Maryland lawmakers have agreed on a final framework for the plan to launch the state’s recreational cannabis industry this summer.
Expected to pass in the General Assembly by Monday’s end-of-session deadline, the bill to create and regulate the new market will allow some recreational cannabis businesses to get up and running before July. Under a broadly supported ballot referendum last year, July 1 was the date that possession of up to 1.5 ounces of cannabis will become legal in the state.
Sales of recreational cannabis products will be taxed at 9%, with large portions of the revenue going toward communities disproportionately affected by the war on drugs.
“This is something that the voters told us they wanted,” Senate Finance Committee Chair Melony Griffith said as her committee passed the amended version of the bill. “It’s taken a lot of work to get to this point, and we all know there’s no perfect bill, but we have a product in front of us that I think is consistent with what the voters communicated in their overwhelming vote.”
Both the Senate committee and its counterpart in the House moved forward with identical versions of the legislation (HB 556 and SB 516) Friday morning after a series of behind-the-scenes meetings led to agreements on a range of sticking points — such as the tax rate and the maximum number of licenses allowed.
Still, the broad strokes of the plan are the same as lawmakers envisioned when they first drafted the bill earlier this year.
Medical cannabis businesses would have the first chance to get a cut of the new industry by converting their licenses into new medical and recreational cannabis licenses before July 1.
A round of new licenses would be available by Jan. 1 specifically for “social equity applicants” — those who have lived in or attended school in an area “disproportionately impacted” by cannabis criminalization. Another round of new licenses would be distributed after May 1, 2024.
The legislation would allow for standard licenses for up to 300 dispensaries, 100 processors and 75 growers. Smaller “micro” operations would be afforded additional licenses for 10 dispensaries, 100 processors and 100 growers.
The number of micro dispensaries — a delivery service with no more than 10 employees that sells cannabis or its products without a physical storefront — was dropped from the originally proposed 200. Lawmakers said they need more time to study different delivery methods. Direct-to-consumer internet sales also will be prohibited until July 2025 under the amended bill.
Other elements on which lawmakers said they compromised include the number of dispensary licenses each business can own, the fees that medical cannabis businesses would have to pay to convert their licenses and the details of future “on-site consumption” licenses.
The on-site consumption licenses will not go into effect until at least May 1, 2024. But concerns over what some have referred to as cannabis “bars” led to some added restrictions, such as prohibiting smoking cannabis inside an establishment, and banning food service businesses like restaurants from getting a license unless more than half their revenue comes from selling baked goods.
The other licensing changes will allow a business to own up to four dispensaries — as opposed to the originally proposed two. Medical cannabis growers and processors would pay 10% of their gross revenue to convert their licenses and medical cannabis dispensaries would pay 8% — with a $100,000 minimum and a $2 million maximum fee for each.
The flat 9% tax rate was also a compromise between the chambers. The House proposed an initial 6% tax rate that would increase by 1% each year until it hit 10%, but the Senate pushed for the flat 9%.
The final version also includes the Senate’s plan to distribute that tax revenue: 35% to the Community Reinvestment and Repair Fund; 5% to a Cannabis Public Health Fund; 5% to a Cannabis Business Assistance Fund; and 5% to county governments, which must distribute half of that money to municipalities from which the sales came. The rest of the tax revenue would go to the state’s general fund.
A new Maryland Cannabis Administration would be created as an independent agency to continue regulating the industry.
The cannabis bills in both chambers still must pass the full House and Senate for final approval. House lawmakers are scheduled to reconvene for a rare Saturday session to consider, and potentially pass legislation in its final form — the cannabis plan and other bills, such as gun control reforms. Both chambers will then meet Monday for the last day of the annual 90-day legislative session.