Extras on Excise: Medical Marijuana Debate Continues after Maryland’s Legislative Session Adjourns


 

On May 2, 2013, then-governor of Maryland, Martin O’Malley (D), signed H.B. 1101 into law, making the state the 19th in the nation to legalize marijuana for medical use.  Medical marijuana has gained considerable traction throughout the nation since then—as 10 additional states have passed some form medical marijuana legislation—yet Marylanders still cannot legally obtain medical marijuana.

According to the Maryland Medical Cannabis Commission’s (MMCC’s) website, patients should expect to be able to purchase medical cannabis from a licensed dispensary this summer; however, this timeline remains uncertain due to several conflicts within the state legislature.

The MMCC imposed an initial deadline of Nov. 6, 2015, for the first wave of applicants hoping to become medical marijuana growers and/or processors—each of whom submitted an initial, nonrefundable application fee of $6,000. In total, the MMCC received 146 applications for licenses to become growers and 124 applications for licenses to become processors.

When determining how to award the applications, the MMCC was—and is—bound by Maryland’s statutory code. One section governing the licensing process, Maryland Health Gen. Code § 13-3306(9), requires the MMCC to “actively seek to achieve racial, ethnic and geographic diversity when licensing medical cannabis growers,” and to encourage minority business applicants within the state.

However, as reported by The Washington Post, when the MMCC began reviewing the initial batch of applications, it opted against giving preference to minority business applicants due to an advice letter issued by Maryland Attorney General Brian E. Frosh (D) in 2015 that generally stated that giving preference to certain entities based on race would be unconstitutional without evidence of “racial disparities in the industry.”

While the MMCC did not consider racial diversity when issuing its initial 30 licenses (15 for growers and 15 for processors), it did consider geographic diversity throughout the state.

Both the consideration of geographic diversity and the lack of consideration of racial diversity have caused considerable headaches for many individuals in the industry.

Two companies have sued the MMCC over its consideration of geographic diversity. Both companies were initially in the list of top 15 applicants for medical marijuana grower licenses, yet, after the MMCC considered geographic diversity, the MMCC removed the companies and replaced them with two lower-ranked companies located elsewhere in the state.

In addition to this dilemma, Maryland’s Legislative Black Caucus believes the initial batch of licensees did not adequately represent or benefit minorities throughout the state because racial diversity was not considered.

In response to these problems, Del. Cheryl Glenn (D-Baltimore), chair of the Black Caucus, attempted to pass H.B. 1443 prior to midnight on April 10, 2017 (when the state legislature ended its legislative session).

The bill aims to dissolve the MMCC, create a new licensing scheme, increase the cap on the number of available licenses (likely giving two licenses to the entities suing the state over the geographic diversity conundrum) and ensure minority representation by requiring Maryland’s certification agency—the Maryland Department of Transportation—to conduct a racial disparity study.

In a scene more akin to a sporting event than a legislative session, individuals in Annapolis were literally watching the clock the night the session came to a close.

At 11:55 p.m., Glenn brought H.B. 1443 before the House—likely with enough votes to pass—yet the clock struck midnight before a vote could be completed. Thus, the state’s regular legislative session came to a close without any decisive action on the bill.

Glenn is now demanding a one-day special session to pass H.B. 1443.

Special sessions are governed by several provisions in Maryland’s Constitution: Md. Const. art. II, § 16 dictates that only the current governor (Larry Hogan (R)) has the power to convene a special session, while Md. Const. art. III, § 14 requires Hogan to call a special session if a majority of state senators and a majority of delegates petition that he convene the Assembly.

Considering Democrats control the Senate 33-14 and the House of Delegates 91-50, calling a special session may not seem daunting at first blush. However, there is some apparent disagreement between leaders within the party.

House Speaker Michael E. Busch (D-Anne Arundel) seems to have some issues with H.B. 1443, as he issued a statement, explaining, “I do not believe it is the job of the General Assembly to decide what applicants are awarded licenses.” In addition, Paul W. Davies—chair of the MMCC—points out that changing the MMCC’s would delay implementing the program even further and may even lead to lawsuits from companies alleging lost profits and smaller market share.

Senate President Thomas V. Mike Miller (D-Calvert), conversely, appears to generally support a special session as long as legislators agree beforehand to hastily pass the bill.

Hogan, meanwhile, appears content to let Democratic Party members battle it out: a spokeswoman for the governor told The Washington Post, “This is between the President and Speaker, and it appears they are moving even further apart.”

To ensure you stay apprised of all updates on Maryland H.B. 1443, the potential special session and the progress of the medical marijuana program, be sure to check in with Bloomberg BNA frequently.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should the legislature call a special session to pass H.B. 1443, or is the appearance of giving licenses to entities suing the state a dangerous option in the long-term?

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