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In the first three months that people could legally buy cannabis in Maryland, customers paid more than $12 million in taxes to the state government.
Customers buying recreational cannabis pay a 9% point-of-sale tax on all flower, edibles, tinctures and other cannabis products, with the money parceled out to a variety of programs.
A new report from Comptroller Brooke Lierman, a Democrat, lays out how the money is coming into the state and where it’s going. Lierman plans to issue reports every three months.
“Transparency is crucial to earning and maintaining the public trust,” Lierman said in a statement, “and my office is committed to helping Marylanders understand what this new part of the economy is generating in taxes.”
Legal cannabis sales for adult use began on July 1, following approval from voters in the 2022 election.
Where the taxes are being paid
Of the approximately $12.1 million in taxes collected in July, August and September, customers at dispensaries in Central Maryland paid the most: $5.49 million, or 45% of all taxes collected.
Central Maryland is defined as Baltimore City and Baltimore, Anne Arundel, Howard, Carroll and Harford counties. That region is not only a population center, but also has 50 of the state’s 96 licensed dispensaries.
Customers in the Capital Region, defined as Montgomery and Prince George’s counties, paid the next-most, $3.05 million. Those two counties, the state’s most populous, have 26 licensed dispensaries between them.
Western Maryland accounted for $1.56 million in taxes, followed by the Eastern Shore with $1.27 million and Southern Maryland with $786,000.
Where the money goes
When state lawmakers approved legal sales of cannabis, they decided to divide the tax collections among several programs. Here’s where the first batch of tax money will be distributed:
- Maryland General Fund: Half of the tax collections, just over $6 million, goes to the general fund in the state budget.
- Community Reinvestment and Repair Fund: $4.25 million, or 35%, goes into a fund that will pay for community programs in areas that have been harmed by the war on drugs. The money is sent out to counties based on a formula.
- County and city governments: $608,000, or 5%, goes to county governments, based on how much cannabis is sold in their area. Some of the money flows to towns and cities in counties that have municipalities.
- Cannabis Public Health Fund: $608,000, or 5%, goes to a fund to address the health effects of cannabis use.
- Cannabis Business Assistance Fund: $608,000, or 5%, will be used to help small businesses, minority-owned businesses and women-owned businesses get into the expanding cannabis industry.
How does this stack up to predictions?
When state lawmakers legalized cannabis, analysts predicted the first 12 months would generate $400 million in sales and $36 million in taxes. That’s a significant amount of money coming into the state, but not a windfall compared to the total state budget of more than $60 billion.
The more than $12 million in taxes collected in the first three months puts Maryland on pace to be ahead of the forecast of $36 million per year. At that rate of sales, the state may collect $48 million in the first 12 months.
Data on total sales is reported faster than the tax collections, and the Maryland Cannabis Administration reports between $50 million to $55 million worth of adult-use cannabis is sold per month. That totals $270.3 million from July through November, which would equate to about $24.3 million in taxes from those first five months.
Maryland dispensaries continue to sell cannabis products for medical purposes, and those sales are not taxed. From July through November, medical sales ranged from about $33 million to $38 million monthly.
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Pamela Wood covers Maryland politics and government. She previously reported for The Baltimore Sun, The Capital and other Maryland newspapers. A graduate of the University of Maryland, College Park, she lives in northern Anne Arundel County.
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