ANNAPOLIS — Maryland’s medical cannabis industry would be rolled into an expanded recreational marijuana market under a proposal headed to the Maryland General Assembly.
The long-awaited bill, weighing in at over 120 pages, has yet to be made public. Del. C.T. Wilson, chair of the House Economic Matters Committee and sponsor of the House version, said the proposal would allow for the state to begin selling to recreational users, possibly as soon as July 1.
“New York is suffering from the fact that they didn’t give out any licenses but they legalized it,” said Wilson. “So all the bodegas and people are just selling it. Some people may think that’s fine. I personally don’t think any consumable product should go without being tested for public safety.”
Identical House and Senate versions of the bill could be introduced in their respective chambers as soon as Friday. Members of the work group charged with hammering out the details of the bill had hoped to introduce legislation as early as the first week of the 2023 session.
Full details of the bill were not immediately available.
In November, voters by a 2-1 margin approved a constitutional amendment legalizing recreational cannabis for adults 21 and older. That law goes into effect but is contingent upon the legislature passing related bills this session setting up the licensing, regulatory and taxation frameworks.
Lawmakers say they are keenly interested ensuring that the new industry is up and running as close to July 1 in order to limit the illicit dealers from gobbling up market share as has happened in New York and California.
The proposal also calls for a phased in tax structure that starts at 6%, the same as the state’s sales tax, and increases to a maximum of 10% over time.
“My goal is to make sure that we are not only competitive with the black market but that we are cheaper than the black market,” said Wilson. “What many states did to their detriment is create a stronger black market because (cannabis) is priced so high.”
“We may not make money on this the first year, if we do it right, because I want to make sure, again, we’re not trying to get Marylanders high,” said Wilson. “We’re trying to make sure this is out of the black market.”
Wilson told the Legislative Black Caucus Thursday that the proposal creates a hybrid license structure that would allow existing medical cannabis growers, processors and dispensaries to also sell to recreational users. Wilson said existing licensees who decide to participate in the expanded market “will pay a hefty fee to do so.”
Currently, state law authorizes 22 grower licenses, 28 processors and 101 medical cannabis dispensaries. That includes a second round of licenses authorized nearly four years ago that were an effort to increase the number of minority owners. In that round, all four grower and all 10 processor licenses went to minority owners.
Those new licensees have been slow to open. None of the new grower licensees are operational.
Wilson said the bill, as it will be introduced, will exempt minority licensees from fees to convert to a hybrid medical-recreational grower or processor license. He added that he would ultimately like to see 10 growing licenses “set aside” for Black owners.
Under the proposed plan, the state would also roll out hundreds of new licenses in at least two rounds.
Round one would prioritize social equity. That round would include 25 licenses each for new growers and processors. Another 120 licenses would be authorized for dispensaries.
Wilson said priority would be given to minority owners in communities disproportionately affected by illegal marijuana. To qualify, applicants would have to have either lived in such a community for five-10 years or attended a public school for five years in one of those communities, he said.
Application barriers would also be reduced, allowing minority applicants to avoid scoring systems that limited their ability to compete for licenses in the medical market. New applications would rely more on business plans and access to startup capital and a lottery system.
“I trust luck more than I trust a government scoring system,” said Wilson.
A second round would authorize 70 new licenses each for new growers and processors. Another 120 licenses would be authorized for new dispensaries.
“If round one doesn’t get us where we need to be as far as reflecting our community, then and only then are we going to be able to step outside race neutral grounds and do something more to identify African Americans and Hispanic Americans specifically,” said Wilson.
Wilson, speaking Thursday morning, said the proposal would cover licensing and regulatory issues needed to get the new industry up and running. At the same time, he said, it would include protections to ensure minority participation in what is expected to be a market of more than $1 billion.
“It’s not worth doing if there is no equity in the market,” said Wilson.
Nationally, minority owners across all races make up just 2% of the industry, he said.
“I believe there is no point and we’ve failed miserably if we can’t do better,” said Wilson.
The proposal also “incentivizes white owners” to partner with new minority licensees. Additionally, the bill authorizes the creation of industry incubators at the state’s Historically Black Colleges and Universities. The incubators would offer training and advice on the industry, as well as business and tax advice.