Maryland Legislature passes two important bills for the cannabis industry

The Maryland General Assembly introduced several bills impacting the cannabis industry during its 90-day legislative session. SB594 and HB622 made it through the legislative process and are on their way to Governor Wes Moore for execution.

SB 594 - Cannabis Advertising - Alterations (plus Social Equity Ownership Changes)

SB 594 went through numerous iterations in the legislature. The current framework for cannabis business advertising is extremely restrictive. The general assembly acknowledged that dispensaries are especially restricted in their ability to market their business. For instance, a dispensary (currently) can only put its business name on the outside of the building. Even "Drive-Thru" or "Woman-Owned Business" are violations of the current statutes and regulations. With new cannabis businesses trying to carve out a place in Maryland's industry, advertising is extremely difficult. SB594, as passed, expands on the type of signage that can be on the exterior of a dispensary. SB594 also expands and clarifies advertising restrictions concerning packaging for cannabis products.

Finally on SB594 - a floor amendment on the last day of session changed the social equity requirements for ownership and control. Currently, a social equity licensee must have 65% ownership and 100% control by social equity owners. Notably, the statute does not require 100% control, but the MCA's interpretation of the statute thus far has been to require unilateral "binary" control by social equity owners. The floor amendment, and the legislators' discussions in amending the social equity requirements made clear the legislature's intent in drafting the social equity requirements: social equity percentages apply to BOTH ownership percentage AND control percentages. This is a big development because social equity licensees are having a very difficult time raising capital and finding business partners when the business partner cannot get reasonable protections. The MCA currently requires social equity owners to have the unilateral authority to: dilute their business partners; make every substantive business decision; change the corporate governing documents; and even selling the entire business. The legislature, in amending SB594, made clear their intent that a social equity owner need not be the unilateral voice in governing these complex businesses.

HB 622 - Micro Dispensary Licensee Changes

HB 622 makes clarifying changes to the annual cannabis agent training requirements. Perhaps more importantly, HB 622 increases the number of agents a micro dispensary may have on staff. Currently, micro dispensary (delivery only) licensees can only have 10 employees. With no micro dispensaries currently licensed in Maryland, and between 2 and 3 possible per region in Maryland, a 10-employee cap will make it extremely difficult to service the needs of Maryland medical patients and consumers. With HB 622, micro dispensaries could have up to 20 employees, doubling their capacity. This is a great opportunity for new cannabis businesses to hire the help they need to really enter the market and service the needs of the industry.

The Cannabis Law team at Corey Tepe, LLC, continues to monitor the constantly evolving and changing legal framework of the cannabis industry. If you have questions or need assistance with your cannabis company, please reach out to Justin Tepe (justin@coreytepe.com) or Leah Dotter (leah@coreytepe.com).