Md. lawmakers set 9% cannabis sales tax, prepare for final vote

When cannabis becomes legal in Maryland on July 1, sales of the product will come with a 9% tax under a compromise that state lawmakers have reached.

A portion of the sales and use tax will go to organizations that serve communities most harmed by the criminalization of cannabis and the enforcement of laws against using or possessing it.

The tax rate was among the last hurdles in the way of a final vote on the rules and regulations for the new industry.

Members of the House of Delegates Economic Matters Committee voted Friday for a 9% sales and use tax on cannabis products — also the tax rate for alcohol — bringing it in line with what the state Senate voted for.

Delegates previously voted for an initial 6% sales tax that would increase by 1 percentage point each year until reaching 10% in 2028.

Each chamber still has take a final vote on the 9% tax rate and other agreements that senators and delegates reached recently about the Cannabis Reform bill.

“(The Senate) is going to be amending our bill the same way we amend theirs,” said Economic Matters Committee Chair Del. C.T. Wilson, D-Charles. “The goal is that the bill is going to cross back equally.”

The 90-day legislative session is scheduled to end Monday, and Democratic Gov. Wes Moore is expected to begin signing bills the next day.

Marylanders voted in November to approve the legalization of marijuana for recreational use and possession for people ages 21 and older.

Lawmakers this session were tasked with determining how the fledgling industry will function. Heading into this week, state senators and delegates had to reach consensus about how to tax cannabis and license the businesses that sell it.

Lawmakers have also sought to encourage participation from “social equity applicants,” defined as someone seeking a license or registration who has lived in or attended school in a community most harmed by the criminalization of cannabis.

Social equity applicants would also include someone who for at least two years attended a four-year college or university in the state where at least 40% of students are eligible for a federal Pell Grant.

Licensed businesses will be permitted to have outdoor spaces for customers to smoke marijuana, but lawmakers chose to prohibit smoking indoors to comply with state regulations established several years ago to curb cigarette smoking inside.

The businesses, one legislative counsel said, will more closely resemble bakeries or coffee shops than smoke lounges.