Maryland legislators continue to deliberate on the merits of two largely similar cannabis legalization bills—one in the House, one in the Senate—which differentiate in ways that will determine how accessible the adult-use cannabis industry is to those most harshly impacted by racist prohibition of cannabis.
SB 708, sponsored by Sen. Brian J. Feldman and other top senate Democrats, was the subject of a hearing in a Senate Finance Committee hearing last Thursday, Mar. 4. While the bill is largely similar to HB 32, Del. Jazz Lewis’ cannabis legalization bill that was pre-filed in the house before the legislative session even began, there are a few significant differences.
Both bills include provisions that direct the majority of cannabis tax revenue towards communities who were most harshly affected by cannabis prohibition—a common goal among proponents of adult-use legalization nationwide. Both bills also give licensing preference to social equity applicants seeking adult-use cultivation, processing or retail licenses. However, what lawmakers have called “narrow differences” between the House and Senate bills could have a significant impact on the extent to which adult-use cannabis licenses are accessible to minorities and small businesses owners who were similarly shut out of Maryland’s medicinal cannabis industry.
The biggest difference lawmakers have yet to reconcile is whether to cap the number of micro-cultivators who maintain smaller cannabis farms of up to 5,000 sq. ft. that would be permitted to grow and sell their own cannabis to storefronts. Allowing micro-cultivators to grow and sell cannabis would bolster the supply of independently-owned storefronts who lack the flexibility and consistency of vertically integrated multistate operators (such as Harvest or gLeaf) that grow and sell their own product at lower prices. While the House bill does not limit the amount of micro-cultivator licenses available, the Senate bill would cap these licenses at 14.
Hope Wiseman is the founder of one of the only independently Black-owned medicinal cannabis storefronts in Maryland, Mary and Main in Prince George’s County that is unaffiliated with a vertically integrated grower. Wiseman testified in favor of SB 708 with an amendment to uncap the number of micro-cultivators licensed in an adult-use industry.
“As we know from the lack of supply to unaffiliated dispensaries like mine in the medical program, these licenses will create product stability, price stability and make sure to ensure a more equitable distribution of flower across the market,” Wiseman explained. “In the current medical market, most medical dispensaries that are unaffiliated with a grower are unable to source enough flower to meet current demand.”
SB 708 also differs from HB 32 by capping the number of adult-use retail licenses to be distributed in 2023 at 47 instead of 100. Additionally, SB 708 would prevent any additional retail or cultivation licenses from being distributed before 2026 while HB 32 requires additional licensing in 2024.
Vicki Orem is a two-time applicant for a medical cannabis license in Maryland who said she has spent over $1 million combined on two unsuccessful applications throughout a highly competitive licensing process. Orem testified against SB 708 before the Senate Finance Committee arguing a cap on additional licenses unnecessarily protects businesses who were licensed in previous rounds.
“You will continue to have a black and white market as long as you continue to protect the industry for a few,” Orem said. “Allow people to enter. If they enter and they are successful, great. If they enter and they fail, then that’s what happens in an open market.”
A combination of expensive regulatory requirements, limited licenses available and a complicated and costly application process led to almost a complete exclusion of minority business owners from Maryland’s medical cannabis industry. The largely white and wealthy nature of Maryland’s first medical cannabis licensees was so apparent that the legislature had to pass reparative measures to designate additional medical cannabis licenses for minority business owners. National, vertically-integrated corporations that tend to own multiple dispensary locations continue to dominate Maryland’s medical cannabis industry as patients enjoy their low prices and consistent supply that is unavailable at independently owned storefronts.
In order for lawmakers to successfully use cannabis legalization to mend some the harm caused to Black and Brown communities through racist prohibition, they will have to find a balance between collecting adequate tax revenue from cannabis sales to bolster these communities while maintaining prices low enough to compete with the illicit cannabis market, the prosecution of which continues to disproportionately impact the same groups.
Sen. Feldman’s legislation proposes an initial cannabis tax rate of 10 percent until spring of 2025 when the tax rate will increase to 15 percent until 2027 and eventually be increased for a last time to 20 percent in 2027. Del. Lewis’ legislation proposes a similar plan, instead starting at 15 percent and increasing to 25 percent by 2026.
In a post summarizing the difference between each bill, the Marijuana Policy Project states “lower tax rates means less revenue for automatic expungement, community reinvestment and other state needs,” citing Virginia’s recent proposal of a 30 percent tax rate which was eventually reduced to 21 percent by the time the legislation passed last month.
Lawmakers in Maryland, Virginia and D.C. are each likely to legalize cannabis and regulate its sale for adult use either this year or next. Whether any piece of legislation can successfully repair the damage caused to Black and Brown communities by cannabis prohibition while simultaneously combating the illicit cannabis market is to be determined.
Maryland State House photo by Martin Falbisoner / Courtesy Creative Commons.