HB 453
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
First Reader
House Bill 453 (Delegate D. Barnes)
Health and Government Operations
Health - Medical Cannabis Reauthorization Act
This bill (1) repeals the statutory caps on the number of grower and processor licenses that
the Natalie M. LaPrade Medical Cannabis Commission is authorized to issue;
(2) establishes new requirements for the commission’s application review and evaluation
process for medical cannabis grower and processor licenses, including establishing new
timeframes for review and required inspections; and (3) requires the commission, in 2030,
to conduct a study on the number of grower and processor licenses necessary to meet the
demand for medical cannabis and report its findings to the General Assembly.
Fiscal Summary
State Effect: Significant increase in commission special fund revenues in any year in
which the commission chooses to issue additional grower or processor licenses from
application fees, beginning as early as FY 2022, and annually thereafter from annual license
fees. Corresponding significant increase in commission special fund expenditures to review
and evaluate additional applications and conduct inspections within the required timeframes.
Local Effect: The bill does not materially affect local finances.
Small Business Effect: Meaningful.
Analysis
Bill Summary: The commission must establish an application review process for granting
medical cannabis grower and processor licenses in which applications are reviewed and
evaluated on a first-come, first-served basis, based on criteria established by the
commission. The commission must grant or deny an application for Stage One preapproval
within 60 days of receiving the application. An applicant that has received
Stage One preapproval must request the commission to conduct any necessary inspections
within one year of receiving preapproval, and the commission must conduct any necessary
inspections within 30 days of a request for an inspection. On a case-by-case basis, the
commission may grant an extension of the one-year timeframe for an applicant who has
received Stage One preapproval to request any necessary inspections.
Current Law:
Natalie M. LaPrade Medical Cannabis Commission
The Natalie M. LaPrade Medical Cannabis Commission is responsible for implementation
of the State’s medical cannabis program, which is intended to make medical cannabis
available to qualifying patients in a safe and effective manner. The program allows for the
licensure of growers, processors, and dispensaries and the registration of their agents, as
well as registration of independent testing laboratories and their agents. There is a
framework to certify health care providers (including physicians, dentists, podiatrists,
nurse practitioners, nurse midwives, and physician assistants), qualifying patients, and their
caregivers to provide qualifying patients with medical cannabis legally under State law via
written certification. Additionally, there are legal protections for third-party vendors
authorized by the commission to test, transport, or dispose of medical cannabis, medical
cannabis products, and medical cannabis waste.
Statute limits the number of grower and processor licenses the commission can issue, and
regulations establish a limit on the number of dispensary licenses. Specifically, the
commission can issue 22 grower, 28 processor, and 102 dispensary licenses. Beginning
December 1, 2024, the commission is authorized to report to the General Assembly on the
number of licensed growers, processors, and dispensaries that are necessary to meet
demand. Prior to submitting the report, the commission must provide the Legislative Policy
Committee at least 30 days to submit comments to the commission.
The commission is required to establish an application review process for granting grower
and processor licenses in which applications are reviewed, evaluated, and ranked, based
on criteria established by the commission.
Fee Schedule
The commission is authorized to set fees to cover its operating costs; these fees were
established by regulations promulgated in September 2015. Exhibit 1 shows the current
application and licensing fees by license type.
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 Exhibit 1
Application and License Fees by License Type
Application Stage One Stage Two Annual License
Fee License Fee License Fee Fee
Grower $6,000 $2,000 $4,000 $125,000
Grower – Dispensary 11,000 3,000 8,000 165,000
Processor 6,000 2,000 4,000 40,000
Dispensary 5,000 1,000 4,000 40,000
Note: The application fee is paid in two phases, shown above as the Stage One license fee and Stage Two
license fee.
Source: Code of Maryland Regulations; Department of Legislative Services
State Revenues: Special fund revenues increase significantly in any year in which the
commission chooses to issue additional licenses, beginning as early as fiscal 2022 from
application fees, and in out-years from application and annual licensing fees, from the
issuance of additional grower and processor licenses under the bill. The commission
advises that it plans to maintain its current fee schedule under the bill.
For illustrative purposes only, if 200 applicants were to apply for a grower license and the
commission were to issue 20 more grower licenses, special fund revenues attributable to
growers would increase by $400,000 in the first year (200 applicants paying the
$2,000 Stage One application fee); $2.6 million in the second year (20 applicants paying the
$4,000 Stage Two application fee, and 20 growers paying the $125,000 annual licensing fee);
and $2.5 million annually thereafter (20 growers paying the annual license fee).
Similarly, if 200 applicants were to apply for a processor license and the commission were
to issue 20 more processor licenses, special fund revenues attributable to processors would
increase by $400,000 in the first year (200 applicants paying the $2,000 Stage One
application fee); $880,000 in the second year (20 applicants paying the $4,000 Stage Two
application fee, and 20 processors paying the $40,000 annual licensing fee); and $800,000
annually thereafter (20 processors paying the annual license fee).
Cumulatively, this illustrative example would result in an increase of $800,000 in the
first year the commission issues additional licenses under the bill and increases of
$3.5 million in the second year and $3.3 million annually thereafter. This example assumes
it takes approximately one year for applicants to finalize their licenses.
HB 453/ Page 3
This illustrative example does not reflect any special fund revenues attributable to grower
or processor agents as the Department of Legislative Services (DLS) does not have a
reliable estimate for the number of agents hired by each licensee. Growers and processors
pay a $200 registration fee for each agent.
DLS notes that interested parties could begin immediately applying for a processor or
grower license under the bill, and the commission would be required to review and evaluate
the application and then either grant or deny the application within 60 days. Thus,
special fund revenues may increase from application fees even in years in which the
commission is not actually planning to issue additional licenses. DLS also notes that this
analysis assumes that the current law cap on grower and processor licenses would not have
otherwise been increased. Under current law, the commission is not authorized to report to
the General Assembly on the number of grower and processor licenses required to meet
demand until December 1, 2024.
State Expenditures: The bill removes the cap on the number of grower and processor
licenses that the commission may issue, and it requires the commission to review and
evaluate processor and grower applications on a first-come, first-served basis. The
commission must grant or deny an application for Stage One preapproval within 60 days
of receiving the application. However, the bill does not require the commission to issue
additional licenses. Thus, special fund expenditures for the commission increase in any
year in which the commission chooses to issue licenses, beginning as early as fiscal 2022.
Since the commission is no longer authorized to collect and rank applications under the
bill, it is likely that administrative costs to issue licenses are lower than in previous
licensing cycles. Ultimately, the costs to issue licenses depends on the criteria the
commission uses to evaluate applications and how many licenses the commission chooses
to issue. This analysis assumes that the commission may simply deny applications (at no
or minimal cost) received during any period in which it is not planning to issue additional
licenses.
Small Business Effect: Small businesses may become licensed as growers and/or
processors, which gives increased access to the medical cannabis market since individual
grower and processor licenses are capped under current law. However, any small business
growers and processors already licensed may be negatively affected due to the additional
competition for market share. It is unknown whether any applicants under the bill, or
currently licensed growers and processors, would be or are small businesses.
HB 453/ Page 4
 Additional Information
Prior Introductions: HB 1449 of 2020 received a hearing in the House Health and
Government Operations Committee, but no further action was taken. Its cross file,
SB 1012, was referred to the Senate Rules Committee, but no further action was taken.
Designated Cross File: None.
Information Source(s): Maryland Department of Health; Department of Legislative
Services
Fiscal Note History: First Reader - February 12, 2021
rh/jc
Analysis by: Kathleen P. Kennedy Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 453/ Page 5


Statutes affected:
Text - First - Health - Medical Cannabis Reauthorization Act: 13-3306 Health General, 13-3304.1 Health General, 13-3309 Health General, 21-257 Health General, 13-3304.1 Health General, 13-3310 Health General, 13-3316 Health General