Gov. Moore proposes 15% Cannabis Tax Rate

On January 15, 2025, Governor Wes Moore and Lieutenant Governor Aruna Miller introduced their proposal to balance Maryland's state budget. This budget highlights that Maryland currently faces a $3 billion budget gap, and the Moore-Miller Administration has emphasized that it is a primary goal of theirs to close this budget gap.

The Moore tax proposal would increase the cannabis tax rate from 9% to 15% effective July 2026. This taxation increase would impact only adult-use cannabis purchases, and not medical purchases, as Maryland laws prohibit medical cannabis from being taxed.

Many states with a legalized adult-use cannabis market, such as Vermont and most western states, have implemented a tax on the sale of cannabis that is over 9%. In fact, Maryland's 9% tax on cannabis purchases is among the lowest in the U.S., and if it were to be increased to 15%, it would be more in line with other states' rates. However, taxation experts have warned that states should not raise taxes on cannabis too high, as doing so may turn consumers back to the illicit cannabis market.

In addition to cannabis-related changes to taxation, the Moore-Miller Administration's proposal also includes a $5 million investment to convert the vacant armory in Catonsville, MD into an incubator space for cannabis businesses. The incubator spaces were intended to be spaces for new micro licensees to start operations, share equipment, and minimize costs for these businesses. The clock is already ticking to become operational for nearly all of the new micro licensees. Incubator spaces being established by the State would provide much needed assistance for many of these new cannabis businesses.

The Cannabis Law team at Tepe Law will be tracking this proposal as it passes through the Maryland General Assembly. If you have questions about the tax proposal or anything related to your cannabis business, please contact Brendon Stern (brendon@tepe-law.com) for more information.