Cannabis retail sales in Maryland for fiscal year 2025 are expected to reach over $1.1 billion according to the Maryland Cannabis Administration (MCA), with the state anticipating to yield over $100 million in tax revenue based on the state’s 9% sales tax on cannabis.
In the six month period between January and June this year, Maryland received over $37 million in tax revenue based on hundreds of millions of retail sales, which the MCA reports surpassed $95 million monthly in June.
With new licensees coming on board in FY26, David Torres, the deputy chief from MCA, projects a 90% growth in sales and anticipates over $200 million in cannabis sales tax revenue that year.
Cannabis tax revenue is allocated between four state funds and individual counties. The majority of funding is given to the state’s General Fund, and the Community Repair and Reinvestment Fund (CRRF) receives the second largest amount of funding. Funds that support small businesses, state public health and each of Maryland’s counties also receive funding.
The Maryland General Assembly allocates 5% of cannabis tax revenue to counties based on the percentage of revenue collected from that county. Counties then distribute 50% of funds to municipalities with cannabis dispensaries that contribute to sales, leaving local governments with just 45 cents for every $100 in cannabis sales.
Maryland’s Cannabis Public Health Fund, which also receives 5% of quarterly revenues, addresses health concerns following the legalization of adult-use cannabis. According to the state’s Department of Health, emergency department visits related to cannabis use have risen to an average of 817 per month, up 4.8% compared to last year’s average. The Department of Health said that data shows a 44% increase in emergency room visits among young people aged 20-29 between 2022 to 2023.
Despite this increase in visits, some products may not have been bought from legal dispensaries, according to director of communications for Maryland’s Department of Health, Chase Cook.
“Intoxicating hemp products (e.g., delta 8 and delta 10) are not subject to regulatory authority by MCA – including product safety and potency testing and packaging and labeling requirements. Unregulated products can put Marylanders at increased risk for adverse events,” Cook told CNS in an email response.
The CRRF, which receives 35% of cannabis tax revenue, provides funding for community-based initiatives, particularly low-income communities and those that have been negatively affected by cannabis prohibition. In the first two quarters of 2024, the CRRF received nearly $12 million.
A survey that was published in December of 2023 by the Office of Social Equity (OSE) reported that Marylanders would prefer funds be allocated towards mental health and substance abuse services, education and after-school programs and housing and homelessness prevention services.
The Cannabis Business Assistance Fund (CBAF), which receives 5% of tax revenue, provides funding to small businesses such as women and minority-owned cannabis businesses. This fund distributed 174 social equity licenses to small businesses through a lottery system in March to encourage participation in the adult-use cannabis industry, according to the OSE.
The CBAF has awarded millions in grants to support small businesses. In its first round of grants, the program provided license conversion fee assistance to 14 medical license holders. A second round supported non-operational conditional license holders, distributing up to $5 million each to nine businesses, according to the director of communications, Karen Hood, at the Department of Commerce. A third round of grants will be announced soon.
The remaining 50% of the tax revenue goes to the state’s General Fund. Individual income tax and retail sales tax are two of the largest contributors to this fund, which supports K-12 education, Maryland health services and state government functions, according to the Department of Budget and Management.
The OSE reports that positive community perception of legalized cannabis is highest in those within the age group of 18 to 34, with 59% of participants reporting that the industry has benefited their community.
According to a report by Johns Hopkins Carey Business School, cannabis legalization has allowed Maryland to spend more on societal needs and to redirect resources previously expended on law enforcement, court proceedings, and imprisonment associated with marijuana consumption.
Maryland’s quarterly tax report for Q3 is set to be released next week, according to the Office of the Comptroller.