Maryland’s legal cannabis market to be shaped by many hands

With lawmakers facing a July 1 deadline to provide a framework for the legal use, possession, and sale of cannabis after voters approved full legalization in November, it’s clear, just a week into the General Assembly session, that the task won’t be straightforward.

While the public is generally enthusiastic about legalization, which passed with 67% support and received more votes than new governor Wes Moore, legislators have a lot of work to do to build a legal market that fulfills their commitments on issues like equity, public safety, taxation, and revenue.

“The people of this state have spoken, and they have spoken loudly,” said Moore at a press conference Thursday. “We cannot, and we will not repeat the mistakes that the state has made when medical cannabis was legalized…we have to get this right from day one.”

While lawmakers are committed to meeting the July 1 deadline, the state of the legal cannabis market nationwide remains an unwelcome specter hanging over the process. An oversupply crisis has depressed cannabis prices, decreasing margins for producers and making it far more difficult for small producers to compete with well-established companies that can produce and distribute at scale. The national spot price of legal cannabis reached an all-time low of $950 per pound in December 2022, according to Cannabis Benchmarks.

Maryland lawmakers must design a framework to turn an illegal marijuana-producing and distributing industry into a legal one by July 1. (Photo by E. A. Breeden/Capital News Service)

Without what they feel is a viable model to look to, lawmakers are instead trying to avoid other states’ mistakes.

“We’re starting from the ground floor,” said Del. C.T. Wilson, D-Charles, chairman of the House Economic Matters Committee. “All we know is what they didn’t do right.”

Wilson and his committee colleagues will have an important role to play in the legalization process: regulating the supply of legal cannabis through licensing and taxation.

The number of licenses distributed and the process of obtaining a license to produce and sell cannabis products in Maryland will largely dictate who can enter the legal market. Moreover, supply will play a large role in determining the price Marylanders pay for cannabis products, a crucial factor in convincing consumers to abandon the illicit market, according to the Marijuana Policy Project.

Given the less-than-successful history of the United States’ war on drugs and its disproportionate impact on Black Americans, legislators seem committed to fostering equitable access to the legal market.

“I’m very worried about this issue…this is always how we’ve done things, where we allow rich people to capitalize and profit, and then we put some minor appeasement in there to placate people that have been harmed (by marijuana) and don’t have the equity, the money upfront, to get involved,” said Sen. Jill Carter, D-Baltimore City.

“I think equity has to be across-the-board considered for everything we do,” said Del. Lily Qi, D-Montgomery, who, along with Wilson, is a member of both the Economic Matters Committee and the Cannabis Legalization Working group, which held hearings on several aspects of the legalization process while the General Assembly was out of session.

While neither Wilson nor Qi explicitly answered what percentage of licenses should go to members of marginalized groups, Wilson hinted at a few policies his committee was considering to ensure an equitable system.

Foremost among them is keeping the license application fee reasonably low. In some states, this cost can reach six figures, according to the Marijuana Policy Project, and serve as a significant barrier to entry for small business owners without a lot of startup capital.

“(The application fee) cannot be high, and it must be refundable,” said Wilson, who added that six-figure application fees were “not the goal.”

Also of concern is keeping taxes low, which lawmakers said they hope will have the dual effect of allowing more producers to enter the market and keeping legal cannabis prices reasonable, an important factor in allowing new market entrants to chip away at the illicit market.

For some advocacy groups, guarantees on equity in employment and working conditions in the industry are just as important as equity in ownership or licensing.

“As a union, we bring a lot of concern around employment practices and how employees are treated, how well they’re compensated, and are they able to share in the success of their industry,” said Jonathan Williams, spokesperson for UFCW Local 400, which represents cannabis workers in Maryland.

Economic Matters will be just one of several committees to work on a chunk of the cannabis framework. The House Judiciary Committee, and perhaps others, will look at undoing another one of the lasting legacies of the war on drugs: thousands of convictions for cannabis-related offenses, which can often serve as barriers to the job market for those convicted.

Judiciary Committee member Christopher Bouchat, R-Carroll, who was convicted of a crime and charged as an adult at age 16, recalled firsthand the impact of such a criminal conviction.

“For the rest of my life, I have that assault conviction on my record. And I think that having felt that, I understand the impact that cannabis convictions have on adults trying to get employment.”

For the new governor, expungement is a crucial part of the legalization process, and righting the wrongs of the last 40 years has been central to his message on this issue.

“As we have said, we cannot talk about the benefits of legalization if we’re also not willing to wrestle with the consequences of criminalization,” said Moore at the press conference.

While Moore supports expunging records of all those convicted solely of marijuana possession, other lawmakers worry that his plan does not go far enough to protect those convicted on other charges or of a cannabis-related felony.

“We know that felony convictions are what harm people from getting jobs, housing, and other opportunities. The stigma of felonies is the problem. Misdemeanor possession is hurting very few people,” said Carter, a Senate Judicial Proceedings Committee member. She added that institutions, including many police departments around the state, now allow officers with prior misdemeanor possession convictions on the force. Carter has introduced legislation to give judges more flexibility in expunging records.

Lawmakers are also tasked with figuring out a plan for the tax revenue cannabis legalization will generate. In a meeting with the House Cannabis Referendum and Legalization Workgroup during the interim, consultants from the Marijuana Policy Project suggested that cannabis legalization could generate over $1 billion in revenue for the state.

Responsibility for that tax plan will fall to the House Ways and Means Committee, whose membership includes Prince George’s County Delegate and Cannabis Working Group member Darryl Barnes.

“This is an exciting time in the history of the state of Maryland,” said Barnes, adding, “we have an opportunity to put forward legislation that impacts a billion-dollar-plus industry that’s coming, but, more importantly, to frame the conversation around equity and inclusion. And that is the most important thing to me, as well as looking at how we will tax this where it’s fair and equitable for those participating.”

By GREG MORTON
Capital News Service