Maryland Cannabis Licensing Update: Priority Actions After Lottery Selection
By Meg Nash
Mar 12, 2024
The Maryland Cannabis Administration will conduct the initial lottery for license applicants on March 14, 2024. As with any lottery, there will be applicants who are thrilled with the results and other applicants who will need to shift their focus to the following licensing round, which will take place later this year. This document offers guidance to all applicants, regardless of the outcome of the lottery.
Selected Applicants: What happens next?
Monitor Email and Review Your Application
First and foremost, applicants who are selected in Thursday’s lottery should monitor the primary point of email account for the applicant entity, as additional communications from MCA will be issued to provide further instructions. It is important to note that the applicant’s selection in the lottery will not result in an automatic award of a Conditional License. Following the lottery, the MCA will investigate and verify the material aspects of each application. These investigations will be applicant specific. The communication from the MCA will clarify and likely identify the specific material that must be submitted.
Please note that the MCA may only accept the issuance of a Conditional License if the applicant provides additional information within ten calendar days if the additional information provided demonstrates that the applicant is eligible for licensure, or if the applicant submitted more than two applications.
Recommendation: Applicants should review their prior submissions in OneStop to identify any additional documents that may be requested and to download copies of all materials that have previously been submitted to MCA.
Award of Conditional License and Supplemental Application
Once a follow-up investigation is conducted by MCA and all information is verified, applicants will receive a Conditional License. The Conditional License does not permit applicants to begin cultivating, processing, or dispensing cannabis but instead initiates an 18-month clock to secure a final license. Applicants can request a six-month extension if needed.
Conditional Licensees will also be required to complete a supplemental application, which requires applicants to undergo a criminal history records check, a financial background check, submit disclosures related to other business licenses, execute authorizations that allow MCA to request information from other jurisdictions related to cannabis business license applications, and identify and demonstrate legal control of the proposed site, through lease, purchase, or other means, for the cannabis business, among other things.
Establishing site control for the proposed business is likely to require the most lead time and should be a priority for all licensees. In addition, applicants will likely need to raise additional capital, either through debt or equity (but only on the 35% side of the entity- verified Social Equity Applicants must maintain 65% ownership and control of the license). Please contact a member of your Vicente team for assistance in identifying compliant property and for guidance with respect to access to capital, including grants available through the Department of Commerce.
Please note that during the Conditional License period, licensees are prohibited from:
- Engaging in purchasing, possessing, cultivating, manufacturing, or selling cannabis or cannabis products
- Making any transfer of an ownership interest that causes a change in the individual or entity that holds the controlling ownership interest
- Make any transfer of control
- If the conditional licensee qualified as a social equity applicant, make any transfer of an ownership interest that causes the conditional licensee to no longer comply with the social equity applicant definition in COMAR 14.17.01.
Applicants Who Are Not Selected: Planning for Future Licensing
Additional opportunities are on the horizon for applicants who are not selected for Thursday’s lottery. First, to the extent that any of the applicants selected in the lottery do not receive a Conditional License, then an additional applicant will be chosen from the same lottery pool.
In addition, applicants who have yet to be selected can ask the MCA to retain their application for up to a year, during which time the next licensing round will likely take place. Any application retained by the Administration that meets the specifications and requirements of a subsequent licensing round within the one-year retention period shall be automatically entered into the lottery if the applicant has appropriately amended the application or provided the information requested by MCA.
Additional information about future licensing rounds is likely to become available in May of 2024. During the next licensing round, all micro-licenses will be reserved for Social Equity Applicants. It has yet to be determined whether the Standard Licenses available will also be limited to Social Equity applicants. The availability of Standard Licenses to non-social equity applicants will depend on the outcome of a disparity study.
Regardless of the outcome, the Vicente LLP team is available to assist in planning for a compliant future in the cannabis industry.
Meet us at the NCIA Maryland Stakeholder Summit!
Members of our team including partner Meg Nash, director of regulatory compliance Casey Leaver, director of regulatory policy Jennifer Flanagan, and senior associate Yolanda Clarke will be attending the National Cannabis Industry Association Maryland Stakeholder Summit on April 2, 2024, and in Baltimore between April 1st and April 3rd. Please contact us to coordinate meetings, in person or virtual.