Maryland is inching closer to a plan to set up its adult-use cannabis market, after a few amendments were made to iron out potential issues.

Voters overwhelmingly approved a ballot referendum last year, legalizing possession of up to 1.5 ounces of cannabis for adults, which will become legal July 1. But the state has yet to implement final rules regarding how the market will be regulated.

On Monday, Maryland’s Senate Finance Committee approved their chamber’s version of Senate Bill 516, a bill to establish the state’s adult-use market, with several amendments. The planned administrative body, for instance, will no longer be combined with the state’s alcohol and tobacco regulatory body.

The committee voted to create an independent Maryland Cannabis Administration to regulate the adult-use industry. It would operate separately from the Alcohol and Tobacco Commission. Both the original Senate and House bills proposed including the Cannabis Commission as a division within the already existing Alcohol and Tobacco Commission, but that plan fell through.

Lawmakers also tweaked the tax plan. Instead of implementing a graduated sales tax, starting at 6% and eventually growing to 10% by 2028, growing 1% each year incrementally, the state would implement a flat 9% sales tax once cannabis becomes legal for adults on July 1. 

The Baltimore Sun reports that the bill is moving towards its final steps before it can be sent to the governor.

Lawmakers need to approve the bill before the state’s annual 90-day session ends on April 10. “We need to get something along to the governor,” Senate Finance Committee Chair Melony Griffith said at the committee meeting.

The House version of the bill, House Bill 556, advanced earlier this month, which now awaits a full vote by the Senate.

DCist reports that both the House and Senate versions aim to address the problems associated with the rollout of the state’s medical cannabis industry. Maryland legalized medical cannabis in 2014, but it was hammered with a series of setbacks. When the industry was finally operational, not a single Black-owned business was included in the first round of licenses, even though Black residents make up nearly one-third of the state’s population.

Maryland’s March to Adult Use Cannabis

Voters approved Question 4, or the Marijuana Legalization Amendment, on Nov. 8, 2022. The passage of this initiative amends the Maryland Constitution with Article XX which allows cannabis possession and consumption for adults 21 and older, starting on or after July 1, 2023. The amendment also instructed the Maryland General Assembly to “provide for the use, distribution, possession, regulation, and taxation of cannabis within the state.”

Two companion pieces of legislation to award licenses, regulate the sale of cannabis, and set tax rates were filed Feb. 3 in both Maryland’s House and Senate. Maryland Delegates Vanessa Atterbeary (D-District 13) and C. T. Wilson (D-District 28) sponsored the House bill and Sens. Brian Feldman (D-District 15) and Antonio Hayes (D-District 40) sponsored the Senate version.

An upcoming round of new licenses for growers, processors and distributors would roll out on Jan. 1, 2024 for social equity applicants, defined as those who have lived in or attended school in an area disproportionately impacted by the War on Drugs. Another round of licenses would roll out after May 1, 2024.

The plan would allow for licenses for up to 300 dispensaries, 100 processors, and 75 growers. Smaller micro operations would be afforded additional licenses for 200 dispensaries, 100 processors, and 100 growers.

Now, the Senate’s version of the bill will move to the Budget and Taxation Committee, before reaching the full Senate for a vote.

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Right on schedule, two companion bills to regulate adult-use cannabis sales by July 1 were unveiled in Maryland. Two pieces of legislation to award licenses, regulate the sale of cannabis, and set tax rates were filed Friday in both Maryland’s House and Senate.

WBAL-11 TV reports that the 120-page House Bill 556 and its companion bill that was cross-filed in the Senate, Senate Bill 556, were unveiled Friday. Maryland Delegates Vanessa Atterbeary (D-District 13) and C. T. Wilson (D-District 28) sponsored the House bill and Sens. Brian Feldman (D-District 15) and Antonio Hayes (D-District 40) sponsored the Senate version.

The bills would implement a phased-in style tax structure that begins at 6%, and is capped at 10%. The tax rate would increase by 1% each year incrementally, finally to be capped at 10%. 

Thirty percent of tax revenue would be allocated toward a community reinvestment fund for 10 or more years. It would also allocate 1.5% of tax revenue to go to local jurisdictions and 1.5% towards Cannabis Public Health Fund and the Cannabis Business Assistance Fund each.

Not Falling Into the Same Traps as Other States

Lawmakers in Maryland said they want to avoid problems seen in adult-use cannabis markets in other states—particularly New York.

“We have to have it ready, otherwise we will have New York’s problem, which is a huge illicit market. Once they lock their heels in, it’s hard to move around,” said Wilson.

The July 1 date of sales would align with the original date set under Question 4. Lawmakers said they were confident that the sale of adult-use will begin July 1 in Maryland, as per the constitutional amendment approved by a large majority of voters.

Wilson reiterated the reasoning behind legalizing pot in Maryland—which goes well beyond simply recreational purposes.

“The goal … wasn’t to get Marylanders high,” Wilson said. “It was to take cannabis out of the criminal street of commerce, take young Black men from being arrested and dying.”

He continued, saying the legislation would “create a more business-friendly space for African Americans and minorities to participate, that’s the overarching goal of the bill.”

Some lawmakers expressed concerns over potential problems that could arise.

“The bill focuses on a very simple taxing structure. We are not permitting a piggyback tax by the local (jurisdictions), so I hope they don’t think they are about to suck in a whole lot of money from this,” said House Ways and Means Committee Chairwoman Vanessa Atterbeary, (D-District 13).

The Road to Adult-Use Sales in Maryland

Voters approved Question 4, or the Marijuana Legalization Amendment, on Nov. 8. The passage of this initiative amends the Maryland Constitution with Article XX which allows cannabis possession and consumption for adults 21 and older, starting on or after July 1, 2023. The amendment also instructed the Maryland General Assembly to “provide for the use, distribution, possession, regulation, and taxation of cannabis within the state.”

Question 4 legalized the possession of cannabis up to 1.5 ounces of flower and 10 grams of concentrate, which was immediately decriminalized after Jan. 1, 2023, and will become legal on July 1, 2023. The bill permits residents to grow two cannabis plants at home, and immediately expunges anyone with cannabis convictions on their record.

Maryland Gov. Wes Moore said weeks ago that he wants to avoid long, drawn-out rollout to the state’s voter-approved law. 

“People of the state overwhelmingly chose to decriminalize cannabis. So we as a state now have an obligation to make sure that the will of the people is both heard, but that we do have a swift and equitable rollout,” Moore told Politico last month.

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