Maryland Cannabis Sales Crack $420 Million For Year; Tax Revenue’s Banking Scrutinized

Maryland’s cannabis dispensaries reported more than $91.4 million in August sales—the state’s second month of commercial adult-use retail—according to the Maryland Cannabis Administration (MCA).

Specifically, adult-use sales accounted for $53 million of the August total, or roughly 58% of the overall market, while medical sales contributed $38.4 million, according to MCA. Both market segments had slight increases over July, when licensed retailers reported $87.4 million in total sales.

Maryland was the 20th state in the nation to launch adult-use sales July 1, 2023, with existing medical operators like Curaleaf, Columbia Care, Green Thumb Industries, Verano, TerrAscend, Ascend and Trulieve moving first to take early advantage of transitioning their facilities to the expanded market for opening day. These companies and others have a four-dispensary cap in the state, which borders Delaware, Pennsylvania, Virginia and West Virginia, none of which have adult-use sales.

Maryland’s first round of cannabis licensing for new market entrants will be available exclusively to social equity applicants: State regulators recently released the eligibility requirements for these applicants, who will be financially backed by a cannabis business assistance fund created by the state Legislature. These licenses are expected to be issued starting in early 2024.

With the addition of adult-use retail operations, Maryland is now on pace to become a billion-dollar cannabis market in 2024, joining the likes of eight other states projected to eclipse that 10-figure benchmark this year, according to Cannabis Business Times sales analytics.

Thanks to nearly a quarter million in medical-only cannabis sales through the first six months of 2023, Maryland’s licensed retailers have now sold $420.2 million in cannabis products in 2023 (through August).

In August, dried cannabis flower sales accounted for more than 60% over the overall retail market, while concentrates (27%), infused edibles (6.7%) and infused non-edibles (5.7%) made up the other leading product categories, according to MCA.

With Maryland home to roughly 6.2 million residents, the state has averaged approximately $14.50 in monthly cannabis sales per person since launching its adult-use program, a per-capita figure that falls in the middle of the pack among its legalization peers (nine state that have commenced adult-use sales since the beginning of 2022).

Source: Cannabis Business Times research and analytics

SAM president Kevin Sabet wrote a letter to the State Comptroller Brooke Lierman’s office and to Wells Fargo CEO Charles Scharf, urging them to cease their collaborations to “circumvent” U.S. law pertaining to a federally illegal plant.

“Federal law is clear—sales of marijuana and THC drugs are illegal,” Sabet said. “The fact that state officials are actively trying to circumvent federal laws and banking regulations is deeply concerning. It’s especially inappropriate because the quotes from members of the State Comptroller Lierman’s staff make it clear this is an active effort to protect the banks who are breaking federal law.” 

A few of Maryland’s licensees have already sent the state more than $100,000 each in tax money from July sales, Rob Scheerer, director of the Office of the Comptroller’s Office, said in mid-August, Maryland Matters reported.

The majority of big banks don’t take on the risk of providing services to state-licensed cannabis companies without clear direction from federal lawmakers, who are currently considering legislation, the Secure and Fair Enforcement (SAFE) Banking Act, in the Senate Banking Committee. But state governments working with financial institutions to bank cannabis tax revenue runs its own set of risks.

Scheerer acknowledged this at a Maryland Association of Counties conference Aug. 18 in Ocean City, saying that the state does not directly use the word “cannabis” on tax returns, Maryland Matters reported.

“We have craftily called this ‘A sale subject to the 9% rate under Senate Bill 516 of 2023,’” Scheerer said.

The revenue from that “sale” will likely account for more than $30 million for Maryland in the latter half of 2023.

Editor's note: After this article was published, the Office of the Maryland Comptroller provided Cannabis Business Times the following statement: 

“Under Maryland law, the Comptroller’s Office is responsible for collecting the sales and use tax on all taxable goods and services in the State, including adult-use cannabis, which was passed by voter referendum in November 2022 and the Maryland legislature in 2023, and established a 9% sales and use tax on adult-use cannabis sales.

“Wells Fargo Bank provides lockbox and other treasury management services to the State of Maryland, including such services related to the collection of state tax revenue. All due care has been taken by State officials and Wells Fargo to ensure that the collection of the Maryland sales and use tax, and the State’s handling of that tax revenue, complies with applicable laws and regulations.  Any inference or assertion that these processes have been designed to evade any applicable laws or regulations is incorrect.”