Now that Maryland voters have approved a marijuana legalization referendum at the ballot, the pressure is on for lawmakers to pass separate legislation to determine what the adult-use market will look like. To that end, a General Assembly cannabis task force met for the first time post-election on Tuesday to consider one key aspect of the future program: tax policy.
The Cannabis Referendum and Legalization Workgroup convened exactly one week after voters decisively passed the reform ballot measure, which triggers the implementation of complementary legislation covering basics like the legalization of possession and low-level home cultivation. But there’s still a lot more work to be done on issues like commercial production and sales, which are not covered by the current law.
Members of the workgroup—which was formed last year by House Speaker Adrienne Jones (D)—have spent a significant amount of time considering a wide range of marijuana policy issues over the last several months, and this latest meeting centered on how to tax cannabis and distribute revenue.
A representative of the National Conference of State Legislatures (NCSL) gave a presentation that went over how other legal states have approached taxing marijuana.
“With the passage of Question 4, Maryland is on track to make this significant impacts over the next few months as it relates to the legalization of cannabis,” Del. Luke Clippinger (D), who sponsored both the referendum bill as well as the implementation measure and serves as the chair of the workgroup, said in opening remarks on Tuesday.
“We’re on the right track and, working together, I’m confident we’ll continue to make sound decisions as we build out our taxation and regulatory structures regarding the legalization of cannabis,” he said, thanking members for “working diligently over the last year to ensure that we produce a thoughtful, meaningful and safe policies.”
Jackson Brainerd of NCSL went over a slideshow presentation that explained how other states have based their tax structures on various factors like the weight, price or potency of cannabis products and the need to set a tax rate that generates revenue but isn’t so high that people continue purchasing marijuana in the illicit market.
It also listed several ways that states have used cannabis tax revenue to support public programs and government operations such as social equity initiatives, education, substance misuse treatment and prevention, law enforcement and infrastructure.
Brainerd emphasized that there are some trends that lawmakers should be aware of when it comes to taxing marijuana, like the fact that it’s proven difficult to “estimate both demand and market prices” in the emerging legal market and that tax revenue in some states has grown quickly once sales begin but gradually slows before stabilizing.
Another option presented to the workgroup would be to allow individual municipalities to impose their own local taxes on cannabis sales that take place within their borders.
Tonight at 7pm is another meeting of the MD General Assembly Cannabis Referendum Workgroup, our first meeting after passage of the ballot referendum. Here is the link to watch us live on YouTube – https://t.co/AI1RRLKN1I
— Nicole Williams (@nwilliams23) November 15, 2022
Tuesday’s meeting lasted just under an hour, and Clippinger said members would be convening twice in December, though he didn’t provide specific details on what kind of cannabis policy issues lawmakers would be going over.
Maryland House Majority Leader Eric Luedtke (D), who has also served as a member of the legislative workgroup, said last month that he would be voting in favor of legalization at the ballot, and he emphasized that the vote would be “the beginning of the conversation.” It has since been announced that Luedtke will be joining the administration of Gov.-elect Wes Moore (D).
The language of the ballot referendum itself was straightforward, but where the more complex aspects of the reform come into play is with the complementary HB 837.
Under that legislation, the purchase and possession of up to 1.5 ounces of cannabis will be legal for adults. The legislation also will remove criminal penalties for possession of up to 2.5 ounces. Adults 21 and older will be allowed to grow up to two plants for personal use and gift cannabis without remuneration.
Past convictions for conduct made legal under the proposed law will be automatically expunged, and people currently serving time for such offenses will be eligible for resentencing. The legislation makes it so people with convictions for possession with intent to distribute can petition the courts for expungement three years after serving out their time.
Even though voters have passed the referendum, the reform won’t take effect immediately. Possession of small amounts of cannabis will become a civil offense on January 1, 2023, punishable by a $100 fine for up to 1.5 ounces, or $250 for more than 1.5 ounces and up to 2.5 ounces. Legalization for up to 1.5 ounces won’t kick in for another six months.
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Advocates have taken issue with that protracted timeline. Having possession legalization take effect sooner was among several asks they made that were not incorporated into the legislation. They also wanted lawmakers to include a provision preventing police from using the odor of marijuana alone as the basis for a search.
Adult-use legalization began to advance through Maryland’s legislature in the 2021 session, but no votes were ultimately held. The Senate Finance Committee held a hearing last year on a legalization bill, which followed a House Judiciary Committee hearing on a separate cannabis proposal.
Maryland legalized medical cannabis through an act of the legislature in 2012. Two years later, a decriminalization law took effect that replaced criminal penalties for possession of less than 10 grams of marijuana with a civil fine of $100 to $500.
Meanwhile, Gov. Larry Hogan (R) separately allowed a bill to create a state fund to provide “cost-free” access to psychedelics like psilocybin, MDMA and ketamine for military veterans suffering from post-traumatic stress disorder (PTSD) and traumatic brain injury to take effect without his signature this year.
Photo courtesy of Brian Shamblen.