Maryland’s Blossoming Cannabis Market Navigates Growth and Controversy Amidst Federal Scrutiny

LOS ANGELES– In a burgeoning market, Maryland’s cannabis sector has reported a robust $91.4 million in sales this August, marking the state’s second month of commercial adult-use retail, according to data from the Maryland Cannabis Administration (MCA). This figure represents a notable increase from July’s sales, which totaled $87.4 million.

The adult-use segment constituted a significant portion of the August sales, amounting to $53 million or approximately 58% of the overall market. Meanwhile, the medical sales segment contributed $38.4 million. These figures indicate a promising trajectory for the state’s cannabis industry, which initiated adult-use sales on July 1, 2023, becoming the 20th state in the U.S. to do so.

Several established medical operators, including Curaleaf, Columbia Care, and Green Thumb Industries, were among the first to transition their facilities to cater to the expanded market. Currently, these and other companies operate under a four-dispensary cap in Maryland, a state bordered by several others where adult-use sales are yet to be legalized.

Looking ahead, Maryland is preparing to issue its first round of cannabis licenses exclusively to social equity applicants, as part of an initiative backed by a business assistance fund established by the state legislature. These licenses are anticipated to be distributed starting in early 2024, fostering a more inclusive market landscape.

According to sales analytics from the Cannabis Business Times, Maryland is on track to establish itself as a billion-dollar cannabis market by 2024, joining the ranks of eight other states projected to reach this milestone within the year. This projection is bolstered by the state’s impressive sales figures from the first half of 2023, which saw nearly a quarter-million in medical-only cannabis sales, bringing the total sales to $420.2 million through August.

The MCA also provided a breakdown of the August sales, revealing that dried cannabis flower dominated the market with a 60% share, followed by concentrates (27%), infused edibles (6.7%), and infused non-edibles (5.7%). On a per-capita basis, the state has averaged roughly $14.50 in monthly cannabis sales per person since the inception of its adult-use program, placing it mid-range among states that have legalized adult-use sales since the beginning of 2022.

However, the state’s burgeoning cannabis industry has not been without controversy. Maryland’s collaboration with Wells Fargo as a banking provider has been criticized by the prohibitionist group Smart Approaches to Marijuana (SAM). SAM’s president, Kevin Sabet, has urged state officials and Wells Fargo to end their partnership, labeling the licensed retail sales as federally illegal drug money. This stance highlights the ongoing tension between state and federal laws regarding cannabis sales and taxation.

Despite these challenges, the state’s 9% excise tax on adult-use cannabis sales is generating substantial revenue, with several licensees having already remitted over $100,000 each in tax money from July sales. The state anticipates that the revenue from these sales could exceed $30 million in the latter half of 2023.

As the industry navigates these complex legal waters, state officials are exercising caution in their terminology to avoid potential federal conflicts. Rob Scheerer, director of the Office of the Comptroller’s Office, noted that tax returns tactfully refer to the revenue as “a sale subject to the 9% rate under Senate Bill 516 of 2023,” avoiding direct mention of cannabis.

As federal lawmakers consider the Secure and Fair Enforcement (SAFE) Banking Act, which is currently under review in the Senate Banking Committee, the evolving landscape of the cannabis industry in Maryland and across the nation remains a focal point of business and legislative attention.