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Consultants tell work group cannabis sales in Maryland could reach $1B after it’s legal


Consultants tell work group cannabis sales in Maryland could reach $1B after it’s legal

Jan 09, 2023 | 6:50 am ET
By William J. Ford
Consultants tell work group cannabis sales in Maryland could reach $1B after it’s legal
A technician inspects the leaves of cannabis plants growing inside a controlled environment. Photo by Konstantinos Tsakalidis/Bloomberg Creative via Getty Images.

As the General Assembly prepares to hash out final details for legalized recreational use of cannabis in Maryland, lawmakers are learning more about the potential scale of the industry.

Cannabis Public Policy Consulting, a firm based in Massachusetts that tracks and analyzes cannabis data, estimates that cannabis sales from licensed dispensaries in the state could reach $1 billion within about two years.

Assuming lawmakers come to terms on the finer details of licensing, regulation and taxation of the industry, recreational cannabis use in Maryland would become legal on July 1, thanks to a referendum passed by voters in November by a 2-to-1 margin.

The estimate of $1 billion in sales by the 20th month after legalization comes from a November survey about cannabis consumption in the state. Although about 4,600 Marylanders were screened for the survey, slightly more than 2,100 people, from 413 of the state’s 468 zip codes, completed it.

In recent meetings, the House Cannabis Referendum and Legalization work group has been briefed on reports that cannabis sales could reach up to $72 billion nationwide in the next decade, discussed tax options and considered impacts on workplace safety

Legal recreational use in Maryland will be limited to adults. Specifically the law will permit a person 21 years and older to purchase and possess up to 1.5 ounces of cannabis. As of Jan. 1, possession of up to 2.5 ounces of cannabis is a civil offense.

It is already legal for buyers with medical cannabis cards to buy cannabis from a licensed dispensary in Maryland.

According to Cannabis Public Policy Consulting, more than half of people recently surveyed are willing to travel up to 20 minutes to purchase cannabis and, among those surveyed, the “median willingness to pay” for legal adult use per gram in Maryland is $14. In other states where medical and recreational use is legal, the median price users are willing to pay is $10 per gram.

“People are pretty hyped about getting cannabis in the adult-use market,” said Michael Sofis, director of research for the consulting group.

Respondents who use cannabis said they spent an average of $49 on cannabis over the past month, but would be willing to spend $56 if adult use became legalized in the state, “which further validates our predictions of favorable demand and early shifts to adult use sales upon its implementation,” according to the firm’s survey document.

The consultants offered policy recommendations, including that the state should have at least 300 dispensaries to keep up with supply and demand, with a ratio of 17,000 residents per dispensary.

Based on that ratio, for the state’s four most populated counties, they recommended 48 dispensaries in Montgomery, 42 in Prince George’s, 39 in Baltimore County and 27 in Anne Arundel.

One or two additional dispensaries should be located on the Eastern Shore because “it’s currently underserved,” Sofis said.

The consultants also recommended a tax rate of no more than 15% to 20%.

Mackenzie Slade, director of the consulting firm, told lawmakers there isn’t a validated measure for determining or estimating the state’s supply.

One reason, Slade said, is because states track supply data differently. Colorado publishes data on cultivated plants. In Massachusetts, officials release figures on harvested and flowering plants.

“It’s kind of all over the place…” she said. “At the end of the day, this isn’t gospel. This is guidelines.”

Del. Robin Grammar (R-Baltimore County) asked if the illicit cannabis market would decline once there’s a transition to the legal market.

Slade said by using public outreach campaigns to inform residents about taxation, cannabis deliveries and locations of dispensaries, the illicit market in Maryland should decrease to less than a 20% share in three years.

Del. Luke Clippinger (D-Baltimore City), who chairs the work group, said cannabis discussions will continue this year.

“First day of session is next Wednesday and the legislature will be working on this issue very, very closely in the 2023 session,” he said.