Maryland Hemp Industry Challenges New Cannabis Licensing

The Maryland Hemp Coalition, hemp farmers, and other hemp-related businesses have filed a suit, challenging Maryland’s new recreational cannabis licensing policy, which they say favors only a special handful of businesses. The plaintiffs in the lawsuit are Gov. Wes Moore (D), Maryland Cannabis Administration, and the Maryland Alcohol, Tobacco, and Cannabis Commission.

While the U.S. Drug Enforcement Agency defines hemp as cannabis products containing less than 0.3% THC—the psychoactive compound responsible for the prized psychoactive effect in cannabis—Maryland’s cannabis law sets a lower THC concentration benchmark. The state regulation prohibits the sale of products with over 0.5 milligrams of THC per serving or 2.5 milligrams per package, whether for ingestion or inhalation.

As the state’s recreational cannabis program kicks off, only businesses with an adult-use cannabis license can sell hemp products with more than the new minimum THC threshold. Sadly, there are only a few licensed businesses, and while most of the affected businesses are willing to get licensed, new licenses may not be issued until Jan. 1, 2024, or later.

Also concerning, only “social equity applicants” are eligible for the first batch of licenses to be issued. According to Cannabis Reform Act, “A social equity applicant is defined as an applicant that has at least 65% ownership and control held by one or more individuals who:

• Lived in a disproportionately impacted area for at least five of the past 10 years;
• Attended a public school in a disproportionately impacted area for at least 5 years; or
• Attended, for at least two years, a 4-year institution of higher education in the State where at least 40% of the individuals who attended the institution are eligible for a Pell grant.”

By “disproportionately Impacted areas,” the law refers to environments that account for over 150% of all cannabis possession charges filed in the State within a 10-year average. For many businesses and investors, the specific jurisdictions the definition refers to are still unclear. Even worse, state officials are yet to release a map of eligible zip codes. 

New Licensing Process Is Negatively Affecting Hemp Businesses

Many have referred to the new Maryland hemp provisions as discriminatory and contradicting the State’s anti-monopoly laws and the Equal Protection Act. Most affected hemp businesses have strongly criticized the State’s licensing regulations, a law that many say will monopolize the industry, spike product prices, and leave retailers with fewer options.

Owner of South Mountain Microfarm, and a plaintiff in the suit, Levi Seller, had expressed concern about the effects of the new laws on hemp farmers in the State during the legislative proceedings.

“We see the small businesses and hemp industry stakeholders; they got left behind during the legislative session,” Sellers said. “We are investigating options to move our facilities out of state as well as could potentially lose the whole farm in the process,” he added during an interview with FOX45 News.

While we await the court’s hearing, several Maryland hemp businesses that sell products with higher THC have ceased operations following the law’s official implementation on the first day of July, when Maryland’s legal cannabis program officially took effect.

“My clients, who have been lawfully selling these products for years, are suddenly in a position where they are being told they can’t sell their products without a license, and yet the obstacles to get a license are nearly insurmountable,” Nevin Young, plaintiff’s legal representative, told WBFF.

“They know that when the State grants monopolies, it’s an invitation to graft favoritism, it eliminates competition, it raises prices, and it limits consumer choice. As soon as a lot of money is on the table, a lot of our elected officials seem to forget about those basic principles,” he added.

However, while they slug it out in the Circuit Court of Washington County, Young is seeking a restraining court order and a preliminary court injunction to suspend implementation of the ban.