Senate panel seeks independent state agency to oversee recreational cannabis

After nearly three hours of review and debate, the Senate Finance Committee approved a heavily amended bill to regulate Maryland’s soon-to-be legalized cannabis industry Monday evening, setting up a showdown with the House of Delegates over some of the language.

Finance voted to change a proposed graduated sales tax — initially seen as ranging from 6% to an ultimate 10% in Fiscal 2028 — to a flat 9% tax, once sales are legalized July 1 for adults, in keeping with voters’ approval of the measure last November.

The committee also voted to create an independent Maryland Cannabis Administration separate from the Alcohol and Tobacco Commission, as was called for in the original legislation and the House bill, both of which proposed it becoming a division within a new Alcohol, Tobacco and Cannabis Commission.

With the 7-2 approval, Finance sent Senate Bill 516 to the Budget and Taxation Committee for its consideration and recommendations, before the legislation is passed out to the floor of the Senate later this week. The House of Delegates’ legislation, House Bill 556, was sent to the Senate two weeks ago.

The Finance Committee considered 16 amendments whose 51 pages pushed the bill reprint to more than 100 pages, including some changes proposed earlier by the House. Additionally, Finance considered a handful of amendments by committee members.

The item that drew the most attention and was debated the longest was a Senate-only amendment that would have exempted dispensaries from the state’s Clean Indoor Air Act, including in restaurants, first questioned by Sen. Benjamin F. Kramer (D-Montgomery).

“Correct me if I’m going down the wrong path here,” Kramer said to the committee counsel, who explained the amendments. “We’re going to allow food facility licenses to be part of a cannabis license, and that means then if we’ve got a restaurant where they’ve got cannabis, they’re going to be smoking cannabis. Am I right or wrong?”

That meant that cannabis smoking would be permitted in restaurants that sold it, though state law prohibits tobacco smoking in restaurants, the counsel said.

Sen. Clarence K. Lam (D-Howard) said he was “a little surprised by this amendment, especially the exemption of the Clean Indoor Air Act.”

“It gives me a significant amount of pause,” Lam said.

“I share the same hesitation,” said Sen. Pamela G. Beidle (D-Anne Arundel).

Sen. Antonio L. Hayes (D-Baltimore City) said he believed the exception initially was designed to address “an equity issue” by allowing onsite consumption in rental units of multifamily dwellings.

After a little more discussion of the restaurant-dispensary exemption, Sen. Stephen S. Hershey Jr. (R-Upper Shore) said, “I just think we need to scratch this.”

The committee ultimately voted 9-2 in favor of amending the amendment to drop the exemption.

After that vote, Beidle and Hayes left for a meeting of the Senate Executive Nominations Committee, where they are the chair and vice-chair, respectively.

After the committee amendments were voted, Kramer proposed language that would have protected the rights of workers to organize through a so-called “labor peace agreement,” while the licensed growers are being given “basically the ability to print money.”

The language in the bill, he told the committee, “is woefully short with regard to protecting the workers.”

Under his proposal, workers would be able to discuss whether they want to be part of a “labor bargaining agreement” without fearing retribution from management.

That amendment failed, however, on a 3-6 vote.

The panel amended the legislation to create “bumper zones” designed to prevent “clumping” of dispensaries near each other, as is often found with liquor stores in impoverished urban areas. Under the changes, dispensaries would have to be 1,000 feet away from each other, as well as 500 feet away from schools, playgrounds and day-care facilities.

The legislation also was amended in an attempt to resolve concerns by the hemp industry, which has testified it would be run out of business with new cannabis regulations by prohibiting the sale of non-cannabis products with a small concentration of Delta-8-tetrahydrocannabinol and Delta-9-tetrahydrocannabinol. Hemp was explicitly defined as not being cannabis.

The committee approved language dealing with hemp by defining THC (tetrahydrocannabinol) to include Delta-8, Delta-9 and any other Deltas that come along, as well as tincture, subjecting them all to regulation by the proposed Maryland Cannabis Administration.

Without any real discussion, the committee deleted credit unions from the bill, leaving banks as the only financial institutions allowed to deal with legitimate cannabis-related businesses with explicit legal impunity.

Editor’s Note: This story was updated to clarify changes to the financial institution portion of the cannabis bill.