This week, the Office of Social Equity released the Community Reinvestment and Repair Fund Survey Results Report, which provides insight into the preferences shared by Maryland residents regarding which type of community-based services and organizations should be the primary beneficiaries of the fund. The report also includes the percentage of the total amount that local jurisdictions will be allocated from the fund.
As previously reported on Conduit Street, Maryland imposes a 9 percent state sales tax on adult-use cannabis. Per statute, 35 percent of the proceeds are allocated to the Community Reinvestment and Repair Fund, a new fund to support communities disproportionately affected by prior cannabis prohibition enforcement.
The fund — managed and administered via a partnership between the Office of Social Equity and the Office of the Comptroller — also includes revenues generated from license conversion fees paid by those businesses in the medical cannabis industry approved to transition into the adult-use cannabis market.
Under the Cannabis Reform Act, funds distributed to counties and Baltimore City were determined by comparing cannabis possession charges within each jurisdiction between July 1, 2002, and January 1, 2023, against the total charges across the state during the same period. Counties have broad flexibility in determining how to allocate the funds, including working with local organizations to support marginalized communities.
Under the directives of the Cannabis Reform Act, the Office of Social Equity was tasked with soliciting public input on potential fund uses. Maryland counties and Baltimore City, community organizations, and residents were invited to participate in the survey between November 1 and November 24 to contribute insights that may shape how the allocated Community Reinvestment and Repair Funds will be used within their communities.
According to the Office of Social Equity, the top three investment areas that respondents identified were:
- mental health and substance abuse services;
- education and after-school programs, and
- housing and homelessness prevention services.
“Transparency is crucial to earning and maintaining the public trust, and my team and I are committed to ensuring Marylanders understand what taxes are collected and where that money is going,” said Comptroller Brooke E. Lierman. “We appreciate the opportunity to be a partner in the work of administering this new segment of our state’s economy. Our agency is working to ensure accurate accounting of cannabis tax revenue and to ensure the funds benefit communities unduly impacted by outdated and biased policies.”
Local Revenue Share Smallest in the Nation
While implementation across jurisdictions has been a variable as different states have taken various approaches, one commonality is that virtually all states have empowered a meaningful local revenue source to support local services. Some have fully authorized local excise taxes where rates are set, and collections are overseen locally. Others have authorized local sales taxes at either standardized or variable rates locally.
For example, in New York, there is both a 13 percent excise tax (9 percent state and 4 percent local) on cannabis sales (paid by consumers and remitted by retailers) and a potency-based tax (remitted by distributors). Oregon levies a 17 percent excise tax on cannabis sales paid by consumers and remitted by retailers. Local governments can also levy up to a 3 percent tax on the retail price.
While there are no local cannabis taxes in Maryland, the state does levy a 9 percent excise tax on any product containing cannabis. But, a mere five percent of state cannabis tax revenue goes to local governments. That translates to local governments receiving a mere 45 cents for a single purchase of $100 of cannabis- the smallest in the nation.
Municipalities will receive half of the local revenue share for transactions within municipal boundaries (counties will retain the other half on such transactions). In addition, 35 percent of the tax proceeds will go to the Community Reinvestment and Repair Fund.
Stay tuned to Conduit Street for more information.
Useful Links
Community Reinvestment and Repair Fund Survey Results Report
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