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Maryland Opens Applications For Marijuana Business Grants As Regulators Issue New Industry Guidance



Maryland officials are now accepting applications for grants to help existing medical marijuana businesses convert into dual licensees that can serve the adult-use market when legalization takes effect next month.

Also, as regulators publish new guidance for the industry, the Department of Commerce (DOC) announced that, starting on August 1, it will additionally be taking applications for grants and loans to support market participation from social equity licensees by providing startup capital and covering operational costs.

The Cannabis Business Assistance Loan/Grant Fund (CBAF), which was established under a cannabis regulations bill that Gov. Wes Moore (D) signed last month, will further provide grants to Historically Black Colleges and Universities (HBCUs) for “cannabis-related programs” like business development and training initiatives.

“The Cannabis Business Assistance Fund will help ensure more equitable footing as our medical cannabis license holders transition to recreational marijuana use in Maryland,” Moore said in a press release. “The fund promotes equitable economic growth and will empower our small, minority, and women-owned businesses to have a greater stake in this growing industry.”

For the first round of assistance, the department said that it is accepting applications for Medical License Conversion Fee grants that will cover application costs for existing medical marijuana dispensaries, processors and growers that will need to convert to dual licensees under draft regulations that were released by the Marijuana Cannabis Administration (MCA) last week.

Eligible businesses could receive grants ranging from $25,000-$50,000, depending on the license type, in order to convert. Applications will be approved on a rolling basis through June 30. Business that qualify but already paid the fee could apply for reimbursement.

In order to qualify, the applicant must be a small business with no more than 50 employees as of May 1. And the business must also be at least 51 percent “owned by individuals whose personal net worth does not exceed $1.7 million,” DOC says.

In a second round of assistance in August, the state will then use the same fund to distribute grants for social equity businesses that received pre-approval before October 1, 2022 and that “have resources available to become operational and participate in the medical and adult-use cannabis industry.”

“Assistance in the form of startup capital and operating expenses will be available as conditional grants or loans. Applicants must be able to demonstrate that with a requested amount of funding they will become operational in a period of time to be announced,” the notice says.

A third effort under the fund will promote cannabis-related programs at HBCUs that assist businesses applying for licenses and business development organizations such as incubators. The funding “will also be available to train and assist small businesses, including minority and women business owners and entrepreneurs who are seeking to become licensed to participate in the adult-use cannabis industry.”

DOC Secretary Kevin Anderson said that the fund “is an important step in reducing barriers and offering equitable opportunities for our small, minority, and women-owned businesses in the medical cannabis industry,”

“We look forward to working with our business community and Historically Black Colleges and Universities as we continue to diversify this industry,” he said.

The draft emergency regulations that Maryland marijuana regulators released last week must still be reviewed by the Joint Committee on Administrative, Executive, and Legislative Review (AELR). The rules must also be published in the Maryland Register before they’re enacted.

The 41-page draft rule sets definitions, codifies personal possession limits, lays out responsibilities for regulators, explains licensing protocol—including for social equity applicants—clarifies enforcement authorities and penalties and outlines packaging and labeling requirements.

The regulatory bill that Moore signed last month covers more ground, including setting a nine percent tax rate on marijuana products, providing for specific allocations of tax revenue and imposing caps on different license types in the state.

Meanwhile, DOC has also identified nearly 100 zip codes that it designated as disproportionately impacted areas to inform social equity application approvals.

State cannabis regulators separately released a series of new guidance documents for the industry last week that cover rules for issues like license fees, packaging, advertising, ownership transfers, the medical cannabis program, growers, processors and dispensaries.

Regulators will host a webinar about cannabis rules on June 14.

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Under a referendum that voters approved in November, legalization of possession of up to 1.5 ounces of cannabis takes effect on July 1, putting pressure on regulators to put the rules in place sooner than later.

The legislation that the governor signed was 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 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.

Meanwhile, Moore also recently allowed a bill to become law that prevents police from using the odor or possession of cannabis alone as the basis of a search.

He additionally signed a measure last week to make it so the lawful and responsible use of marijuana by parents and guardians will not be construed by state officials as child “neglect.”

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Photo courtesy of Mike Latimer.

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