Maryland lawmakers draft bills to regulate sale, tax recreational-use cannabis

Lawmakers filed a bill Friday to establish a regulatory framework for Maryland’s nascent adult-use recreational cannabis industry, as Marylanders count down the clock toward legalization this summer.

The bill would set up a system to tax sales and provide funding mechanisms for communities disproportionately affected by the war on drugs.


The state would tax cannabis sales to consumers at 6% for the fiscal year starting July 1. That’s when possession of up to 1.5 ounces becomes legal in Maryland. The rate would increase by 1% each year to a maximum of 10% in 2028. Medical cannabis would not be subject to the sales tax.

“One of the lessons we’ve learned is that if you overtax marijuana, people are less likely to buy it from a regulated source,” House Ways and Means Chair Vanessa Atterbeary, a Howard County Democrat, said in a statement. “The low tax rate will help discourage an illicit market while still helping fund support for social equity applicants and traditionally disenfranchised communities.”


Atterbeary and Economic Matters Chair C.T. Wilson, a Democrat from Charles County, are sponsoring the bill in the House. Democratic Sen. Antonio Hayes of Baltimore and Sen. Brian Feldman, a Montgomery County Democrat, are sponsoring the Senate’s identical version.

Revenue generated by the tax would mostly go to the state’s general fund. But 30% would go to a new Community Reinvestment and Repair Fund for at least the next decade. The fund was created last year to direct money to “community-based organizations” in areas determined by the attorney general as “the most impacted by disproportionate enforcement” of cannabis laws before legalization.

“We knew Maryland needed to modernize its cannabis policies, and we knew we had to get it right,” House Speaker Adrienne A. Jones said in a statement. “Part of getting it right meant making the new industry equitable, while meeting that July 1st deadline. We managed to do both and developed a robust bill that will level the playing field for historically disenfranchised communities.”

A smaller percentage of the tax revenue, 1.5%, would go to counties and municipalities. Maryland’s 24 jurisdictions would receive money from the fund proportional to the number of residents charged with cannabis-related crimes between July 1, 2002, and Jan. 1, 2023, in comparison to the total number of people charged.

Two entities created last year, the Cannabis Public Health Fund and the Cannabis Business Assistance Fund, also would each get 1.5%.

Maryland will join 20 states and the District of Columbia in permitting recreational use by adults, which voters approved in a referendum in November. Virginia legalized it in 2021, but Maryland’s other neighboring states have not.

Cannabis in the state would be regulated by the Maryland Alcohol and Tobacco Commission — which would be renamed the Maryland Alcohol, Tobacco and Cannabis Commission — in the office of the state comptroller.

The legislation would establish the Office of Social Equity under the commission. The office’s mission would be to encourage communities harmed by past enforcement of cannabis laws to participate in the industry and offer recommendations and technical assistance for diversity and social equity applications.


“It’s a $2 billion industry coming to the state of Maryland and I’d like to make sure African Americans have a chance to participate,” Wilson said in an interview Friday.

Democratic Gov. Wes Moore would be charged with appointing the office’s executive director. His appointee would have to have at least five years of experience working in civil rights advocacy, litigation or “social justice.”

The governor is a former board member of a cannabis company, Green Thumb Industries, and has said he worked there to diversify “the board and the industry as a whole.” He has said repeatedly that equity should be a focus when developing the recreational cannabis industry, including making sure communities disproportionately affected by the drug’s criminalization benefit from the new market.

Moore spokesman Carter Elliott said Friday that the governor “recognizes this bill as a well-crafted piece of legislation and is looking forward to future collaboration” with lawmakers. He said Moore is “committed to legalizing cannabis, expunging the records of anyone convicted of simple possession, and investing in this emerging industry while prioritizing equitable access to all Marylanders.”

The Office of Social Equity also would consult with the comptroller and the Maryland Department of Commerce on how to allocate money through the Community Reinvestment and Repair Fund and the Cannabis Business Assistance Fund. The office would be required to seek annual public input regarding the distribution of the Community Reinvestment and Repair Fund.

The focus on equity also was apparent in how lawmakers proposed distributing licenses among people interested in growing, processing or selling recreational cannabis.


While there are several types of licenses, the bill would allow for standard licenses for up to 300 dispensaries, 100 processors and 75 growers. Smaller — or micro — operations would be afforded additional licenses for 200 dispensaries, 100 processors and 100 growers. This would include current medical licensees that may apply to convert to a combined medical and recreational license.

For instance, the first round of new licenses would be limited to “social equity applicants.” Applicants would meet that definition if, for example, they lived in or went to public school in a “disproportionally impacted area” as defined by the Office of Social Equity.

According to the Maryland Medical Cannabis Commission website, there are approximately 100 licensed medical cannabis dispensaries, 20 processors and 20 growers. License holders in the current medical cannabis industry would be able to convert their licenses into combined medical and recreational licenses. Fees for doing so will range from $100,000 to $2.5 million, depending on the licensee’s gross revenue in 2022.

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The conversion of medical licenses would begin before July 1, while the first round of new licenses would begin being issued “on or before” Jan. 1.

The bill also seeks to regulate advertising for cannabis. If enacted, any ads could not feature cartoons, mascots or other illustrations that attract the attention of children nor show anyone consuming cannabis. They could only appear in print publications and on TV channels, radio stations, websites and apps that have a majority-adult audience. Also, cannabis retailers would be prohibited from advertising on “publicly visible” locations, including billboards.

If sellers have retail websites, they must require visitors to state that they are 21 or older.


Senate President Bill Ferguson, a Baltimore Democrat, said Friday he believes lawmakers crafted a “very intentional, thoughtful framework” that “has the possibility of being a national model.”

Ferguson said even though both chambers introduced identical legislation, the House and Senate likely will have differences of opinion on some provisions as the legislative process continues in the coming months.

Lawmakers have until mid-April to pass a final version of the regulatory bill before their annual 90-day legislative session ends and recreational cannabis becomes legal July 1.

“What I do believe we’ve done effectively here is put us on the best path possible,” Ferguson said.