Maryland House Advances Bill To Regulate Marijuana Sales As State Prepares For Voter-Approved Legalization
The Maryland House of Delegates has advanced an amended bill to create regulations allowing for adult-use marijuana commerce following voter approval of legalization last year.
The legislation, sponsored by Del. C.T. Wilson (D), passed on a second reading on the floor on Wednesday, just days after clearing committee. The House will need to give final third reading approval to the measure before it potentially moves to the Senate, where a companion version is scheduled for consideration in committee on Thursday.
The House was initially set to take up the bill on Tuesday, but Minority Leader Jason Buckel (R) made a motion to special order the proposal for the next day so that members could have more time to review and prepare additional amendments.
Wilson, who chairs the Economic Matters Committee that approved the bill last week, said in opening remarks on Tuesday that the legislation “delivers a promise that the General Assembly made to the voters who approved on a referendum the adult use of cannabis in November of 2022.”
We're one step closer to #CannabisReform in Maryland.
HB556 creates an equitable licensing, tax and regulation framework for the new cannabis industry. pic.twitter.com/7AnPzZmmNx
— MD House Democrats (@mdhousedems) March 7, 2023
“It addresses our society’s shift away from the way we look at and treat cannabis, confirmed by the voters, and away from the war on drugs—away from tearing up communities,” he said. “Instead, it regulates cannabis as a business, not as a criminal activity, and provides a safe product for medical patients and adults who wish to use it.”
“We see this as an opportunity to keep our community safe,” the sponsor added. “While some here may think that this is a money grab to provide revenue, we realize as a body that that is not the goal. The goal was to take cannabis out of the illicit drug market and save the lives of individuals who may get arrested or may get shot for this.”
Wilson then described numerous amendments, many technical in nature, that were adopted in his panel. That included changes to provisions concerning delivery services, the integration of the state’s existing medical cannabis businesses into the recreational market and how regulatory and social equity offices would be structured.
On the floor on Wednesday, members considered additional amendments from Republicans.
Buckel, the GOP leader, proposed two changes, both of which were defeated.
One of his amendments would have clarified that nothing in the bill could be construed to prevent employers from disciplining workers who test positive for cannabis.
The other Buckel proposal would have clarified that the bill could not be construed to allow people operate machinery—in addition to motor vehicles, aircraft or boats—while under the influence of marijuana.
An amendment from Del. Jefferson Ghrist (R) that would have defined how localities could place restrictions on where cannabis business can operate also failed.
Del. Mike Griffith (R) proposed a change that would have removed licensing for cannabis consumption facilities from the bill, but it too was rejected.
An amendment from Del. Nino Mangione (R) that would have eliminated provisions for the loan loss reserve account to cover loans to cannabis businesses was defeated.
The body also rejected Del. Wayne Hartman’s (R) amendment to allow homeowners’ associations and landlords to create rules on marijuana use.
The House #CannabisReform bill creates a licensing, regulation and taxation framework for the new recreational cannabis industry and puts equity at the center. #Working4MD #mdga23 pic.twitter.com/wKWEq10jkx
— MD House Democrats (@mdhousedems) March 8, 2023
Here’s what 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.
Because the bill is considered emergency legislation that would take effect immediately, it 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.
On the Senate side, the companion version is being carried by Sens. Brian Feldman (D) and Antonio Hayes (D). That bill is expected to be taken up by the Senate Finance Committee on Thursday.
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Senate President Bill Ferguson (D) said last month that he believes the legislation “has the possibility of being a national model.”
“It’s a complex topic. There’s a lot of different pieces. No state has gotten it right,” Ferguson said. “And so what I do believe we’ve done effectively here is put us on the best path possible.”
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.”
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.
Past convictions for conduct made legal under the proposed law will be automatically expunged, and people currently serving time for such offenses will be eligible for resentencing. The legislation makes it so people with convictions for possession with intent to distribute can petition the courts for expungement three years after serving out their time.
Parts of the referendum took effect at the beginning of the year. Possession of up to 1.5 ounces of cannabis became a civil offense, punishable by a $100 fine, with a $250 fine in place for more than 1.5 ounces and up to 2.5 ounces.
Adult-use legalization began to advance through Maryland’s legislature in the 2021 session, but no votes were ultimately held. The Senate Finance Committee held a hearing that year on a legalization bill, which followed a House Judiciary Committee hearing on a separate cannabis proposal.
Maryland legalized medical cannabis through an act of the legislature in 2012. Two years later, a decriminalization law took effect that replaced criminal penalties for possession of less than 10 grams of marijuana with a civil fine of $100 to $500.
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Photo courtesy of Brian Shamblen.