The Real Deal - Summer 2023
Date: August 8, 2023
Recreational Cannabis in Maryland (Part 1 of 2)
From a land use perspective, how will this new industry be regulated?
As of July 1, 2023, the regulated production, manufacture, sale, and purchase of recreational cannabis is legal in the State of Maryland. The Maryland General Assembly’s passage of Maryland House Bill 556 and Senate Bill 516 developed a framework for Adult-Use Sales of cannabis and their enactment authorizes Maryland residents at least 21 years of age to purchase cannabis products legally from a licensed dispensary. Existing medical cannabis dispensaries will be able to sell to adult consumers on July 1, if they properly convert their license. Additionally, the legislation authorizes the Maryland Cannabis Administration to issue additional grower, processor, and dispensary licenses, and new incubator licenses over two licensing rounds. HB 556 and SB 516 establish a new agency, the Maryland Cannabis Administration, to regulate cannabis businesses in the State. Maryland Medical Cannabis Commission staff will transition to the new agency to provide continuity of operations for businesses and patients in the medical program, and new regulations governing health, safety and security will be supplemental to the existing medical cannabis program regulations. What is not regulated by Maryland’s new state authorization of recreational cannabis are the land use regulations promulgated by county and municipal governments in local jurisdictions where growing, processing, and dispensary licenses may be located and the subsequent land use regulations pertaining to this new industry.
Generally, local land use regulation like zoning codes and ordinances dictate where uses including cannabis-related uses may be located within a given jurisdiction. These regulations impact site selection by placing restrictions on factors such as acreage, proximity to other uses, restrictions by zoning district, and environmental considerations such as setbacks, stormwater and forest requirements, buffers, and hours of operation. Methods of approval also differ spanning the gamut from limited administrative approvals to public hearings before hearing officers, administrative law judges, boards, and commissions. The power to locate is the power to control, and unless preempted by state or federal law, local governments are left to their own devices to establish where and how cannabis-related uses can be located. While the direct impacts of recreational cannabis authorization in Maryland on land use regulation will be limited as medical cannabis dispensaries already exist as authorized uses throughout the state following the adoption and regulation of the medical cannabis industry in Maryland in 2016, many indirect impacts on land use are expected.
The expanding of the market to recreational cannabis will likely lead the cannabis industry to expand site selection, spur horizontal or vertical integration within the industry, and perhaps facilitate franchising along horizontal or vertical lines. As the industry grows, its impacts will reverberate in the commercial real estate markets, particularly industrial and warehouse products, that will need to adjust to the manufacturing, storage, retail, and shipping needs of this new industry in Maryland.
While formerly a sleepy issue for communities that perhaps were not likely targets for the limited medical cannabis industry, many communities will now be faced with navigating the land use regulatory process in their respective jurisdictions as the various component parts of the recreational cannabis industry take shape on their blocks and near their homes. While some may see recreational cannabis favorably for its economic impact in what many estimate will be a billion-dollar industry by 2025, others are skeptical and fearful of cannabis saturation, especially in already disinvested communities struggling with addiction and poverty. This will likely play out in the entitlements process before local boards, commissions, legislatures, and permitting offices.
While much is yet to be written by county and municipal legislatures regarding further land use regulation of cannabis-related uses, if past is prologue, most will be reactive instead of proactive. What we’ve seen with other new land uses like social hosting sites (e.g. Airbnb) and other loosely regulated industries like ride-sharing (e.g. Uber), is a wait-and-see-approach. Local governments will gauge the impact on communities through constituent outreach and the lobbying of the industry before they take action. The wide variety of forms of cannabis consumption that currently exists, from smoking and vaping products to edible cannabis products, will likely be a factor in how land use controls are used to regulate the industry. As local zoning power emanates from state police powers that are passed down to local jurisdictions through individual enabling statutes, the state retains the authority under the Land Use Article, Annotated Code of Maryland, to preempt local law and further regulate land use for cannabis-related uses. As local governments gauge the impacts on these uses on communities, they may turn to state government to pass legislation or rulemaking that lifts this burden from their shoulders in favor of uniform statewide standards.
Stay tuned for Part 2 in a future issue of The Real Deal, where we will explore how various jurisdictions in Maryland currently regulate cannabis-related uses. As always, if you need real estate or land use support for your growing business don’t hesitate to reach out to Whiteford’s team of real estate, business, and land use attorneys for legal representation.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.