As of July 1, 2023, adult-use cannabis consumption is legal in the State of Maryland. The Maryland Cannabis Administration (MCA) provided information for interested cannabis business owners regarding the process to apply for a cannabis license. Of particular importance is that the first round of applications is exclusively for Social Equity Applicants (SEA). On September 1, 2023, the Office of Social Equity (OSE), an independent executive agency, released the specific criteria that applicants can use to determine if they are an eligible Social Equity Applicant to apply in the first round.
Social Equity Applicant Criteria
A Social Equity Applicant is eligible if they are applying for a cannabis license or cannabis registration that has at least 65 percent ownership and control[i]held by one or more individuals who have:
Note: As long as the applicant meets one of these criteria, they do not need to live in Maryland to be eligible to apply for a license. However, the applicant must still use MCA’s Social Equity Verification Portal. In addition, the applicant will need to provide supportive data that indicates the geographic area in question is consistent with Maryland’s definition of “disproportionately impacted area.”
Only verified Social Equity Applicants may apply for a license in the first round. Applicants must verify themselves as a Social Equity Applicant before the cannabis business license applications are released. To verify eligibility, an applicant must:
Note: While the above tasks are mandatory, completing the tasks only verifies that the applicant can apply for the first round of licensing. However, that process is not the completion of the application itself.
Once the Cannabis Business License Interest Form is successfully completed, the applicant will receive a personalized link to The Social Equity Verification Portal (Portal). Free of charge, this Portal will confirm that the applicant is eligible to apply for a license during the first round.
The Portal will open (tomorrow) Friday, September 8, for a period of 60 days, closing on Tuesday, November 7. If an applicant successfully completes the Cannabis Business Interest Form before September 8, then they will receive a link upon opening the Portal. If an applicant successfully completes the verification after September 8, then they will receive a personalized link via email within 1-2 business days.
If an applicant is verified through the Portal as a Social Equity Applicant based on the MCA Acceptable Verification Documents, they will be granted a social equity applicant verification number and corresponding report that they must submit along with their actual application.
It is still unclear when the cannabis business license applications will be released. According to the regulations, MCA must make an application announcement at least 60 days before the application period (i.e., the period in which a prospective licensee submits their application). The application period will be open for 30 days.[iii] While the release of the application is pending, the Cannabis Reform Act requires MCA to begin issuing first-round licenses on or before January 1, 2024.
Note: Just because an applicant is verified and can apply, this does not mean they are guaranteed admission to the application lottery. If there are more applications from verified Social Equity Applicants than there are available licenses, a random lottery will determine the license winners.
[i] As defined by statute:
Owner means a person with an ownership interest in a cannabis licensee.
Ownership interest means a direct or indirect equity interest in a cannabis licensee, including in its shares or stock.
(i) the decision-making authority over the management, operations, or policies that guide a business; or
(ii) authority over the operation of the technical aspects of a business.
(i) holding a right to veto significant events;
(ii) the right or authority to make or veto decisions regarding operations and strategic planning, capital allocations, acquisitions, and divestments;
(iii) the right or authority to appoint or remove directors, corporate-level officers, or their equivalent;
(iv) the right or authority to make major marketing, production, and financial decisions; and
(v) the right or authority to execute exclusive contracts or significant contracts in the aggregate of $10,000 or greater on behalf of the licensee.
See Md. Alcoholic Beverages Code Ann. § 36-101.
[ii][ii] A “disproportionately impacted area” is defined as a geographic area that has had above 150% of the State’s 10-year average for cannabis possession charges.
[iii] See COMAR 14.17.05.03.
The contents of this Alert are for informational purposes only and do not constitute legal advice. If you have any questions about this Alert, please contact the Shulman Rogers attorney with whom you regularly work or a member of the Shulman Rogers Employment and Labor Law Group.
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