Maryland lawmakers approve rules for legal cannabis market

A bill that would launch the legal sale of recreational cannabis in Maryland this summer will head to Gov. Wes Moore’s desk after months of wrangling over how to tax the product, set up the market and who should profit.

With just one workday before adjourning on Monday at midnight, lawmakers passed House and Senate measures with relative ease, having hammered out critical points earlier after members of both chambers spent much of last year studying the pitfalls other states experienced standing up their legal markets. Legislators also drew from Maryland’s own botched rollout of its medical cannabis industry.

“We’ve been talking with our counterparts in other states saying, ‘If you had to do it all over again what would you do differently? What did you wish you had known when you set up your program?’” Senate Finance Chairwoman Melony Griffith (D-Prince George’s) said during a news conference. “We have great expertise here in Maryland, with our medicinal cannabis program, and have had tremendous success. So all of those ingredients, if you will, have been rolled into our cannabis framework.”

“Did you get that?” Griffith said, smiling at her play on words.

Maryland studied how much marijuana adults consume. It’s a lot.

The 108-page proposal headed to Moore establishes a framework allowing medical cannabis businesses to initially stand up the market; sets the sales tax at 9 percent, similar to the rate charged for alcohol but lower than what other states settled on and provides the lion’s share of the state’s profits to communities most harmed by the war on drugs.

Moore (D), who supported the legalization of recreational cannabis, will probably sign the bill.

Senate President Bill Ferguson (D-Baltimore City) said last week that every effort was being taken “to the degree feasible” to avoid the possibility of a legal challenge. “We can’t prevent [it] entirely but we can mitigate the possibilities because we want to see a functional marketplace in July,” he said.

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Lawyers and lawmakers were paying close attention to the license conversion fees required of medical cannabis owners, which run from $100,000 to $2 million based on a business’ 2022 sales; the number of licenses an entity could own; and the terms for what the state calls “social equity applicants,” who are eligible to obtain licenses when the second round is awarded in January.

Since 2012, when Colorado and Washington passed ballot measures to legalize marijuana, 19 other states and the District have taken similar steps. Some, such as Virginia, have left buyers and sellers operating in a gray area with no legal market in place. And none, according to Maryland lawmakers, has appropriately addressed the impact on minority communities from the war on drugs — a decades-old government-led campaign to reduce illegal drug use that led to the mass incarceration of Black people.

In addition to settling on a 9 percent sales tax, lawmakers agreed to provide 35 percent of the state’s revenue to the Community Reinvestment and Repair Fund, a new fund for local organizations that serve communities disproportionately affected by the war on drugs. The Office of Social Equity would create the guidelines for identifying those communities.

Five percent — up from 1.5 percent in the original bill — would be given to local counties. During floor debates, attempts were made to permit others — including emergency medical services and public education — to reap some of the proceeds.

Legislative analysts estimate that the state would bring in about $13 million in fiscal 2023. State coffers are expected to experience a dip in net proceeds as the state builds up the Maryland Cannabis Administration and the Office of Social Equity, which will play a role in the operation of the program, then see an estimated $67 million by fiscal 2027.

Sen. Mary Beth Carozza (R-Worcester) said she worried about local jurisdictions like Ocean City that will be unable to impose more stringent requirements and penalties than the ones set by the state.

“It’s not an unintended consequence, it’s a predictable one,” she said.

Del. Wayne A. Hartman (R-Worcester) offered an unsuccessful amendment to increase from 500 feet to one mile the minimum distance that a dispensary could operate from a school, playground, library or public park. It also must be at least 1,000 feet from another dispensary. He also suggested limiting operations near a school, day-care center, recreational center, playground, public park or library.

“So, we couldn’t put a dispensary anywhere in Ocean City because there’s nowhere that spans a mile between any of these things?” said House Economic Matters Chairman C.T. Wilson (D-Charles), defending the bill on the floor Saturday.

Hartman responded: “I can’t tell you I’m heartbroken by that.”

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Wilson told Hartman that some of his constituents might be because “we’re doing their bidding,” noting that lawmakers created the framework in response to voters who overwhelmingly approved a November 2022 referendum asking them if recreational cannabis should be legal for adults 21 and over.

“They asked us to do this,” he said. “They asked us to do this in a fair and equitable way. They asked us to make sure we didn’t stick them all in one place and to make sure that anybody who wanted to buy does have access.”

During the debate in the Senate late Friday night, Griffith said she expects the legislature to revisit statutes dealing with cannabis, much like the work it does to the state’s alcohol laws.

Last year, the General Assembly passed legislation that allows people who were arrested for marijuana possession to have their records expunged and others serving time for simple possession to get their sentences reconsidered.

The bill, which allows adults to possess up to 1.5 ounces of cannabis and grow two marijuana plants out of public view, also increased penalties for smoking marijuana in public to a $250 fine for the first offense and $500 for a second.

Griffith, who has been in the General Assembly for 24 years and is serving her first year as finance chairwoman, said she has never seen a bill generate as many amendments as the cannabis bill.

Some Democrats were also unsuccessful in amending the bill, including Sen. Jill Carter (D-Baltimore City), who pushed for those who were previously incarcerated for drugs to be able to participate in the market.

“We have to do everything we can to not widen the caste system in Maryland,” she said.

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