Maryland is still on track to set up a marketplace for recreational cannabis sales starting on July 1 after the state Senate approved its plan on Friday. Adults 21 and over will be able to possess up to 1.5 ounces of cannabis and use the drug.
The General Assembly has prioritized keeping taxes low in order to squelch illicit sales.
But before they can move forward, both chambers’ versions of the bill must agree before they are sent to the governor’s desk. And right now they don’t.
While the Senate worked from the House’s bill as their foundation, they did a bit of redesigning along the way. The Senate redistributed tax revenues and suggested starting with a higher levy.
Lawmakers have 10 days left in the legislative session to hash out the details. Here’s some of the work before them:
No smoking in on-site cannabis lounges
Both bills create an on-site consumption license. On-site consumption businesses would be allowed to distribute cannabis in a facility where cannabis consumption can also be consumed.
But if the measures in the Senate bill prevail, customers will be able to consume products, like edibles, but not be allowed to smoke in these businesses.
The adjustment was made after senators had concerns they’d be creating a law that would conflict with the state’s Clean Indoor Air Act, the law that prohibits smoking in public buildings.
The Senate’s tax rate is higher
Both chambers agree they want to crush an illegal cannabis market by keeping prices low, and that includes taxes.
The suggested tax rate in each bill was one of the major differences. The Senate version proposes a flat 9%, starting right at July 1. This is higher than than the 6% starting point recommended by the House. The House proposed a gradual increase of 1% each year until reaching 10% in 2027.
But whichever lawmakers choose, it would still be one of the lowest tax rates among states with regulated recreational markets.
Medical cannabis will remain tax free.
How revenues get distributed
The bulk of tax revenues will fund the government oversight of the newly created industry. But some portions will go back into communities disproportionately harmed by cannabis prohibition.
The bills also create a Community Reinvestment and Repair fund to aid communities that have been disproportionately affected by the past criminalization of cannabis.
The House dealt the fund 30% of revenues and the Senate 35%. An initiative to address the health effects of cannabis legalization and the Cannabis Business Assistance Fund will each get 1.5% of revenues, according to the House. But if you ask the Senate, they’ve decided on 5% for both. The assistance fund will help fledgling entrepreneurs.
A larger piece for the counties
Right out of the gate, county and municipal governments expressed concerns that the House bill didn’t give them enough of a cut. The Senate thought so too, and bumped it up. Let’s break this down.
According to the House version of the bill, counties and municipalities would get 1.5% of the revenues made in their jurisdictions. For example, if the state took in $1,000,000 in cannabis revenues from Montgomery County, the state would take 6%, which is $60,000. However, Montgomery County would take 1.5% of the $60,000, or $900.
There’s one more limit on this $900 in the House version. The funds would have to be used on behavioral health and drug treatment programs.
Under the Senate’s version, and with their 9% tax rate, the state would make $90,000 in tax revenues and $4,500 would go to the county without telling the county how it should be spent. However, it would be up to the county whether to give the municipalities within it a portion — so in our hypothetical example, Montgomery County would decide whether to share funds with Gaithersburg, Rockville or other cities.
There are 157 municipalities in Maryland, including Annapolis and Baltimore City.
Fewer micro dispensary licenses clipped
Both chambers agreed on the types of licenses and the number of each, for the most part.
The difference here was a drop in the overall number of micro dispensary licenses. A micro dispensary license is a delivery service, essentially a dispensary without a brick and mortar storefront. This license type allows an entrepreneur to start a cannabis business with less capital.
The House recommended starting off the delivery service program with a trial of 10 licenses and reserved 190 additional for a future license round, based on the outcome of a study. The Senate put 10 micro dispensary licenses into their bill and stopped there.