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Primary Responsibilities of the MCA:
- Licensing Oversight: MCA is responsible for managing all licensing aspect, ensuring that cannabis businesses operate legally and efficiently.
- Regulation Enforcement: It enforces regulations under the Code of Maryland Regulations (COMAR) Title 14 Subtitle 17 and Title 10 Subtitle 62.
- Inspection and Testing: The agency conducts regular inspections and oversees the testing of cannabis products to maintain safety and quality standards.
The Cannabis Reform Act:
- Act Implementation: Maryland has approved the Cannabis Reform Act (HB556/SB516), which is fundamental in shaping the state’s approach to cannabis.
- Recreational Use Legalization: Effective July 1, 2023, the Act allows individuals aged 21 and above to legally purchase cannabis for recreational use.
- License Conversion for Medical Dispensaries: Medical cannabis dispensaries have the option to convert their licenses to standard medical and adult-use licenses, enabling them to serve a broader market.
Role in Licensing Conversion:
- Conversion Fee: Medical cannabis licensees or preapproved entities must pay a fee to convert their license.
- Operational Guidelines: Post conversion, these entities can cultivate, manufacture, or dispense cannabis products for both medical and recreational use.
- Non-Conversion Option: Licensees who choose not to convert can hold their license for resale but cannot operate under it from July 1, 2023.
Lottery System for New Licenses:
- License Selection Process: MCA employs a lottery system to select businesses for new cannabis licenses.
- Conditional License Period: Selected businesses get 18 months, extendable by six months, to secure a location and receive zoning approval.
General Eligibility
Individuals applying for a Maryland cannabis license must:
- Be 21 years-of-age or older.
- Not have any disqualifying criminal convictions.
Applications will be selected for the lottery based on:
- Submission of a detailed and complete operational plan.
- Submission of a detailed and complete business plan demonstrating likelihood of success, and numerous other details.
- Submission of a detailed diversity plan.
Key Dates and Outreach Initiatives:
- July to August 2023: MCA, in partnership with the new Office of Social Equity, will conduct outreach and training about the application process for new licenses.
- Fall 2023 Application Period: A 30-day window will open for standard or micro cannabis license applications in Round 1.
- Ongoing Review and Selection: MCA will review applications, conduct lotteries, and notify selected Round 1 applicants starting January 1, 2024.
- Future Licensing Rounds: Announcement of Round 2 for standard and micro cannabis licenses, including on-site consumption licenses, is expected in the second half of 2024.
Focus on Social Equity:
Round 1 Applicant Criteria: All Round 1 applicants must be social equity applicants, owning at least 65% of the business and meeting specific criteria related to residence, education, or impact by cannabis enforcement policies.
Mapping of Impacted Areas:
- Disproportionately Impacted Areas: These are defined as areas with cannabis possession charges above 150% of the state’s 10-year average. MCA will provide a map and associated zip codes to identify these areas.
- CannDelta’s Assistance: Understanding whether you fall under a Disproportionately Impacted Area can be complex. CannDelta can assist in determining your eligibility and provide guidance on how it affects your licensing process. Contact us for more information and support.
Maryland Cannabis Licensing Types and Activities
Understanding the different types of cannabis licenses available in Maryland is crucial for prospective applicants. Here’s a detailed breakdown of each license type and the specific activities they encompass:
Standard and Micro Cannabis Licenses Overview
- Standard Licenses:
- Intended for larger operations with greater production and distribution capacities.
- Includes grower, processor, and dispensary licenses.
- Micro Licenses:
- Designed for smaller-scale operations.
- Includes grower, processor, dispensary, and incubator space licenses.
Standard Grower License
- Activities Allowed:
- Cultivation of cannabis plants.
- Packaging and distribution to licensed dispensaries and testing laboratories.
- Operational Scale:
- Can operate with an indoor canopy ranging from 10,000 sq. ft. to 300,000 sq. ft.
- Canopy Calculation:
- One sq. ft. of indoor canopy is considered equal to four sq. ft. of outdoor canopy for regulatory purposes.
Standard Processor License
- Activities Allowed:
- Transformation of cannabis into other products or extracts.
- Packaging and distribution to dispensaries and independent testing laboratories.
- Processing Capacity:
- Licensed to process more than 1,000 pounds of cannabis per year.
Standard Dispensary License
- Activities Allowed:
-
- Acquisition, possession, sale, or dispensing of cannabis products and related materials.
- Delivery of medical cannabis permitted until June 30, 2024.
- Post-June 30, 2024 Requirements:
- After this date, standard dispensaries must form a qualifying partnership with a micro-dispensary to continue delivery services.
On-Site Consumption Lounge License
- Activities Allowed:
- Permits cannabis consumption within the licensed premises.
- Operational Guidelines:
- No cultivation, processing, or serving of infused food allowed.
- Cannot own other types of cannabis licenses.
- Location changes permissible with approval and compliance.
- Licensing and Sourcing:
- Licensing expected to happen in the second half of 2024.
- Lounges can source cannabis from licensed growers, processors, and standard dispensaries.
Incubator Space License
- Purpose:
- Facilities designated for Micro Licensee operations.
- Ownership Restrictions:
- The owner/controller cannot have ownership or control over any other type of cannabis license.
- Pre-Licensing Preparations:
- The Maryland Economic Development Corporation will identify regional sites for incubator spaces prior to issuing licenses.
Micro Grower License
- Activities:
-
- Cultivation, packaging, distribution to other licensees and testing laboratories.
- Operational Limit:
- Up to 10,000 sq. ft. of cultivation space annually.
- Conversion Option:
- Can convert to a standard grower license under specific regulations.
Micro Processor License
- Activities Allowed:
-
- Transform cannabis to other products/extracts, packaging, distribution to dispensaries and testing labs.
- Operational Limit:
- Processes up to 1,000 pounds of cannabis annually.
- Conversion Option:
- Can convert to a standard processor license under specific regulations.
Micro Dispensary License
- Activities Allowed:
-
- Delivery services only, with no physical storefront.
- Operational Limits:
- A maximum of 10 employees, delivery to private residences and medical facilities.
- Conversion Option:
- Can convert to standard dispensary license.
Application and License Issuance Process for Maryland Cannabis Licenses
Lottery Award System
- Functioning of the Lottery System:
-
- Applicants meeting minimum qualifications are entered into a random lottery conducted by the Maryland Cannabis Administration (MCA).
- The lottery ensures a fair and unbiased selection process for potential licensees.
- Notification of Selection:
- Post-lottery, the MCA notifies all participants regarding whether their application was selected.
- Selected applicants may be requested to provide additional information or documentation.
Application Process for Maryland Cannabis Licenses
- Application Completion:
-
- Applicants must use designated forms provided by the MCA.
- All applications must be accompanied by the specified application fee.
- Submission Restrictions:
- An individual or entity can only be listed on one application per license type in each application round.
- A maximum of two applications per license type is allowed for each individual or entity in each round.
- Property Ownership Not Required:
- The MCA does not require applicants to own or possess property or a facility for operating a cannabis business at the time of application.
Application Timeline for Maryland Cannabis Licenses
- Announcement of Application Rounds:
-
- The MCA will announce each application round at least 60 days in advance.
- Applications are accepted for a 30-day period.
- Outreach Efforts:
- The MCA actively reaches out to small, minority, and women business owners, as well as potential social equity applicants, before accepting applications.
Evaluation of Applications
- Review for Minimum Qualifications:
-
- The MCA evaluates applications on a pass-fail basis for minimum qualifications.
- Key Components of the Application:
- A detailed operational plan for safe, secure, and effective business operations.
- A business plan demonstrating the likelihood of success and appropriate employee working conditions.
- A detailed diversity plan.
- Documentation proving the applicant meets the requirements of a social equity applicant (for the first round of licensing).
Post-Selection Procedures
- After Lottery Selection:
-
- Selected applicants will receive further instructions on finalizing their license issuance.
- Timeline for Licensing and Operation Commencement:
- Applicants are given a timeline for completing all necessary steps to secure their license and begin operations.
License Fees and Other Associated Costs in Maryland Cannabis Licensing
Standard Licenses
- Standard License Fee: $5,000.
- Grower License: $50,000 (valid for a 5-year period).
- Processor License: $25,000 (valid for a 5-year period).
- Dispensary License: $25,000 (valid for a 5-year period).
- On-Site Consumption License: $10,000 (valid for a 5-year period).
Micro Licenses
- Micro License Fee: $1,000.
- Micro Grower License: $10,000 (valid for a 5-year period).
- Micro Processor License: $10,000 (valid for a 5-year period).
- Micro Dispensary License: $10,000 (valid for a 5-year period).
- Incubator Space License: $10,000 (valid for a 5-year period).
Fee Reductions for Social Equity Businesses
- Discounted Fees:
- Licensed social equity businesses receive a 50% reduction in licensing fees for each license type.
Conversion Fees for Existing Licensees
- For Medical Cannabis Dispensaries Converting to Standard Licenses:
- Conversion Fee: Payable by existing medical cannabis licensees to convert to standard medical and adult-use licenses.
Additional Fees
- Registration Fees:
-
- Independent Testing Laboratory: $5,000 annually.
- Ancillary Business and Security Guard Agency Fees:
- Annual Business Registration: $1,000.
- Agent Registration (every 2 years): $50.
- Permit Fees for Edible Products:
- Application Fee: $1,000.
- Annual Permit Fee: $500.
- Miscellaneous Fees:
- Transfer of Ownership Interest: $1,000 (entity transferee), $500 (individual transferee).
- Change in Location Fee: $500.
- License Reinstatement Fee: $2,000.
- Receivership Application Fee: $1,000.
- Management Agreement Fee: $1,000.
Social Equity and Community Impact in Maryland Cannabis Licensing
Maryland’s cannabis industry is committed to promoting social equity and positively impacting communities.
Understanding Social Equity in Cannabis Licensing
- Concept of Social Equity:
-
- Social equity in cannabis licensing refers to the efforts to ensure fair access and opportunities in the cannabis industry for communities that have been historically marginalized and disproportionately impacted by past cannabis laws.
- Significance:
- Promotes diversity and inclusion in the burgeoning cannabis market.
- Aims to rectify historical injustices related to cannabis enforcement.
Qualifying as a Social Equity Applicant
Applicants must meet specific criteria to be considered social equity applicants. This includes:
- Residing in a disproportionately impacted area for at least five years in the past ten years.
- Attending a public school in a disproportionately affected area for a minimum of five years.
- Attending a four-year higher education institution in Maryland for a minimum of two years, where at least 40% of attendees are eligible for a Pell grant.
Support and Resources for Social Equity Applicants
- Assistance Provided:
-
- The Maryland Cannabis Administration offers various resources, training, and assistance specifically tailored for social equity applicants.
- Guidance on the application process, business planning, and compliance with regulations.
- Financial Support:
- Information on any available funding, grants, or financial aid programs designed to support social equity applicants in establishing and operating their cannabis businesses.
Ongoing Regulatory Requirements in Maryland Cannabis Industry
For cannabis businesses in Maryland, compliance with state regulations is not just a one-time effort but an ongoing commitment. Understanding and adhering to these requirements is essential for maintaining licensure and operating successfully. Here’s what licensees need to know:
Importance of Compliance in the Cannabis Industry
- Maintaining Legal Standing:
-
- Compliance is key to retaining the legal status of your cannabis business.
- Adherence to state regulations protects your business from legal risks and penalties.
- Key Regulatory Areas:
- Businesses must stay informed and compliant in areas like product safety, operational standards, and consumer protection.
Ongoing Licensing Requirements
- Annual Renewals:
-
- Licenses must be renewed annually, requiring submission of updated information and renewal fees.
- Reporting Obligations:
- Regular reporting to the Maryland Cannabis Administration is mandatory, covering aspects like sales, inventory, and security measures.
- License Validity:
- Keeping all aspects of the business compliant with state laws and regulations is crucial to maintain license validity.
Inspection and Enforcement
- Routine Inspections:
-
- Periodic inspections by regulatory authorities ensure compliance with health, safety, and operational standards.
- Preparing for Inspections:
- Businesses should maintain organized records and ensure all operations are in line with regulatory requirements.
- Enforcement Actions:
- Non-compliance can lead to enforcement actions, including fines, license suspension, or revocation.
Compliance and Reporting Requirements for Maryland Cannabis Licensing
Licensing Compliance
- License Renewals: Licenses for cannabis businesses in Maryland are typically renewed annually, with the renewal date set on December 31st of each year. Ensure timely submission to avoid disruptions.
- Ongoing Compliance: To maintain a cannabis license, businesses must continuously meet all regulatory requirements. This includes adhering to operational, security, and safety standards set forth by the Maryland Cannabis Administration.
- Consequences of Non-Compliance: Failure to comply with licensing requirements can lead to penalties, fines, or even license revocation. It is crucial to understand and abide by these regulations to avoid legal repercussions.
Product Testing and Quality Assurance
- Mandatory Testing: All cannabis products in Maryland must undergo rigorous testing to ensure safety and potency. Compliance with testing standards is essential to protect consumers and maintain product quality.
- Quality Control: Implementing robust quality control measures within your business operations is necessary to consistently produce safe and reliable cannabis products. Regular quality assurance checks are vital.
- Reporting Obligations: Cannabis businesses are required to report any issues related to product safety, contamination, or potency. Transparency in reporting is crucial to address concerns promptly.
Taxation and Financial Reporting
- Tax Obligations: Understand your tax obligations as a cannabis business, including sales tax and any other applicable taxes. Compliance with tax laws is essential to avoid legal complications.
- Financial Reporting: Accurate financial reporting is a must. Businesses should keep comprehensive records of all financial transactions and revenue. Be prepared to submit reports as required by state regulations.
Inventory Management and Tracking
- Seed-to-Sale Tracking: Maryland enforces seed-to-sale tracking systems to monitor cannabis inventory. Maintain accurate records of cultivation, processing, and sales to ensure compliance.
- Reporting Discrepancies: If any discrepancies or irregularities occur in your inventory, it is your responsibility to report them promptly. Compliance with tracking regulations is critical.
Security and Surveillance
- Security Requirements: Comply with security regulations, which include specific equipment requirements and data retention policies. Security is crucial to protect your business and the safety of employees and customers.
- Incident Reporting: In the event of security breaches or incidents, follow reporting procedures as required by law. Timely reporting is vital to address security concerns effectively.
Environmental Compliance
- Environmental Regulations: Cannabis cultivation and processing can have environmental impacts. Ensure compliance with environmental regulations, including waste disposal and sustainability practices.
- Waste Management: Properly manage waste generated during cannabis production to minimize environmental harm. Adhering to waste disposal guidelines is essential.
Social Equity Reporting
- Demographic Data: Businesses with social equity initiatives must report demographic data, including information on ownership and control within the company.
- Community Impact Reports: Provide reports on the impact your business has on the community, especially if you qualify as a social equity applicant. Demonstrating your commitment to social responsibility is essential.
Frequently Asked Questions
What Happens After You’re Selected for a License in the Lottery?
The MCA will contact all license winners with additional information and next steps following the draw. The MCA will conduct a final review of each application before distributing conditional licenses.
When Will the Next Round of Licenses be Awarded?
The next round of license application round is expected to take place summer 2024, however there is no official date. The MCA is required to announce any application period 60 days before the beginning of the 30-day application period.
What Licenses Will be Available in the Second Round?
The MCA will issue a maximum of the following license in the second application period:
For standard licenses:
- 25 grower licenses
- 25 processor licenses
- 120 dispensary licenses.
For micro licenses:
- 70 grower licenses
- 70 processor licenses
- 10 incubator space licenses
- 15 on-site consumption licenses
Will First Round Applicants who met Minimum Requirements but not get Selected for a License be Required to pay the Application Fee Again?
The MCA will not charge an application fee for first round applicants who met the minimum qualifications but were not selected in the lottery, provided they apply for the same license type (Standard or Micro) in the next round. These applicants may choose to apply in a different location or region than the one they selected during the first licensing round.
When do ‘Not-Selected’ First Round Applicants Need to Decide if they want to be Included in the Second round?
If you met the minimum requirements in the first round, the MCA will reach out to the primary contact on your application to determine whether the applicant(s) want to be included in the second round and to alert the applicant(s) of any additional application requirements.
Take the Next Step in Your Cannabis Journey
Are you ready to navigate the Minnesota cannabis licensing landscape? Whether you're starting a new venture or expanding your existing business, understanding the complexities of the process is crucial.
If you need guidance or have questions about the licensing process, CannDelta is here to help. Our team of experts offers tailored support to navigate these regulations and ensure your business is set up for success.
