Cannabis Business in Maryland

As of January 2024, Maryland has over 138,000 registered medical marijuana patients, according to the Maryland Cannabis Administration (MCA).

In 2023, Maryland's cannabis industry recorded a total of approximately $96.5 million in sales:

• Adult-Use Marijuana Sales: $61.5 million
• Medical Cannabis Sales: Nearly $35 million

The Comptroller of Maryland reported $14.56 million in tax revenue from cannabis sales in the last quarter of 2023.

Overview of the Cannabis Industry in Maryland

The cannabis industry in Maryland is made up of businesses that cultivate, process, and dispense cannabis for medical and adult use. This article will give a general overview of the industry in the state.

Cannabis License Types

• Standard Cannabis Licenses: These licenses authorize businesses to grow, process, or dispense cannabis for both medical and adult use. They are valid for five years. Examples include Standard Dispensary, Standard Grower, and Standard Processor.
• Micro Licenses: These are a smaller-scale version of standard licenses. Types of micro licenses include Micro Grower, Micro Processor, Micro Dispensary, Incubator Space, and On-Site Consumption.
• Medical Cannabis Licenses: Before the legalization of recreational cannabis, businesses operated under medical cannabis licenses. They could convert to standard cannabis licenses by July 1, 2023, to participate in the adult-use market.
• Hemp Licenses: The Maryland Department of Agriculture issues licenses for the cultivation of hemp through the Maryland Hemp Farming Program. Hemp processors and dispensaries can also obtain hemp from sources outside the state-regulated system if the source is properly licensed.
• Ancillary Business Registration: Businesses that support licensed cannabis operations, such as Security Guard Agencies, Secure Transportation Companies, and Waste Disposal Companies, need to register with the Maryland Cannabis Administration.

Ownership and Licensing in the Maryland Cannabis Industry

Medical Cannabis Ownership

With the legalization of recreational marijuana in Maryland, existing medical cannabis businesses had to adapt to a changing landscape. The Cannabis Reform Act (CRA), which went into effect on July 1, 2023, required existing medical cannabis businesses to either convert their licenses to include adult-use sales or sell their cannabis business. Due to the uncertainty of the market and the restriction on selling a newly converted license for at least 5 years, many chose to sell their business. Many of these cannabis businesses for sale were owned by women and minorities. Before the transition to adult-use legalization, the percentage of cannabis businesses owned by women or minorities was as follows:

Social Equity Licensing

The CRA also created the Maryland Cannabis Administration. In late 2023, the MCA held an application round exclusively for Social Equity Applicants. The CRA defines a Social Equity Applicant as someone who has lived for at least 5 of the past 10 years in a disproportionately impacted area, attended public school in such an area for at least 5 years, or attended a qualifying higher education institution in Maryland for at least two years.

Additionally, the applicant must have at least 65% ownership and control of the business. This program was created to increase the participation of groups that were disproportionately impacted by cannabis prohibition. Out of 1,700 applications received by the MCA for 179 licenses, nearly 85% self-reported as women- or minority-owned firms.

The following table highlights the participation of women and minorities during the Social Equity Applicant licensing round, showing the percentage of applications self-reported as women- or minority-owned across various license types.

Regulations and Oversight

The Maryland Office of the Comptroller is responsible for the collection of a 9% sales and use tax on recreational cannabis sales. The revenue collected is distributed to various state funds including the Community Reinvestment and Repair Fund and the Cannabis Business Assistance Fund.

The Maryland Department of Agriculture oversees the Maryland Hemp Farming Program which issues licenses for the cultivation of hemp. Licensed hemp growers must adhere to strict testing requirements to ensure that THC levels remain within the legal limit of 0.3%. Processors and dispensaries may use hemp from outside sources as long as they are licensed by the Maryland Department of Agriculture, the US Department of Agriculture, or another approved state agency. The MCA oversees the production and sale of all cannabis products, including medical marijuana and hemp-derived CBD. The sale of CBD in food or dietary supplements is prohibited in Maryland.