First Look at the Maryland Adult-Use Cannabis Program

License Details & Tips For Maryland’s New Cannabis Program

On Friday, March 10,2023, the Maryland House voted in favor of a measure that could have adult-use sales open as early as July 1. Cross-filed with SB516, House Bill 556 outlines a regulatory and licensing system for adult-use cannabis as well as imposes a sales and use tax on the sale of adult-use cannabis.

In addition, HB 556 also establishes a multitude of departments under the renamed Alcohol, Tobacco, and Cannabis Commission (ATCC) that will implement and enforce these regulations, including an Office of Social Equity, an Advisory Board on Medical and Adult-Use Cannabis, and a Cannabis Regulation & Enforcement Division.

While the 100-page bill still needs to go through a few more lawmakers’ hands before it can become a reality, it gives a broad first look at how Maryland plans to roll out its adult-use program. 

Top 5 Takeaways for Maryland Adult-Use Cannabis Licenses

1. Medical Licenses Can Convert: Medical licensees can convert their licenses on or before July 1 for a revenue-based fee.
2. Timeline Starts Now: While medical licensees will be allowed to convert, the Division will also be required to begin issuing the first round of licenses on or before January 1, 2024 and the second round of licensing on or before May 1, 2024. 
3. Social Equity Is First: The first round of licensing will be open for social equity applicants. 
4. Strict Application Requirements & Qualifications: Applicants will be evaluated on a pass/fail basis before being entered into a lottery. The initial evaluation includes, but isn’t necessarily limited to, a detailed business plan, operational plan, and diversity plan.
5. No Property Ownership & Residency Requirements: There is no mention of a Maryland residency requirement, and the Division will not be requiring applicants to possess or own property at the time of applying.

Cannabis License Types & Application Fees

HB 556 also outlines the various license types as well as the number of licenses available for each and associated fees. Keep in mind, the number of licenses available includes medical conversions. 

Medical Conversion Licenses 

Under the bill, medical dispensaries, processors and growers will be permitted to convert their license to adult-use on or before July 1, 2023, paving the way with the first adult-use sales in the state. The fees associated with converting a medical license that began operations before October 1, 2022 range from $100,000-$2,500,000 and will depend on the applicants’ 2022 revenue.

If the medical facility began operations after October 1, 2022, they will pay a one-time conversion fee; dispensaries will pay a fee of $25,000, while growers and processors will pay a fee of $50,000. As of 2021, there are roughly 100 medical dispensaries, 25 medical processors, and 20 medical growers operating or pre-approved to operate in Maryland.

Standard Adult-Use Cannabis Licenses

The application fee for a standard adult-use license is $5,000.

• Dispensaries: 300 available licenses, permitted to operate at a physical storefront that sells cannabis or cannabis products. 
• Growers: 75 available licenses, permitted to grow between 10,000-300,000 sq. ft. of indoor canopy.
• Processors: 100 available licenses, permitted to process more than 1,000 lbs of cannabis per year.

Micro Licenses

The application fee for a micro license is $1,000.

• Dispensaries: There will be 200 available licenses and they will be permitted to operate a delivery service without a physical storefront.
• Growers: There will be 100 available licenses and they will be permitted to grow up to 10,000 sq. ft. of indoor canopy.
• Processors: There will be 100 available licenses and they will be permitted to process up to 1,000 lbs of cannabis per year

Incubator Licenses

The application fee for this license type is $5,000. There will be 10 available licenses and they will be permitted to operate a facility within which a Micro-licensee could operate as well. 

On-Site Cannabis Consumption Licenses

The application fee for this license type is $5,000.There will be 50 available licenses and they will be permitted to operate a facility where individuals can smoke, vape, and consume cannabis. 

What To Do Now to Prepare for Maryland Cannabis License Applications

1. Gather Critical Resources: While we still have to wait for the bill to pass through the Senate, our team of experts can help get you in position to apply when the time comes. Getting your fundamental materials together now can put you miles ahead of other applicants when the application period opens.
2. Generate Business Documentation: Documents like financial models and business plans can not only help you attract investors, but it can help you create a clearer picture of how your business could run, who will run it, and, perhaps most importantly, how much it could cost.
3. Partner With A Maryland Consultant: Starting early and partnering with a trusted consulting firm will ensure your vision for your business is executed properly, compliantly, and efficiently. Our team of dedicated and experienced Maryland cannabis consultants is ready get you off to the races and win a license. Contact our East Coast team and let’s get your cannabis business started now.