Maryland lawmakers took another step toward establishing a regulated, adult-use marijuana market on Friday, holding a hearing on a reform proposal months after voters approved legalization at the ballot last year.
The House Economic Matters Committee discussed the legislation from Dels. C. T. Wilson (D) and Vanessa Atterbeary (D), taking testimony from dozens of people as members raised questions about various provisions.
The measure is meant to get the state prepared to regulate cannabis commerce as the state law legalizing possession of up to 1.5 ounces of marijuana for adults takes effect on July 1.
Wilson, who chairs the committee, said in his opening remarks that he’s “not here to create a cash cow for the state or produce a marketplace for intoxicants.”
Rather, he said that lawmakers are trying to “regulate this so we can have a safe usage and basically get rid of the black market through proper oversight” and “keep Marylanders safe if they choose to partake in the substance.”
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.
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 and another 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.
The bill proposes to cap the total number of license types: 75 standard growers, 100 micro-cultivators, 100 processors, 300 retailers, 200 delivery services, 10 incubator spaces and 50 on-site consumption facilities.
The first marijuana licenses would need to be issued by January 1, 2024.
A 15-member advisory committee would be created to advise and make recommendations to the division.
There would also be an Office of Social Equity to promote industry participation and provide technical assistance for people who’ve been disproportionately impacted by criminalization.
That office would additionally be charged with working with the state comptroller and the Maryland Department of Commerce to determine how best to distribute marijuana tax dollars for the community reinvestment fund.
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.
$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.
Members of the House Ways & Means Committee also sat in on the Friday hearing.
— Jheanelle Wilkins (@JheanelleW) February 17, 2023
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.
Senate President Bill Ferguson (D) said last month that he believes the legislation “has the possibility of being a national model.” The companion version of the measure in his chamber is being sponsored by Sens. Brian Feldman (D) and Antonio Hayes (D).
Last year, Marylanders overwhelmingly approved the legalization of cannabis. Now, the House Economic Matters Committee is hearing HB 556 to discuss a regulatory framework that promotes justice, equity, and prosperity.
— Delegate David Fraser-Hidalgo (@fraserfor15) February 17, 2023
“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.
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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.
Photo courtesy of Mike Latimer.