Several mid-Atlantic state legislatures recently took significant action on the cannabis front, setting the stage for a major expansion of the cannabis market in the region. The impact of these laws varied widely, as shown by the summaries below.
Maryland has supported a medical marijuana market since 2012, with currently over 100 licensed dispensaries. In November 2022, Maryland voters approved a referendum, legalizing recreational cannabis use for adults 21 and older beginning on July 1. Accordingly, the Maryland state legislature moved quickly to establish a regulatory scheme to oversee the forthcoming cannabis market. The final bill (joint legislation comprised of emergency bills HB 556 and SB 516) charged the Maryland Cannabis Administration with issuing licenses for up to 300 dispensaries, 100 processors, and 75 cultivators. The bill also provided for “micro” licenses and reserved a number of licenses for social equity applicants. Starting July 1, the state’s existing medical dispensaries can sell to all adults (not just medical patients) if they pay a conversion fee. Unique among the mid-Atlantic states, the bill authorized outdoor smoking and indoor nonsmoking consumption at a maximum of 50 licensed on-site consumption facilities. Nonmedical cannabis sales will be taxed at 9% of the sale price.
As we previously reported, the Virginia legislature continued to push off its adult-use market. Regarding hemp products, however, the state legislature approved Governor Youngkin’s bill amendments, regulating Delta-8 THC and CBD products. Per the amendments, hemp products in Virginia must maintain a 25 to 1 ratio of CBD to THC, instead of the previous cap of 2 mg of total THC per package. The amended bill also scrapped a provision requiring a bittering agent in topical products to make them unpalatable. Manufacturers and retailers of smokable or edible hemp products still must pay a $1,000 registration fee to the Virginia Department of Agriculture, and failure to register could lead to up to $10,000 per day fines for violations. Additionally, the Virginia Cannabis Control Authority — rather than the Virginia Board of Pharmacy — will now oversee Virginia’s medical marijuana program, which consists of four licensees and 13 dispensaries across the state . Barring any changes made when the legislature reconvenes to finalize the state budget, the law will become effective July 1.
A slow mover in the cannabis space, this year, the North Carolina Senate passed SB 3, which would allow North Carolina doctors to prescribe marijuana to patients with certain “debilitating medical conditions[s],” such as cancer or HIV/AIDS. The bill provides for up to 10 medical marijuana suppliers licenses, which would allow the licensee to grow cannabis and sell products from up to eight dispensary locations. SB 3 currently awaits approval by North Carolina’s House of Representatives, which referred the bill to the Rules Committee on March 6. House Speaker Tim Moore reportedly stated that he believes the bill has a strong chance of passing. And for his part, North Carolina Governor Roy Cooper indicated he would sign the bill and continue to support broader marijuana decriminalization.
In March 2023, the Delaware legislature passed two cannabis-related bills — HB 1, which legalizes possession and recreational use of marijuana by adults at least 21 years old, and HB 2, which establishes regulations for an adult-use cannabis market in the state. Delaware Governor John Carney allowed both bills to go into effect on April 23 without his signature. Under HB 1, adults can now purchase and possess up to an ounce of cannabis at a time, but the prohibitions on private growing and public consummation of cannabis remain in place. HB 2 created a new Office of Marijuana Control Commission within the Division of Alcohol and Tobacco Enforcement and charged it with overseeing and issuing licenses to up to 30 cannabis retailers, 60 growers, 30 manufacturers, and five laboratory operators beginning 14 months after the bill’s effective date. The bill sets a tax rate of 15% of the sale price for adult-use sales, while exempting medical cannabis sales from taxation. Delaware localities can still pass local ordinances prohibiting marijuana businesses within their jurisdictions.
Why It Matters
While some Western states’ cannabis markets are considered oversaturated, undergoing consolidation, and in some cases, contracting, the increased cannabis activity on the East Coast now offers new opportunities for manufacturers, distributors, and retailers.