Published May 3, 2023
By Kyle Jaeger
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Maryland’s governor has signed a bill to regulate marijuana sales, setting the stage for statewide legalization.
House and Senate lawmakers reached an agreement on the cannabis legislation last month, sending it to the desk of Gov. Wes Moore (D), who signed it into law on Wednesday.
The governor said at a signing ceremony that the law will “ensure that the rollout of recreational cannabis in our state drives opportunity in an equitable way.”
“The criminalization of marijuana harmed low income communities and communities of color in a profound way,” he said. “We want to make sure that the legalization of marijuana lifts those communities now in a profound way.”
Legislators have worked quickly to get the cannabis regulatory legislation in place before the state’s voter-approved legalization law takes effect in July.
House and Senate bills as introduced earlier this session were identical, but they were amended in certain different ways throughout the committee process as they advanced. Last month, key committees took up the opposite chamber’s measure and approved reprints to align the text. After floor debates and votes on either side of the Capitol, the legislation received final passage.
Some of the most significant differences that were ironed out concern the tax rate for marijuana products and the regulatory body that will be responsible for overseeing the market, both of which were resolved in favor of Senate-passed provisions, but there were also other more modest compromises that got the legislation into final shape.
Here’s an overview of the Maryland marijuana regulation law, passed by lawmakers as SB 516 and HB 556:
Cannabis will be taxed at nine percent. Medical marijuana sales will be exempt from the tax.
Thirty-five percent of marijuana tax revenue will go toward a community reinvestment fund, with counties, a Cannabis Public Health Fund and a Cannabis Business Assistance Fund each getting another five percent. The five percent in revenue that goes to the counties will then be divided up, with 50 percent going to local municipalities based on marijuana sales at retailers based in those jurisdictions.
A new, independent Maryland Cannabis Administration will be responsible for regulating the program.
Existing medical cannabis dispensaries will be converted into dual licensees at the same time that legalization takes effect on July 1 if they’ve paid a fee.
Regulators will need to start approving additional marijuana business licenses by July 1, 2024.
Ultimately, there will be a licensing cap for 300 dispensaries, 100 processors and 75 growers. For smaller microbusinesses there will be a limit of 10 dispensaries, 100 processors and 100 growers.
Social equity applicants will need to have 65 percent ownership by people who have lived in disproportionately impacted areas for at least five of the past 10 years, attended public school in such an area for at least five years or meet other criterial based on a disparity study.
A Capital Access Program will be created under the state Department of Commerce to promote industry opportunities for social equity applicants and provide low-interest loans.
Starting in 2025, $5 million will be appropriated annually for grants to existing medical cannabis dispensaries that form “meaningful partnerships” with social equity applicants that involves mentorship, training and/or shared business space.
The legislation will end sales of delta-8 hemp products on the broad market, instead requiring that any intoxicating cannabis products be done through licensed marijuana businesses.
Localities cannot impose additional taxes, nor could they prohibit existing medical cannabis businesses that convert to dual licenses from operating in their area.
Medical cannabis patients will be able to grow up to four plants for personal use, rather than two under the current law. They will not have to pay taxes on medical marijuana products.
New dispensaries cannot be located within 500 feet of a school, childcare facility, playground, recreational center, library or public park. Dispensaries will have to be separated from one another by at least 1,000 feet.
The conversion fee for existing medical cannabis businesses to become dual licensees will be 10 percent of gross income from growers and processors (with a $2 million cap) and eight percent of gross revenue for dispensaries with the same cap.
Single business entities cannot own more than four dispensaries.
At least 25 percent of shelf space in dispensaries will need to be reserved for cannabis products from social equity licensees.
There will be a 10-license cap on microbusinesses, without language allowing regulators to authorize more in the future.
Smoking will not be permitted indoors at on-site consumption facilities, but people could do so on outdoor patios at licensed facilities.
Dispensaries will be permitted to repackage products.
Regulators will need to create rules for internet marijuana sales by July 2025.
Because the bills were considered emergency legislation that takes effect immediately, they needed to be approved with three-fifths of the vote in both chambers to be enacted. Under the voter-approved referendum, legalization of possession of up to 1.5 ounces of cannabis takes effect on July 1, putting pressure on lawmakers to get regulations in place for commerce.
The bill is partly a product of extensive work from bipartisan and bicameral lawmakers who were part of House Cannabis Referendum and Legalization Workgroup, which was formed in 2021 by Speaker Adrienne Jones (D).
Members held numerous meetings to inform future regulations following Maryland voters’ approval of a legalization referendum during last year’s election, which triggered the implementation of complementary legislation covering rules for basic policies like possession and low-level home cultivation.
In addition to legalizing the purchase and possession of up to 1.5 ounces of cannabis for adults starting this summer, the legislation will also remove criminal penalties for possession of up to 2.5 ounces. Adults 21 and older will be allowed to grow up to two plants for personal use and gift cannabis without remuneration.
Past convictions for conduct made legal under the proposed law will be automatically expunged, and people currently serving time for such offenses will be eligible for resentencing. The legislation makes it so people with convictions for possession with intent to distribute can petition the courts for expungement three years after serving out their time. Parts of the referendum took effect at the beginning of the year. Possession of up to 1.5 ounces of cannabis became a civil offense, punishable by a $100 fine, with a $250 fine in place for more than 1.5 ounces and up to 2.5 ounces.
Adult-use legalization began to advance through Maryland’s legislature in the 2021 session, but no votes were ultimately held. The Senate Finance Committee held a hearing that year on a legalization bill, which followed a House Judiciary Committee hearing on a separate cannabis proposal.
Maryland legalized medical cannabis through an act of the legislature in 2012. Two years later, a decriminalization law took effect that replaced criminal penalties for possession of less than 10 grams of marijuana with a civil fine of $100 to $500.
Meanwhile, Maryland lawmakers recently approved a separate measure to prevent police from using the odor or possession of cannabis alone as the basis of a search.
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