Maryland's high demand market undermined by restrictions, delays

The rollout of Maryland’s social equity cannabis program has faced significant delays, with none of the businesses open nearly a year after they were awarded licenses.Part of the issue is that it’s difficult to attract investors to a business and challenging to find real estate.

ADVERTISEMENT Maryland’s cannabis regulations require that the original social equity applicant retain 51% ownership in the company.A separate social equity partner can own 14% of the company, leaving just 35% for a non-social equity investor.

Further complicating matters is that the original social equity licensee must hold the license for five years, a measure taken after witnessing social equity applicants in other states flipping their licenses soon after they were awarded.“It can be challenging to entice investors and raise capital if you can’t give them any ownership or control,” said attorney Meg Nash, a partner in Vicente’s Boston/Maryland office.

Medical to recreational conversion Social equity applicants aren’t the only cannabis businesses struggling.When medical marijuana growers and processors added recreational use to their licenses in 2023, they had to pay the state a conversion fee of 10% of their total gross revenue in 2022 up to $2 million.

Medical marijuana retailers had to pay 8% up to $2 million.“These were seven-figure charges for some businesses,” said Wendy Bronfein, co-founder, chief brand officer and director of public policy at Maryland-based Curio Wellness, which is among the cannabis businesses that had to pay seven figures for an adult-use license.

On top of that, they’re not allowed to sell their licenses for five years from the date they converted, which makes it difficult to attract investors.“The idea that you cannot exit your business at the time that’s best for you and your investors is not a decision the state should be making,” Bronfein said.

The state’s medical mar...