Only about 10% of the applicants hoping to be among the first to receive a social equity cannabis business license in Maryland will get one. However, it’s looking unlikely that licenses will be awarded by the beginning of the year.
The application period closed Dec. 12 for the first round of social equity business licenses. Of 1,708 total applications submitted, 84% self-reported that they were “minority- and women owned businesses,” according to a Maryland Cannabis Administration press release.
However, race and gender are not factors to receive one of the 179 licenses to be awarded. Social equity criteria are based upon where the majority owner lives or went to school.
Under the Cannabis Reform Act, a social equity applicant must own or control 65% of the company. They are defined as someone who has either:
- Lived in a disproportionately impacted area for at least the five of past 10 years
- Attended a public school in a disproportionately impacted area for at least five years
- For at least two years, attended a four-year institution of higher education in Maryland where at least 40% of the individuals who attend are eligible for a Pell Grant
The MCA will now review each application, and those that qualify will be entered into lotteries. For standard dispensary licenses, there will be a lottery in each of the 24 counties. Lotteries will be held in four geographic regions for standard grower and processor licenses, as well micro-dispensaries, micro-growers and micro-processors.
Under the act, the first licenses are to be awarded by Jan. 1. But no lottery dates have been set yet, MCA spokesman David Torres said in an email. An update to the applicants are expected in the “coming weeks,” according to the news release.
Reaching out to social equity applicants
Maryland Cannabis Administration Acting Director Will Tilburg said the number of applications received by the Dec. 12 deadline demonstrated the significant interest in Maryland’s cannabis industry. “It is also a testament to the comprehensive outreach and education efforts made by the Administration and our partners at the Office of Social Equity to potential social equity applicants,” he said in the news release.
The MCA held five technical assistance seminars and six outreach events over the summer.
Social equity applicants had to pre-qualify using a special portal made available in September. The Office of Social equity published ZIP codes and public schools that were within disproportionately impacted areas.
“The law defines ‘disproportionately impacted area’ as a geographic area identified by the Office of Social Equity that had above 150% of the State’s 10-year average for cannabis possession charges,” says the MCA website.
MCA said 870 of the applicants reported they were black-owned businesses. Asian owners submitted 268 applications, and 56 submissions were from Hispanic or Latino owners.
Torres said 262 applicants claimed to be white males, and five did not report race, gender or ethnicity information. Torres and Tia Lewis, chief of the office of communications and outreach, did not respond to follow-up questions by deadline.
Rules meant to prevent lottery stuffing
In Missouri, 11 businesses that received conditional social equity licenses in October may be disqualified because they did not provide adequate documentation that the majority owner met eligibility criteria in that state, according to a Dec. 15 report by the Missouri Department of Health and Senior Services.
A Missouri Independent investigation found that three of those companies “used a strategy of flooding Missouri’s lottery with applications.” It reported that Canna Zoned was connected to 104 of the 1,048 applications entered into the lottery. Cannabis Business Advisors was connected to more than 400 applications, and Amendment 2 Consultants was connected to more than 80 applications.
The MCA did not respond to questions about how they will weed out similar lottery-stuffing efforts. But the rules seemingly are meant to prevent it.
“An individual or entity may not be associated with applications submitted for the same license type in multiple regions. Additionally, an individual or entity may be associated with no more than two applications across all licensing categories within the entire first licensing round,” the application instructions said, with boldface.
Those selected in the lottery will receive a conditional license for a period of 18 to 24 months. During this period, the applicant must undergo background checks and submit further documentation, including “demonstrating legal control.”
In the first round, the MCA will award 75 standard dispensary licenses, 16 standard grower licenses and 32 standard processor licenses. For micro-businesses, it will award licenses to eight dispensaries, 24 processors and 24 growers.
