A year ago, there were still plenty of unknowns in Maryland’s cannabis industry. Medical cannabis businesses, now cleared to participate in the newly approvedrecreational market, had to gauge what would happen when they opened their doors to all adults 21 and over on July 1, 2023, rather than just those with a medical need. And a newly established state agency charged with regulating the blooming pot market had to staff up for the anticipated surge in activity.
But on July 1, on the first anniversary of recreational legalization, Maryland cannabis business leaders and regulators say that legalization has gone smoothly here, in part because they learned from other states that had already carried out the legalization processes. With the immediate transition finished, the industry is now adjusting to a cannabis market that is maturing, along with its consumer base.
Cannabis use is no longer taboo and can now be discussed in terms of “everyday use,” said Chase Lessman, senior director of sales for the Bethesda-based cannabis company CULTA. Many of his recreational customers are either new to cannabis and learning about it, or returning after decades of nonuse.
Many Maryland residents are less rosy in their outlook, however. Two-thirds of state voters approved recreational cannabis in 2022, with the understanding that, in addition to creating a new revenue stream, it would help correct social equity imbalances that led Black people in particular to be disproportionately punished for marijuana use. But a recent Washington Post-University of Maryland poll found that Maryland voters’ feelings have become cooled since then, with only about a third of voters now saying legalization has been a good thing.
One out of three saw legalization as bad overall; and the remaining third of voters said it was neither good nor bad. Some have raised concerns over the increased concentration of THC, the psychoactive component in cannabis, in today’s products, along with the health risks posed by cannabis use and the potential for driving under the influence.
Some Maryland jurisdictions, including Carroll and Prince George’s counties, have aimed to limit where dispensaries can be located following clashes over the new businesses. In Carroll County, where local government discussions about cannabis have become especially heated, leaders floated the idea of again outlawing recreational cannabis.
“People are now making it clear they don’t want predatory pot-profiteers setting up shop in their communities,” Kevin Sabet said in a statement in advance of the first anniversary of recreational sales. The former White House drug adviser in the Bill Clinton, George W. Bush and Barack Obama administrations has become a nationally known anti-pot activist.
It’s unclear yet whether the controversy in some areas is part of the normal growing pains within the burgeoning industry or a sign of trouble to come.
A maturing industry
From July 2023 through May of this year, dispensaries have made nearly 10 million transactions and logged more than $1 billion in total sales of flowers, edibles, concentrates and seeds, according to Maryland Cannabis Administration data. Nearly two-thirds of those sales were recreational, made to adults 21 and over outside the state’s medical cannabis program.
Maryland taxes nonmedical marijuana sales at a rate of 9%, and netted $41.4 million in revenue in the first nine months of legalized recreational cannabis, according to the state comptroller’s office.
A year out from legalization, though, the growth of the state’s cannabis industry may not be apparent to the average cannabis consumer. With few exceptions, the growers, processors and dispensaries that make up Maryland’s cannabis business landscape are the same ones that opened their doors to adult use a year ago.
A focus on social equity
“What makes Maryland unique is the intention that went into it as far as repairing the harms of the war on drugs,” said William Tilburg, director of the new Maryland Cannabis Administration, which is based in Linthicum.
The decadeslong U.S. campaign to curb drug abuse and related societal ills through criminal enforcement amplified cycles of poverty by leaving incarcerating millions of Americans — disproportionately Black, Latino and other racial minorities — with criminal records for drug offenses, public health experts said. That history led Gov. Wes Moore to last month issue more than 175,000 pardons for misdemeanor cannabis possession and use convictions in the state.
The Maryland legislature’s cannabis reform package required certain possession charges to be automatically expunged. The legislation also set up a framework to ensure that people from the areas most impacted by prohibition — measured by the number of cannabis possession charges issued there — don’t get left out.
Some of the state’s pot-related revenues, including around $65 million from cannabis license conversion fees paid by businesses, as well as more than a third of revenues from the 9% sales and use tax, go into a fund used to invest in localized programs in communities based on how much they were impacted.
The laws also aim to give people from those neighborhoods a fair shake at participating in the marketplace without being crushed by industry giants.To that end,business licenses were converted from those already granted under the state’s medical cannabis system into licenses for underserved groups. The first licensing round, held by lottery, focuses entirely on social equity applicants — potential businesses meeting certain thresholds for their owners’ communities being disproportionally impacted by cannabis possession charges.
A March drawing picked 174 lottery winners, a group that is “chomping at the bit to get in this market and get going,” Tilburg said. Around 75% of the businesses self-reported that they were majority-minority owned, which Tilburg described as “a really stark contrast” to the diversity of ownership across all industries, but especially in cannabis. An additional drawing was held Friday to pick 31 more applicants.
In addition to standard grower, processor and dispensary licenses, four “micro” licenses were awarded to small businesses that will be cannabis delivery services without a physical storefront. An additional 60 growers and processors were also awarded a micro license, which limits the size of their operations.
Winners have 18 months from the drawing dates to get their businesses up and running; in the meantime, the cannabis administration and industry partners are helping them set up.
The state also is working on developing an incubator space to house microbusinesses, providing storage for micro-dispensaries, grow space for micro-growers and commercial kitchens for micro-processors to help them reduce costs.
“They need to find locations, build them out, get IT, legal services all those things, and so [we’re] connecting those businesses, those awardees with subject matter experts who can help them,” Tilburg said.
A new agency for a new industry
Until last year, the Maryland Cannabis Administration was known as the Maryland Medical Cannabis Commission and had just over 50 employees. The agency is now authorized for more than twice as many employees, and has filled most of those new positions, Tilburg said.
Maryland completed the transition despite a short runway, with less than two months between Moore’s signing of the cannabis reform law and recreational sales beginning. Tilburg said the state has thus far avoided the “operational issues” — like staffing up too slowly — that other states, like New York, struggled with.
He credits the easy transition to the “attention and thought” that state lawmakers put into cannabis reform legislation, as well as operational support from Moore’s administration.
Maryland legislators had models to look at as they crafted the state’s recreational cannabis system — about 20 U.S. states had taken steps to legalize recreational cannabis by the time the Cannabis Reform Act landed on Moore’s desk.
Addressing public health concerns
From a public health perspective, the reform law includes a multitude of regulations, including product labeling mandates, according to Mathew Swinburne, a public health lawyer focusing on cannabis law and policy based University of Maryland Francis King Carey School of Law, which hosted a media panel on the topic in June.
Packaging can’t contain images that may appeal to minors, such as food products, cartoons, toys or animals. They are required to be child-resistant, must contain certain warning statements, and must disclose all noncannabis ingredients as well as itemized measurements of all cannabinoids and terpene ingredients.
Those measurements come in part from the state’s product testingrules, Swinburne said.
Most cannabis products are being tested at independent labs. But the cannabis administration is working on rolling out a state reference lab to serve as a check on the accuracy of those independent labs — “something not a lot of states do,” Swinburne said.
Other states have struggled to definitively measure public health impacts of their own legalized pot system. In Maryland, the impacts are not yet known, but they are being measured and will be compared with results of a statewide survey before recreational cannabis legalization, which set a baseline. Among the categories being tracked are the rates adult and youth use pot, as well as data on mental health outcomes associated with using marijuana and how many people are identified as driving under the influence of cannabis.
A recent proposal by U.S. officials to reclassify cannabis as a less dangerous drug could open the doors to more research on marijuana itself, but the ramifications of the rescheduling are mostly unclear. The move by the Biden administration was met with resistance from some, including Maryland Rep. Andy Harris.
The Republican congressman argued that the decision “lacks both substance and data,” questioning research on cannabis’ medical uses and urging federal officials to consider impacts on pregnant women and children, as well as its effects on driving under the influence of marijuana.
The biggest concern for public health officials in the state, according to Swinburne, is the impact that recreational cannabis for adults will have on youth cannabis use. The baseline study noted that the state’s annual youth risk survey found that more than 26% of Maryland high schoolers during the 2021-22 academic year had tried marijuana. Results released last week show that the number dropped to about 23% the following academic year — before recreational cannabis became legal in Maryland.
Adult use of cannabis increases once it’s legal, other states have shown, but “that doesn’t seem to be true for adolescent use,” according to media panel participant Leah Sera, a University of Maryland School of Pharmacy professor who serves on the state’s Cannabis Public Health Advisory Council.
“That’s encouraging,” Sera said at the panel. “But that doesn’t mean that we aren’t concerned about it and that we’re not going to have a strong public health, public education effort in schools.”
