Maryland To Award Nearly 200 Adult-Use Licenses For Social Equity Businesses

The Maryland Cannabis Administration (MCA) has announced the 30-day application period for the first round of new cannabis business licenses in the State. This round includes an opportunity for social equity applicants to apply for up to 179 licenses distributed by county and region. In order to be eligible, applicants must meet specific eligibility criteria and successfully complete a Social Equity Verification portal prior to the application period opening.

“Today’s announcement is another step forward in fulfilling Maryland’s commitment to building
an equitable and inclusive cannabis industry,” said Maryland Cannabis Administration Acting
Director Will Tilburg. “This application round will more than double the number of cannabis
businesses in the State, and each award will be to a verified social equity applicant.”

The MCA, in partnership with the Office of Social Equity, is leading this process in order to encourage social equity applicants to become part of Maryland’s growing cannabis business industry. This announcement marks a significant step towards creating opportunities for individuals disproportionately impacted by previous drug policies and seeking to benefit from the new legal cannabis industry.

Cannabis Reform Act in Maryland

In November 2022, Maryland voters approved a referendum to legalize marijuana for adult use. The Maryland Legislature passed the accompanying Cannabis Reform Act (H.B. 556/S.B. 516) in spring 2023. This bill took effect upon Governor Wes Moore’s signing on May 3, 2023.

Sales of adult-use cannabis are permitted beginning July 1, 2023. Maryland law imposes a 9% sales and use tax on retail sales of adult-use cannabis and cannabis products, which is the same rate that applies to the sale of alcoholic beverages.

The Office of the Comptroller is committed to supporting Maryland’s business community, including the state’s newly legal adult-use cannabis industry. The agency administers the state’s sales and use tax, which includes responsibility for collecting the tax and distributing revenue from tax collected on retail sales of adult-use cannabis.

The Cannabis Reform Act created a framework for licensing, including but not limited to:

• Establishing a licensing system for adult-use businesses.
• Imposing labeling, testing, and safety requirements.
• Prohibiting certain products and advertising practices.
• Providing criminal justice reform provisions.

Office of Social Equity

The Office of Social Equity, an independent executive agency established by the Cannabis Reform Act of 2023, serves to promote economic opportunity and equity in Maryland’s adult-use cannabis market. Specifically, the Office of Social Equity – through programs, outreach, and advocacy – seeks to cultivate an adult-use cannabis market that encourages full participation from communities disproportionately impacted by the War on Drugs to positively impact those communities.

The State of Maryland has committed unprecedented resources to promote and encourage equitable access and participation in the adult-use cannabis market. This Office will assist the State in directing these resources to focus on equity and economic growth and create an industry that is reflective of Maryland’s diversity.

Definition and Qualifications for Social Equity Applicants

Social Equity Applicants are defined as an individual who has been “disproportionately impacted by the War on Drugs.” The Office of Social Equity has collected, evaluated, and published criteria to be considered a social equity applicant. An applicant must meet one of the following criteria and owns and controls at least 65% of the business:

Criteria 1: Disproportionately Impacted Area Zip Codes

Using data from the Maryland Judiciary, the Office of Social Equity conducted a 10-year analysis to determine that these zip codes meet the statutory definition of a disproportionately impacted area.

Criteria 2: Public School Attendance in a Disproportionately Impacted Area

Using data from the Maryland State Department of Education, the Office of Social Equity conducted an analysis to determine that these public schools are located in disproportionately impacted areas in the State.

Criteria 3: Higher Education Institution Attendance

Using data from the Maryland Higher Education Commission, the Office of Social Equity determined that these 4-year institutions of higher education​ meet the statutory requirements for this criteria.

Amounts and Distribution of Licenses

The MCA will award 179 licenses in this round, with each Maryland county and region receiving a proportional number of licenses. The MCA will issue medical cannabis cultivation, processing, dispensary, delivery service, and microbusiness licenses as part of the selection process.

This round includes an opportunity for social equity applicants to apply for up to 179 licenses distributed by county and region. In order to be eligible, applicants must meet the specific criteria outlined above and successfully complete a Social Equity Verification portal prior to the application period opening on April 1, 2024.

Schedule of Rollout

The first round of applications will open on November 13. During the application period, applicants will have access to an online portal hosted by the MCA where they can submit their applications for consideration.

The application round will be open for a period of 30 days, from November 13 to December 12. Any applicant who meets the minimum requirements for licensure on a pass-fail basis will be placed in a randomized lottery based on license type (grower, processor, or dispensary) and county or region for which the application was submitted. Under the Cannabis Reform Act, the Administration will begin conducting the lottery on or before January 1, 2024. You can find the breakdown of the number of licenses that will be available by license type and geographic area in the first application round here.

The Cannabis Reform Act of 2023 was designed with social equity applicants in mind, and the state is taking steps to ensure that those who the War has most impacted on Drugs have access to this rapidly growing industry. By offering low-cost resources and assistance, Maryland is providing these applicants with an opportunity to get in before large corporations can dominate the adult-use cannabis market.

It’s clear that Maryland is looking out for its social equity applicants, and the state has implemented several measures to ensure they have an equal opportunity to succeed. However, as we’ve recently seen with New York’s social equity program, these types of programs can only succeed if adequately implemented and monitored. Hopefully, Maryland will be able to avoid the same pitfalls and create a successful social equity program that will benefit its citizens for years to come.

Only time will tell, but Maryland’s commitment to encouraging diversity in the adult-use cannabis industry is undoubtedly a step in the right direction. Let’s hope this trend continues and more states follow suit!

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