
• Online direct-to-consumer sales

This competition suppresses legal market share and undermines the revenue projections that justified Delaware's regulatory infrastructure investments.

Comparison: Delaware HB 98 vs. Connecticut HB 7181

Both bills address the hemp loophole, but through different mechanisms:

Connecticut's advantage: HB 7181 creates financial incentives for municipal enforcement. Local police receive 35% of violation revenue, generating 2.67× return on enforcement investment. This aligns local government interests with state cannabis policy.

Delaware's gap: HB 98 created regulatory channels but provided no enforcement incentive structure. Without municipal revenue sharing, local police have no financial motivation to prioritize hemp THC violations over other enforcement priorities.

Lesson for 2026: Delaware's revised bill should incorporate enforcement economics, not just channel restrictions. Regulatory authority without enforcement incentives produces paper compliance, not market transformation.

Stakeholder Analysis

Winners (if HB 98 passed)

Licensed marijuana dispensaries: Elimination of unregulated competition improves market position without requiring price reductions.

Package stores (beverages only): THC beverages projected to generate up to 20% of liquor store revenue, offsetting declining alcohol sales.

Consumers (safety): Tested products with accurate labeling and age verification.

State revenue: Products currently sold tax-free would generate 15% cannabis tax (edibles) or $0.50/container (beverages).

Losers (if HB 98 passed)

Hemp/CBD retailers: Core product category eliminated. As one retailer stated: "The bill would take all of the products off their shelves and force them to close their businesses."

Bars and restaurants: On-premises THC beverage service prohibited under substitute bill.

Convenience stores/gas stations: Loss of hemp THC product sales.

Consumers (access): Fewer retail locations selling THC products; higher prices at licensed outlets.

Political dynamics

The withdrawal reveals Delaware's challenge: hemp retailers organized effective opposition while licensed dispensaries (not yet operational in August 2025) couldn't mobilize equivalent support. The U.S. Hemp Roundtable's email campaign to lawmakers demonstrated industry coordination that marijuana interests lacked.

Policy Implications

What Delaware Should Do in 2026

1. Incorporate enforcement economics

Following Connecticut's model, Delaware should include municipal revenue sharing from hemp THC enforcement. Suggested structure:

• 35% of violation revenue to enforcing municipality
• 35% to state general fund
• 30% to cannabis regulatory operations

This creates local government buy-in and sustainable enforcement capacity.

2. Phase implementation

Rather than immediate prohibition, consider:

• 6-month registration period for existing hemp retailers
• Pathway for compliant retailers to obtain limited cannabis licenses
• Grandfather clause for retailers meeting testing and age verification standards

This reduces opposition intensity while achieving regulatory goals.

3. Separate CBD from THC

Consumer confusion about CBD vs. intoxicating THC undermined HB 98. The 2026 bill should:

• Explicitly exempt non-intoxicating CBD products
• Define "intoxicating hemp product" by THC content threshold (e.g., >0.5mg THC per serving)
• Maintain broad CBD retail availability while restricting only intoxicating products

4. Coordinate with Marijuana Commissioner

Commissioner Sanderlin stated hemp regulation is his "primary goal regarding the illicit market." The 2026 bill should reflect OMC input and ensure regulatory capacity exists before implementation deadlines.

For Other States

Delaware's HB 98 withdrawal illustrates common challenges:

1. Hemp industry opposition is organized and effective — the U.S. Hemp Roundtable mobilized constituents rapidly
2. Channel restrictions without enforcement incentives produce political opposition without regulatory results
3. Timing matters — Delaware attempted hemp regulation before dispensaries opened, limiting pro-regulation industry voices
4. Stakeholder consensus requires time — rushing legislation invites withdrawal

States considering hemp loophole closure should:

• Build coalition with operational licensed cannabis retailers
• Include enforcement economics that align local government interests
• Allow adequate stakeholder input time
• Clearly exempt non-intoxicating CBD products

Conclusion

HB 98 represented Delaware's first serious attempt to address the hemp loophole that undermines legal cannabis markets nationwide. Its withdrawal doesn't indicate policy failure—it reflects insufficient stakeholder consensus and political timing.

CBDT assessment: Had HB 98 passed, Delaware could have gained 3–5 percentage points of legal market share by eliminating unregulated competition. The bill's withdrawal means Delaware's legal market continues competing against quasi-legal hemp products sold at lower prices without testing or age verification.

2026 outlook: Rep. Heffernan's commitment to revised legislation, combined with Commissioner Sanderlin's stated hemp regulation priority, suggests Delaware will revisit this issue. Success requires:

• Enforcement incentive structure (Connecticut model)
• Explicit CBD exemption
• Stakeholder coalition building
• Realistic implementation timeline

The hemp loophole represents one of the most significant structural barriers to legal cannabis market optimization nationwide. Delaware's 2026 attempt will be worth watching—not just for Delaware, but as a model for the 20+ states facing identical challenges.

For methodology details, see How the Black Market Death Equation Predicts Cannabis Success. For state-specific analysis, see Delaware Cannabis Market Analysis. For comparison, see Connecticut HB 7181 CBDT Analysis.