One year into MD's Lottery Round, where are we and where are we going?

The Maryland Cannabis Administration ("MCA") announced the social equity lottery license round on September 8, 2023. Just over a year after the announcement, where does that round of lottery applicants/winners stand and what comes next?

Who won and who didn't?

The MCA initially planned to award 179 licenses. After conducting a lottery draw in March 2024, the MCA held a second lottery in June 2024 and awarded 26 more licenses. So, Maryland has up to 205 more cannabis businesses coming on-line.

For those who applied and didn't win in either drawing (statistically, most applicant's didn't win), their applications can be held by the MCA and entered in a future lottery. But those applications are only retained for one year under MCA regulations. See COMAR 14.17.05.06. In all likelihood, there will not be another lottery within that one-year window.

Wait, I thought there was supposed to be another lottery in 2024!?

The Cannabis Reform Act does permit a second lottery after May 2024. However, before the second lottery can be conducted, the MCA, in consultation with several other State agencies, must conduct a disparity study to determine if the 2024 lottery corrected the racial disparity in cannabis license ownership in Maryland. Considering that none of the 205 winners in the 2024 lottery are operational, it's difficult to imagine a comprehensive disparity study being conducted until the success of the 2024 winners is determined. The 2024 winners have 18 months from the time the conditional license was issued to become operational before their licenses are at risk of revocation. Our prediction is late 2026 as the earliest potential date for a second lottery.

So what are the winners doing?

The 2024 lottery winners have just started receiving conditional license awards over the last 2 months. Between March 2024 and July 2024, the MCA, in consultation with third-party investigators, conducted a broad investigation to ensure the lottery winners indeed qualified as social equity applicants. Now that conditional licenses are being issued, the lottery winners can engage with investors, partners, find a facility, and start buildout. In other words, now the hard work begins.

One great tool from the MCA is the dispensary location map. Conditional dispensary license winners can use the map to determine if a proposed location has the appropriate offsets from schools, parks, places of worship, and other dispensaries.

The Maryland cannabis attorneys at Tepe Law, LLC, are assisting selected applicants and conditional license holders in creating business structures that comply with the MCA's regulations, finding and acquiring property for operations, and creating compliant business practices. If you have questions about this post or how the cannabis attorneys at Tepe Law can help you, please contact Justin Tepe at justin@tepe-law.com.