Maryland Senators Approve Marijuana Sales Bill As State Prepares For Legalization This Summer

A Maryland Senate committee has amended and approved a marijuana sales bill to get the state ready for the implementation of a voter-approved legalization referendum, sending it to the floor—where a vote is expected this week.

At a meeting of the Senate Finance Committee, members passed the legislation from Sens. Brian Feldman (D) and Antonio Hayes (D) in a 7-2 vote.

Senate President Bill Ferguson (D) said last week that there were a number of issues that lawmakers needed to address before advancing the measure, including input from existing hemp businesses who’ve expressed concern about possible ramifications of the measure as introduced.

The top senator said that “a lot of legislators are struggling with it right now,” describing it as a “tough issue” that will be addressed as the bill moves.

The House of Delegates already approved its companion version this month. The bills were identical when introduced, but the House and Senate bills have now been amended in different ways.

The Senate panel adopted a large-scale amendment that largely aligns the legislation with the House version. That includes approving numerous technical revisions, setting the sales tax on cannabis at a consist nine percent rate, changing polices on the structure of the advisory commission and amending definitions related to delta-8 THC that could impact the state’s existing hemp industry. The definition of a social equity applicant was also changed to mirror the House legislation.

Members adopted additional revisions that differ from the House bill, for example to require a process for verifying ID for cannabis consumers at retailers and prohibiting on-site consumption of combustable cannabis products.

The committee defeated several GOP-led revisions that deal with issues related to labor peace agreements, requiring cannabis processors to be awarded microgrower licenses and giving existing hemp businesses more time to either close shop or apply for a marijuana business license.

“We have a date by which we’re supposed to stand up this program,” Sen. Melony Griffith (D), the chair of the Finance Committee, said at the meeting, referring to the July 1 start date for legalization.

“There has been a lot of work from each of the members on this committee and many of our colleagues in the Senate,” she said. “Many stakeholders have provided input. Some have been working in partnership with our colleagues in the House. Our staff has put in a lot of time and a lot of hours hearing from each of us about little modifications—some little, some big—that we would like to see to this bill.”

Prior to the House vote on its version of the regulations bill this month, the Senate president said 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.”

Here’s what the SB 516 as amended would accomplish: 

Cannabis would be taxed at nine 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 under the state Department of Commerce 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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The House version was amended in several ways before being approved on the floor. For example, it was revised to allocate 1.5 percent of cannabis tax revenue to counties and a requirement was removed stipulating that the head of the regulatory commission needed to be a member of law enforcement.

Also, the House panel adopted an amendment that eliminates a 200 license cap for delivery services, with members determining that the category would be covered under the separate micro-dispensary licenses.

Members also revised the legislation’s definition of a social equity applicant, clarifying that a disproportionately impacted area is one that has experienced more than 150 percent the state’s average cannabis possession charge rate over the past 10 years. Also, social equity applicant eligibility was changed to include those who attended for at least two years either an HBCU or one of certain other institutions of higher learning in the state.

The measure was further amended to prohibit localities from imposing licensing, operating or other fees or requirements that are greater or more burdensome than businesses “with a similar impact on the area.”

The House bill was also revised to include language allowing both adults and medical patients to purchase plants and other cultivation supplies through the licensed market.

Finally, the chamber’s version now says that existing medical marijuana businesses have the option to either convert to a dual-market retailer, selling products to both adults and medical patients, or sell their license to another operator.

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 that the governor considers the proposal “a well-crafted piece of legislation and is looking forward to future collaboration with the legislature.”

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.

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Photo courtesy of Martin Alonso.