Maryland House Approves Bill To Regulate Marijuana Sales As Senators Hold Hearing On Companion Version

The Maryland House of Delegates on Friday passed a bill to create regulations allowing for adult-use marijuana commerce following voter approval of legalization last year. Meanwhile, the Senate companion version received its first committee hearing on Thursday.

In the House, members approved the legislation from Del. C.T. Wilson (D) in a 103-32 vote, just two days after the chamber advanced it through second reading. The measure now moves to the Senate.

“This is a $1-2 billion industry for Maryland alone. You might not agree with marijuana or the vote that our citizens took, but they took it,” Wilson said on the floor.

The bill to setup Maryland’s legal cannabis sales just passed the House 103-32! I voted green 🌲

Details on HB 556 at https://t.co/UzNlf3cnAr pic.twitter.com/VcWSFFG3sM

— David Moon (@DavidMoon2014) March 10, 2023

“It’s now our obligation to create an adult-use program,” he said, “and it’s our duty to ensure that Marylanders can receive the benefit of ownership in this industry; that citizens can have access to safe and effective cannabis without fear of adverse health effects or violence; that small business can flourish in Maryland under this industry and that communities that were ravaged by the war on drugs are in some small part allowed to finally benefit from marijuana.”

While the House and Senate version were identical upon introduction, the House measure underwent significant amendments in committee prior to being passed by the body.

Senate President Bill Ferguson (D) said during a press conference on Friday ahead of the House vote that he expects that bicameral lawmakers will work to “resolve” differences between the two versions, “potentially” in a conference committee, “sooner than later.”

“We want to get this moving. There’s a lot of pieces to this,” he said. “And I think, you know, there’s no such thing as perfect in legislation. It’s doing the best you can to mitigate any of the potential unintended consequences that we can imagine today.”

The Senate Finance Committee took up that chamber’s version during a meeting on Thursday, with four hours of discussion and roughly 100 witnesses testifying on the proposal.

Witnesses and lawmakers suggested numerous changes touching on issues related to licensing, taxing, equity, on-site consumption facilities, workplace policies, product potency and the incorporation of current medical cannabis businesses into the recreational market, among others.

“The political landscape on this subject of cannabis has shifted pretty dramatically,” Sen. Brian Feldman (D), sponsor of the Senate bill, said. “We’re not out front of the country by any stretch. Instead, we’ve taken a very deliberate, methodical approach since enacting medical cannabis program of ours almost a decade ago.”

“Now our job is to create the regulatory framework to make it work in the best possible way drawing on some of the mistakes, candidly, that were made in terms of our medical cannabis program rollout and lessons learned from other states…that preceded us,” he said.

Here’s what the House-passed HB 556 would accomplish: 

Cannabis would be taxed at six percent for the first fiscal year starting this summer. It would increase by one percent each year until 2028, maxing out at 10 percent. Medical marijuana patients would be exempt from the tax.

Thirty percent of marijuana tax revenue would go toward a community reinvestment fund for at least the next 10 years. The bill further calls for 1.5 percent of revenue to go to localities, 1.5 percent to counties and 1.5 percent each for a Cannabis Public Health Fund and the Cannabis Business Assistance Fund.

The Marijuana Alcohol and Tobacco Commission would be renamed as the Maryland Alcohol, Tobacco and Cannabis Commission, which would be responsible for regulating the program. Under the commission, there would be a Division of Cannabis Regulation and Enforcement that would be tasked with reviewing and issuing marijuana business licenses.

Existing medical cannabis dispensaries would be converted into dual licensees at the same time that legalization takes effect on July 1 if they’ve paid a fee. Regulators would need to start approving additional marijuana business licenses by July 1, 2024.

Social equity applicants would 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 would be created to promote industry opportunities for social equity applicants and provide low-interest loans.

The bill stipulates that $5 million would 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.

Localities could not impose additional taxes, nor could they prohibit existing medical cannabis businesses that convert to dual licenses from operating in their area.

Medical cannabis patients would be able to grow up to four plants for personal use, rather than two under the current law. They would not have to pay taxes on medical marijuana products.

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Because the bills are considered emergency legislation that would take effect immediately, they must be approved with three-fifths of the vote in both chambers to be enacted. The 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.

A spokesperson for Gov. Wes Moore (D) told The Baltimore Banner last month that the governor considers the proposal  “a well-crafted piece of legislation and is looking forward to future collaboration with the legislature.”

We’ve compiled the best legal cannabis practices from other states, learned lessons from medical cannabis and created an equitable implementation framework.

The House passed one of the best models for recreational cannabis in the country. Let’s get it across the finish line. https://t.co/Ih8erOblBq

— Speaker Adrienne A. Jones (@SpeakerAJones) March 10, 2023

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 have 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.

Photo courtesy of Mike Latimer.