This week, the Montgomery County Council passed Bill 4-24, establishing the “Community Reinvestment and Repair Fund Commission.” This commission, consisting of 13 voting members drawn from impacted communities, will advise on the allocation of tax revenue from the sale of cannabis.
Lead sponsors Council Members Kristin Mink (center), Will Jawando (left), and Laurie-Anne Sayles (right) held a press conference with community advocates and service providers to discuss the significance of the bill’s passage.
Based on previous sales data, estimates project the County fund to receive close to $1 million in its first year. Bill 4-24 adopts a community-based advisory body model similar to Baltimore City (via Bill 23-0353) and Prince George’s County (via CB-088-2023).
Bill 4-24 was cosponsored upon introduction by Council President Andrew Friedson, Vice President Kate Stewart, and Council Members Sidney Katz, Natali Fani-González, Gabe Albornoz, and Evan Glass.
Adult-use cannabis and cannabis products carry a 9 percent tax. The revenue supports several funds as outlined by the Cannabis Reform Act of 2023, which legalized personal cannabis use for adults over 21. State law mandates that the Comptroller of Maryland collects and distributes the sales and use tax revenue from the retail sale of adult-use cannabis.
As previously reported on Conduit Street, Maryland Comptroller Brooke Lierman announced that the State of Maryland collected more than $14.6 million in adult-use cannabis sales tax revenue between January and March 2024, a slight increase over revenues from October through December 2023.
The Comptroller of Maryland divides quarterly revenues from adult-use cannabis among the following funds.
Community Reinvestment and Repair Fund (CRRF): The CRFF accounts for 35 percent of quarterly revenues. These funds support community-based initiatives in areas disproportionately impacted by the enforcement of cannabis prohibition before July 1, 2022. The Office of Social Equity formulates the distribution percentages, ensuring each county receives an appropriate share of the CRRF funds.
Maryland Counties: Five percent of quarterly revenues go to Maryland counties based on the percentage of revenue collected from that county. Counties will then distribute 50 percent of funds to municipalities with cannabis dispensaries that contribute to sales and use tax revenue.
Cannabis Public Health Fund: Five percent of quarterly revenues are allocated to the Cannabis Public Health Fund to address the health effects associated with legalizing adult-use cannabis.
Cannabis Business Assistance Fund: Five percent of quarterly revenues go to the Cannabis Business Assistance Fund. Through fiscal 2028, this fund will receive five percent of quarterly revenues to assist small, minority-owned, and women-owned businesses entering the adult-use cannabis industry.
General Fund: After required disbursements, the remainder of quarterly revenues go to Maryland’s General Fund.
Additionally, funds are allocated to the Maryland Cannabis Administration to support operational costs.
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, while 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. However, 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.
Previous Conduit Street Coverage
Maryland’s Q1 Cannabis Tax Revenue Climbs to $14.6 Million
My County Just Received Cannabis Funds…What’s This For, Again?
Feds Move to Reclassify Cannabis: Here’s What That Means for the Industry
Moody’s: Tax, Policy Tweaks Crucial to Unlock State Cannabis Revenues
Maryland Cannabis Administration Awards First-In-The-Nation Social Equity Business Licenses
Maryland Adult-Use Cannabis Sales Reach New High
MACo Summer Conference Session
At the MACo Summer Conference session, “New Money, New Strings: Taming Targeted Funds,” an expert panel will provide a concise yet comprehensive overview of how counties can responsibly manage and allocate new revenue from cannabis and opioid restitution, highlighting both permissible and restricted uses.
MACo’s Summer Conference, “Turning the Tide,” is August 14-17, 2024, at the Roland Powell Convention Center in Ocean City, Maryland.
Learn more about MACo’s Summer Conference:
- Exhibitor Details & Pricing SOLD OUT!
- Tech Expo Exhibiting Details SOLD OUT!
- Questions? Contact Virginia White
