Quick Market Facts

Laws and Regulations

Official State Website

Regulatory Agency – Maryland Cannabis Administration

Enforcement Division – Alcohol, Tobacco, and Cannabis Commission

State Governor’s Office 

Decriminalized 

Yes. In April 2014, Governor Martin O’Malley decriminalized the possession of ten (10) grams or under of cannabis by signing HB 881 into law.

Medical Market

Yes. In 2003 through the Darrell Putman Compassionate Use Act (HB 702), by Governor Bob Ehrlich. By July 1, 2023, all medical dispensaries were given the option to convert to a dual-use medical/adult-use facility, or to transfer their license. No further medical cannabis business licenses will be granted, moving forward.

Recreational Market

Yes. Maryland voters approved a ballot referendum in the 2022 General Election to allow the use of cannabis by adults 21+ (hence, “adult-use”) starting July 1, 2023. During the 2023 legislative session, the General Assembly passed legislation that provided a framework for implementing legal adult-use sales, including a licensing and taxation framework (see House Bill 556/Senate 516). The Cannabis Reform Act, which took effect immediately upon the Governor’s signature on May 3, 2023, authorized existing licensed dispensaries to convert their licenses for dual medical and adult-use sales by July 1, thereby creating a legal adult-use marketplace as of July 1, 2023. The Act also authorized the Maryland Cannabis Administration to issue additional grower, processor, and dispensary licenses, and new incubator licenses over two licensing rounds. Maryland recreational dispensaries made a total of over $87 million in sales in their first month (July 2023). (Source https://mmcc.maryland.gov/Pages/cannabisfaq.aspx)

Qualifying Conditions 

Qualifying medical conditions included cachexia, anorexia, wasting syndrome, severe or chronic pain, severe nausea, seizures, severe or persistent muscle spasms, glaucoma, post-traumatic stress disorder (PTSD), or another chronic medical condition that is severe and for which other treatments have been ineffective.

Dispensary Approved Products for Sale

Adult consumers may purchase (source MCA Dispensary Guidelines): 

Cannabis vaporizing devices (e.g., vapes)

Home cultivation products – Home cultivation products include clones, seeds, seedlings, stalks, roots, and steams of the cannabis plant. A licensed dispensary may only obtain home cultivation products from a licensed grower.

Usable cannabis products (e.g., flower, pre-rolls)

Edible cannabis products, infused non-edible cannabis products, capsules, and tinctures containing up to 10 mg THC per serving or 100 mg of THC per package. 

Liquid edible products – A new product authorized under the latest regulations for adult consumers are liquid edible products (e.g., beverages). For the purposes of producing a liquid edible product, one single container is a single serving of product, and it may not contain more than 10 mg of THC.

Hemp-derived products – containing more than 0.5 mg THC per serving or 2.5 mg THC per package may only be sold by licensed dispensaries if they have been manufactured, processed, and tested in accordance with MCA regulations. (Note: THC includes any THC isomers or derivatives, including delta-8 and delta-10). These products may only be displayed or offered for sale in the restricted area of a dispensary. Hemp-derived products with less than 0.5 mg THC per serving and 2.5 mg THC per package, as well as certain full spectrum hemp tinctures and hemp-derived products that are not intended for human ingestion or inhalation, such as lotions, balms, salves, or pet CBD products, may still be sold in the public area of a dispensary.

Clones/Seedlings – A dispensary may sell up to two clones or seedlings to any adult who is at least 21 years old and up to four clones or seedlings to any qualifying patient who is at least 21 years old or a registered caregivers.

Current Sales

The journey to a more inclusive and regulated cannabis market began in earnest in 2023. Sales from existing medical businesses that converted to recreational started on July 1, 2023, signaling the advent of a new era, and generating over $87 million in revenue for the existing recreational stores that converted from a medical license to adult use. However, in order to continue operations on and after July 1, 2023, Maryland required existing medical cannabis businesses to convert their medical licenses to the new standard cannabis licenses for dual adult- and medical-use cannabis and pay a conversion fee before the July 1st deadline (Md. Code, Alco. Bev. § 36-401). 

The Maryland Cannabis Authority (MCA) allows for a Conditional Conversion Notice, which is a process involving transfer of ownership requests and is aimed to streamline administrative efforts. If a Conditional Conversion Notice is submitted but the MCA denies the transfer, the original license holder retains the rights to either convert or not convert their license as outlined in the initial notice provided by the MCA (Md. Code, Alco. Bev. § 36-401).

Is Delivery Allowed?

Until June 30, 2024: Standard dispensaries and registered delivery services can deliver cannabis to qualifying patients and registered caregivers.

From July 1, 2024: They cannot operate any delivery service.

Tax Rates

Medical cannabis sales are considered medicine and therefore exempt from state sales tax (COMAR 14.17.04.10). Adult-use cannabis is subject to a 9% sales and use tax, however, most non-cannabis products and accessories such as glass pipes, hemp, and clothing are taxed at the standard 6% rate. In addition, vaping products, electronic smoking devices (aka “batteries”) and tobacco pipes also have different sales tax rates.  Batteries, tobacco pipes, vaping liquid containing cannabis and non-cannabis vaping liquid over 5ml are taxed at 12%, while non-cannabis vaping liquid 5ml or less is taxed at 60% of the taxable price (Md. Code, TG § § 11-104(j-k), Comptroller of Maryland). Additionally, as stated in Md. Code, Alco. Bev. § 36-405, “a political subdivision or special taxing district may not impose a tax on cannabis.” However, a political subdivision may decide how to distribute its allocation of tax revenue (Md. Codes, Alco. Bev. § 36-405 and TG § 2–1302.2).

Maryland Cannabis History

Introduction

Maryland’s journey in the cannabis industry began in 2003 with the Darrell Putman Compassionate Use Act (HB 702) which protected medical cannabis patients and limited fines for possession. In 2011, Senate Bill SB 308 expanded patient protections and specified conditions for medical cannabis use. HB 180  in 2013 extended similar safeguards to caregivers. The formation of the Natalie M. LaPrade Maryland Medical Cannabis Commission (MMCC) in 2013 paved the way for formalized research and regulation. The years 2014 to 2016 saw the establishment of a comprehensive medical cannabis framework, including patient enrollment in research programs and the authorization of additional healthcare professionals. The program became fully functional in 2017, with 2019 showing significant growth. In 2022, HB 837 and SB 833, led to “Question 4,” allowing adult-use cannabis legalization, approved by Maryland voters in November 2022, and effective from July 1, 2023, with provisions for possession, cultivation, expungement, and minority and women-owned businesses.  Emergency Rules  per stipulations in 837/833 were created to govern adult use cultivation, processing, sales, and delivery of recreational cannabis, while also detailing the conversion of the medical industry into dual use facilities.

Early Regulatory Stages (2003-2011)

Maryland’s journey with the cannabis industry commenced in 2003 through the Darrell Putman Compassionate Use Act (HB 702). This foundational act ensured protections for medical cannabis patients, capping the fines at $100 for those holding under an ounce. The 2011 Senate Bill SB 308 augmented these patient protections, specifying medical cannabis use for certain conditions, yet retaining the $100 penalty. HB 180 in 2013 extended similar protections to caregivers.

Formation of Natalie M. LaParade Maryland Medical Cannabis Commission (2013)

In 2013, with the passing of HB 1101, Maryland formalized medical cannabis research, allowing academic institutions to delve into its potential. This led to the creation of the Natalie M. LaPrade Maryland Medical Cannabis Commission (MMCC), now called the Natalie M. LaPrade Maryland Cannabis Administration, responsible for framing regulations around cultivation, usage, and research.

Founding of a Medical Cannabis Framework (2014-2016)

The 2014 Maryland General Assembly initiated a holistic legal structure for the state’s medical cannabis initiatives via HB 881. This not only protected patients, caregivers, and doctors but also marked the beginning of a distribution scheme. Subsequently, 2015’s HB 490 stipulated patients’ enrollment in research programs for cannabis access, as well as standard requirements for research program administrators and healthcare professionals. By 2016, HB 104 extended the list of healthcare professionals authorized to certify eligible patients, encompassing nurse practitioners, dentists, nurse midwives, and podiatrists.

Program Implementation and Expansion (2017-2019)

2017 witnessed Maryland’s medical cannabis program becoming fully functional, marked by the inauguration of the initial dispensaries. Oversight of the program was entrusted to the Natalie M. LaPrade Maryland Medical Cannabis Commission (MMCC). The progress was evident; by 2019, Maryland had 18 sanctioned growers, 85 dispensaries, and a patient registry which surged to over 117,000 by October 2020. 

Broadening Scope: Inclusion of Adult-Use Cannabis (2022-2023)

HB 837/SB 833/Question 4 – 2022

HB 837 and SB 833, endorsed by Sen. Brian Feldman and House Judiciary Chairman Luke Clippinger, paralleled HB 1, directing Maryland’s “Question 4” on legalization to voters. These bills, sanctioned by the Maryland General Assembly in 2022, awaited the approval of Question 4 by the voters. The bills allowed holding up to 1.5 ounces of cannabis and two plants, introduced restricted expungement and release, and allocated funding for minority and women businesses. Maryland voters gave their nod to Question 4 with a 67.2% majority on November 8, 2022. Consequently, possessing and cultivating cannabis became legal from July 1, 2023. 

Summary of HB 837/SB 833

Section 1: Mandates the Maryland Medical Cannabis Commission to research cannabis usage and report by early 2023.

Section 2: Sets up a “Cannabis Assistance Fund” to support small, minority, and women-led businesses in the cannabis sector.

Section 3: Expansion of Decriminalization (Effective from January 1, 2022 to June 30, 2023)

Decriminalization policies experienced substantial updates in this section. The previously established limit, which decriminalized cannabis possession below 10 grams, was revised. The new regulation expanded decriminalization to encompass up to 1.5 ounces, transforming the act of usage and simple possession within this range into a civil offense with a penalty capped at $100. Moreover, the legislation introduced a graduated penalty system. Possession exceeding 1.5 ounces but not surpassing 2.5 ounces was now penalized with a civil fine not exceeding $250.

Section 4: Legalization of Limited Possession, Sharing, and Home Cultivation for Adults (Effective July 1, 2023)

This section marked a groundbreaking shift, granting individuals aged 21 and above the legal right to possess and cultivate specific amounts of cannabis for personal use. The outlined permissible limits included 1.5 ounces of cannabis, or 12 grams of cannabis concentrates, or products infused with no more than 750 milligrams of THC. Beyond these guidelines, penalties were imposed based on the quantity possessed. For instance, holding an amount that exceeds the aforementioned limits but is below 2.5 ounces of cannabis, 20 grams of cannabis concentrates, or products with THC content below 1,250 milligrams results in a civil fine up to $250 or the possibility of community service. Possession significantly above these thresholds could lead to a sentence of up to six months in jail and/or a fine of up to $1,000. The legislation also recognized the need for regulating public consumption, with public smoking of cannabis attracting a civil fine of up to $50 for first-time offenders, which escalates to $150 for repeat violations.

Section 5: Penalties for Specific Offenses and Provisions for Expungement

This section articulated the consequences for certain breaches, such as possession with the intent to distribute (PWID). The prescribed penalty for PWID is a potential three-year imprisonment term and/or a fine amounting to $5,000. However, this penalty could be circumvented if the possessed quantity is 2.5 ounces or less, without additional evidence indicating an intent to distribute. Furthermore, home cultivation exceeding the permissible two plants, as well as potential home manufacturing of cannabis products (like creating cannabis-infused edibles), could result in the same punitive measures. In terms of legal remediation, the section introduced provisions for automatic expungement of records where sole charges of cannabis possession were laid before July 1, 2023. The Department of Public Safety and Correctional Services was mandated to clear these records by July 2024. Additional provisions allowed individuals imprisoned for cannabis possession to request release or resentencing unless they were concurrently or consecutively serving sentences for unrelated offenses. Lastly, the section specified that expungement petitions for possession with intent to distribute could only be submitted four years after the completion of the entire sentence, which includes terms of parole and probation.

Section 6: Details about the Cannabis Public Health Advisory Council’s formation.

Section 7: Calls for a review of previous business disparity studies, emphasizing the role of women and minorities in the industry.

Section 8: MMCC is to examine and offer suggestions on home cultivation for medical use by November 1, 2022.

Section 9: States the conditional execution of Sections 2-6, based on the public’s approval of HB 1.

Cannabis Reform Act – HB 556/SB 516 (2023)

During the 2023 legislative session, Maryland made significant strides in cannabis legislation. The focus was on twin bills, HB 556 sponsored by Delegates CT Wilson and Vanessa Atterbeary, and SB 516 championed by Senators Brian Feldman and Antonio Hayes. These bills paved the way for legalizing and regulating the sale of cannabis in Maryland for adults aged 21 and over. It’s worth noting that simple possession and home cultivation had already been legalized by this time, effective from July 1, 2023 (Md. Code, Criminal Law §§ 5–601.2, 5-602).

The House was quick to act on this initiative. On March 10, 2023, they passed an amended version of HB 556 with a vote tally of 103-32. The Senate approved an amended version of SB 516 on March 31 with a vote of 32-13. Both chambers found common ground and approved harmonized versions of the bills on April 8, 2023. To culminate this legislative journey, Governor Wes Moore affixed his signature on May 4, 2023, turning the bills into law. They also outlined licensing opportunities. Marijuana Policy Project created a condensed summary of the twin bills here.

COMAR 14.17 – Adult Use Rules (July 1, 2023)

On July 1st, 2023, Emergency Rules that govern the new recreational cannabis market in Maryland were approved.

The MCA’s Emergency Regulations were approved by the Joint Committee on Administrative, Executive, and Legislative Review (AELR), and became effective from, July 1st, 2023, with an expiration date of June 30th, 2024, and were subsequently printed in the Maryland Register on July 14, 2023. Aimed at streamlining the implementation of an adult-use cannabis market, and refining and expanding Maryland’s cannabis industry, these regulations establish clear definitions, set personal possession limits, clarify the roles and responsibilities of regulators, and provide details on upcoming licensing protocols. A notable emphasis is placed on catering to social equity applicants in the forthcoming application phase. Moreover, the regulations address enforcement authority, associated penalties, and prescribe requirements for packaging and labeling.

A significant component of this regulatory framework emphasizes the conversion of current medical marijuana licenses into dual-use permits, authorizing them to cultivate, manufacture, and sell both medical and adult-use cannabis, which was required in order for existing cannabis businesses to sustain operations beyond July 1, 2023. This process encompassed conversion fee determinations, name change limitations for licenses, and a five-year ban on the transfer of such converted licenses  (COMAR 14.17.02.03).

Additionally, the Emergency Regulations pave the way for a unified supply chain for all cannabis products cultivated or manufactured within Maryland. They further delineate the licensing processes for new businesses, introduce diverse license categories, and elaborate on procedures ensuring the safe and secure sale and dispensing of cannabis to adults aged 21 and above (COMAR 14.17.05). The scope of these regulations also encompasses permissible activities and associated fees for varied license types, which include standard licenses, micro licenses, incubators, and on-site consumption venues.

Furthermore, the MCA’s Emergency Regulations serve to fortify the state’s existing medical cannabis infrastructure, ensuring a consistent supply for registered caregivers and patients. This reinforcement entails maintaining the best practices previously established in the medical cannabis program, instituting patient-centric services and dedicated product reserves, continuing with the patient and caregiver registry, mandating clinical directors at dispensaries for patient education, and establishing a new license type and policies for home deliveries of medical cannabis products. The rules ensure that medical cannabis dispensaries offer exclusive service to patients either during designated hours or via specialized service lines, and authorize the sale of high-potency products solely to patients and caregivers and exempt these transactions from taxation. 

Starting July 1, 2023, existing medical cannabis businesses that paid the conversion fee will commence adult-use sales, becoming dual-use facilities (COMAR 14.17.02.03).  Adult-use delivery is prohibited, and delivery from medical dispensaries will cease by July 1, 2024, as micro-dispensary license holders will take over that service (COMAR 14.17.07.07). The first licensing round for new applicants is set for review and approval by January 1, 2024, exclusively for social equity applicants. 

By May 1, 2024, the second licensing round will be held after a diversity or disparity study. If evidence suggests business discrimination against firms owned by minorities and women in Maryland’s cannabis industry, the second round will use a lottery system with constitutionally consistent remedial measures, restricting micro-licenses solely to social equity applicants. There’s no specified minimum for licenses to be issued, just a maximum. Future licensing rounds will base decisions on market demand studies, adhering to the bill’s set license caps (Md. Code, Alco. Bev. § 36-404). The MCA will provide a 60-day notice before each application period, accepting applications for a minimum of 30 days thereafter. Only non-profits can operate incubator licenses (COMAR 14.17.05.03).

Several other crucial stipulations within the regulations include the prohibition of transferring a dominant license interest until July 1, 2028 (with specific exceptions), the mandatory MCA pre-approval for all management agreements, a directive for dispensaries to source at least a quarter of their inventory from distinct ownership entities, and the provision for online pre-ordering systems with delineated pick-up and delivery guidelines. As for financial dealings, to qualify as a secured creditor, lending entities must conform to the stipulations within Maryland’s Financial Institutions Article, and all associated agreements necessitate prior MCA approval.

Beyond the basic operational aspects, the MCA has taken a commendable stride towards social equity within the cannabis sphere. These progressive regulations herald the introduction of the Social Equity Partnership Grant Program, offer discounted fees for businesses under the social equity umbrella, and enforce obligatory distribution collaborations between existing cannabis entities and their social equity counterparts (Cannabis Business Times,  JDSupra).

Social Equity and Diversity

Following the law’s enactment, the MCA was mandated to license five growers identified in the Pigford v. Glickman or In Re Black Farmers case. These are Black farmers who experienced discrimination by the USDA regarding farm loans and have yet to receive full compensation for the endured discrimination or its lingering effects. The MCA was required to actively reach out to small, minority, and women business owners potentially interested in cannabis licensing. Furthermore, they had to link potential social equity applicants with the Office of Social Equity. Between the first and second licensing rounds, the state Attorney General will assess the diversity of licenses and consider remedial measures to support minorities and women in the cannabis sector (COMAR 14.17.05.08).

Social equity applicants must fit specific criteria: they either previously held a particular grower or processor license that wasn’t operational as of October 1, 2022, or they must be owned and controlled (at least 65%) by individuals meeting certain residency, education, or disparity study criteria. Out-of-state applicants must provide evidence of meeting these criteria (Md. Code, Alco. Bev., §36–101).

All cannabis businesses need to report the demographics of their ownership and workforce, highlighting minority and women involvement. New applicants are required to present a viable diversity plan, except for converting medical businesses. To support social equity applicants, a Capital Access Program will be established, offering loans with a maximum duration of 10 years and limits up to $500,000 or $1 million based on the business type. Lastly, cannabis licensees are required to present a comprehensive plan detailing their minority business enterprise participation targets for procurement (Md. Code, Alco. Bev. §36–1404).

“Social Equity Partnership” Grants 

Beginning in the fiscal year 2025, the governor will allocate $5 million annually to a grant program designed to foster “meaningful partnerships” in the cannabis industry. Under this “Social Equity Partnership” Grants program, established cannabis businesses, primarily those that transitioned from medical enterprises, will offer mentorship, training, and possibly shared facilities or equipment to social equity licensees. The program’s rules and administration will be overseen by the Office of Social Equity. While this office may allow cannabis licensees to charge social equity licensees some costs or fees, such charges must be significantly below the standard market rate. Operational licenses that engage in partnerships with social equity licenses are eligible for grants from the Office of Social Equity. However, the grant amount each licensee can receive annually is limited to $250,000 for each partnership and cannot surpass the conversion fee they initially paid (Md. Code, Alco. Bev., §1–323).

Office of Social Equity

As the law requires, the ATCC has established an Office of Social Equity. The office’s director, appointed by the governor, is mandated to have at least five years of experience in fields like civil rights advocacy, litigation, or other areas related to social justice, and will be supported with dedicated staff and contractors. The primary responsibilities of this office include promoting active involvement in the cannabis industry by those most adversely affected by the War on Drugs. It will also play a role in the administration of the Community Reinvestment and Repair Fund, even though the allocation of these funds is predetermined based on county residents’ past cannabis possession charges. The office will provide reports detailing how these funds are utilized and gather community input on the same. Furthermore, the Office of Social Equity will identify and challenge any regulations that could potentially inhibit the intended legislative goals, particularly those that set unnecessary restrictions or financial demands. They are also tasked with offering insights on regulations concerning diversity and social equity applications (Md. Code, Alco. Bev. §1-309.1).

Another key role involves collaboration with the MCA to ensure that minority and social equity cannabis business applicants receive free technical assistance. The office will also produce detailed reports on the state of diversity and equity within the cannabis industry, especially in areas of ownership, management, and employment. In addition to these duties, the office will guide businesses in accessing financing through Maryland’s Capital Access Program and work closely with the Department of Commerce to oversee the Cannabis Business Assistance Fund. It’s important to note, however, that the Office of Social Equity doesn’t hold the power to determine the quantity of licenses to be issued in any given licensing round (Md. Code, Alco. Bev. §1-309.1).

Community Reinvestment and Repair Fund

The 2023 Cannabis Reform Act has made slight modifications to the language adopted in 2022 concerning the Community Reinvestment and Repair Fund. Under the revised terms, the Comptroller is tasked with distributing the funds to each county based on the proportion of cannabis-related arrests in that county over the 20.5 years leading up to January 1, 2023, relative to the total cannabis arrests across the state. It’s up to each county to legislate how these funds will be utilized, but they are restricted to administrative costs and community-based projects either aimed at supporting low-income communities or areas identified by the office of social equity as being disproportionately impacted. These designated areas are those that have experienced cannabis possession charges at a rate more than 150% of the state’s decade-long average. Furthermore, fees from dual-use conversions are directed into this fund. Importantly, the fund’s resources cannot be channeled towards law enforcement (Md. Code, Alco. Bev. §1–322). 

Products containing more than 2.5 milligrams of THC per package, or 0.5 grams per serving, can only be sold by licensed cannabis businesses that adhere to regulations regarding packaging, labeling, and testing. However, there’s an exception for hemp-derived tinctures that maintain a 15:1 or greater CBD:THC ratio and contain no more than 2.5 mg of THC (be it delta 8, 9, or 10) per serving, capped at 100 mg per bottle. Sellers of these tinctures are obligated to provide samples for potency and contaminant testing. Furthermore, the sale and distribution of any cannabinoid product not derived from natural biologically active chemical constituents is forbidden (Md. Code, Alco. Bev. §36–1102).