top of page

Start a Dispensary in Maryland: Cannabis Licensing 2023-2024

Updated: May 6

As the old saying goes, “With new opportunities come new challenges.” And for Maryland, the historic legalization of adult-use cannabis presents both in abundance. Stepping into the spotlight as the 23rd state to legalize recreational cannabis, Maryland is not just creating a framework for cannabis businesses but is laying the foundations for an inclusive, diverse, and sustainable industry model.

From its comprehensive licensing strategy tailored to accommodate both behemoths and boutique businesses to its deep commitment towards social equity, Maryland is blazing a trail that many states will likely follow. The budding entrepreneurs and industry veterans alike are presented with a golden ticket, offering access to what could potentially be one of the most prosperous cannabis markets in the United States.

In this article, we will take a deep dive into Maryland’s licensing process, the diverse types of licenses on offer, and the critical components of application assessment. Moreover, with the state’s market projected to skyrocket in the coming years, understanding the dynamics and potential of this market will be crucial for any player hoping to stake their claim in Maryland's green gold rush. So, whether you're a seasoned industry professional or a curious newcomer, strap in and let's navigate the promising terrain of Maryland's cannabis market.

License Types

The cannabis industry in Maryland continues to mature, with the 2023 and 2024 license application rounds ushering in varied opportunities for businesses, both big and small. To cater to a wide range of business aspirations and models, the state offers different license tiers and types. Whether you're a large-scale cultivator or a small business looking to carve a niche in the cannabis delivery space, Maryland has a license tailored for you.

Standard License

The Standard License is for those aiming big. It caters to sizable operations, befitting well-established players or those with substantial capital backing.

  • Growers: With this license, cultivators can operate a space ranging from over 10,000 square feet up to 300,000 square feet of indoor canopy or its equivalent.

  • Processors: Licensed processors in this category can handle more than 1,000 pounds of cannabis annually.

  • Dispensaries: This license permits operation of a brick-and-mortar retail location where customers can purchase cannabis or cannabis-related products.

Micro License

The Micro License is designed with smaller businesses in mind, presenting a great entry point for startups or those with limited capital.

  • Growers: Limited to a maximum of 10,000 square feet of indoor canopy or its equivalent.

  • Processors: A ceiling of 1,000 pounds of cannabis processing per annum.

  • Dispensaries: Unlike the standard license, this permits the operation of a cannabis delivery service. Instead of a physical store, micro license holders can deliver products directly to consumers. However, there's a stipulation – such businesses can employ no more than 10 individuals.

Incubator Space License

The Incubator Space License offers a unique opportunity for fostering growth and collaboration. It allows for the creation of a space where micro license holders can operate, essentially providing a nurturing environment for smaller businesses. This license can be seen as a way to boost local entrepreneurship and encourage symbiotic relationships within the cannabis industry.

On-site Consumption License

An On-site Consumption License adds a recreational dimension to Maryland's cannabis scene. It allows for the establishment of spaces where patrons can legally consume cannabis. Such venues can offer outdoor smoking areas and indoor spaces for vaping and consumption. It's an avenue for businesses aiming to create social hubs centered around cannabis, drawing parallels with establishments like bars and cafes in the alcohol industry.

Critical Components: Three-Pronged Assessment

The budding cannabis industry in Maryland is set for another phase of growth with the upcoming licensing window. As many potential applicants prepare to participate, it’s crucial to understand the intricacies of Maryland's application requirements.

In light of this, we've undertaken an in-depth review, especially focusing on section which lays out the criteria by which applications are reviewed. Let’s dive into it. Three main components determine the fate of your application:

Operational Plan

This delineates the logistical and operational aspects of your proposed business. It should reflect a thorough understanding of the cannabis market, ensuring safe, secure, and efficient business operations.

The regulatory wording asks for "A detailed operational plan for the safe, secure, and effective operation of the business." Based on this, your operational plan should include at least:

  • Secure: Your operational plan must emphasize robust security measures. Think access control, surveillance, visitor policies, and a robust emergency response protocol.

  • Safe: The spotlight here is on quality control procedures. How will you handle product storage, recall procedures, prevention of theft/loss/diversion, and emergencies?

  • Effective: The end game for any dispensary is not just selling cannabis, but doing so successfully. Your operational plan should encompass product acquisition, inventory control, sales strategies, employee training, cash handling, promotional activities, and, crucially, compliance.

Business Plan

Your business plan should emphasize financial viability, sustainability, and long-term growth strategies. Demonstrating a clear pathway to success and showcasing the experience and capability of your team can be the make-or-break elements here.

The regulation states the requirement as "a business plan demonstrating a likelihood of success and sufficient ability and experience on the part of the applicant, and providing for appropriate employee working conditions." Based on this, we suggest approaching the business plan with the intent of including, at least:

  • Likelihood of Success: Showcase a sound financial plan. Discuss your available resources, startup strategy, and a roadmap covering all capital expenditures.

  • Sufficient Ability & Experience: Highlight the credentials of your team. Detailed biographies, past experiences (both within and outside the cannabis sector), and an organizational chart can bolster your application.

  • Appropriate Working Conditions: While unusual for a business plan, you’ll need to delve into employee benefits, scheduling strategies, compliance with regulations like OSHA, EPA, FMLA, and your overall HR approach.

Diversity Plan

Maryland, like many progressive states, recognizes the importance of inclusivity in this burgeoning industry. Your diversity plan should highlight commitments to hiring, supplier diversity, and overall business strategies that embrace a wide range of backgrounds and perspectives.

beach path to the water with wooden peg fence on each side.  It's sunset

Social Equity Qualification

In the first round of adult-use cannabis business licensing applications, Maryland will only be accepting applications for social equity qualified licensees. This will be around September 2024. A social equity applicant is defined as an applicant that has at least 65% ownership and control held by one or more individuals who qualifies in one or more of the following categories:

  • Lived in a disproportionately impacted area for at least five of the past 10 years. The Cannabis Reform Act (HB556/SB516) defines a disproportionately impacted area as an area that had above 150% of the state's 10-year average for cannabis possession charges. A map of disproportionately impacted areas and associated zip codes in Maryland will be shared in the coming weeks.

  • Attended a public school in a disproportionately impacted area for at least 5 years

  • Attended, for at least two years, a 4-year institution of higher educaiton in the State where at least 40% of the individuals who attended the institution are eligible for a Pell grant.

The 'Pass-Fail' Mechanism: It's Binary

Rather than a scoring system that assigns points for various sections of the application, Maryland employs a binary "pass-fail" mechanism. This approach simplifies the initial review process, focusing on the adequacy and completeness of the application. If the application meets the required criteria, it proceeds; if not, it's halted right there.

Making it To The Finish Line: Application Timeline

Maryland's licensing authorities have allocated a window of 30 to 60 days for accepting applications. This period might seem generous, but given the complexity of the application process, it can feel quite tight. Entrepreneurs must ensure that their submissions are not only comprehensive but also timely. Missing this window could mean waiting for another cycle, which could take years or might not happen at all.

  • License application released: September 2023

  • Application acceptance: the window of time during which cannabis business licenses will be accepted will begin 60 days following the publishing of the application. Then, the window will last 30 days during which applications will be reviewed and processed which will include assigning a pass or fail status to each application.

  • Lottery Selection: Meeting the criteria doesn’t guarantee a license; it simply earns your application a spot in the lottery. This system is designed to ensure fairness, especially when the number of adequate applications exceeds available licenses. While there's an element of luck here, only those with robust, complete applications even get a shot.

  • License Award: On or before January 1, 2024, the Maryland will begin issuing first round licenses and on or after May 1, 2024, they will begin issuing second round licenses. Awardees will be notified of their selection in the lottery within 5 days of the lottery selection process. The initial license issued will be "Conditional" meaning that the applicant must submit additional requested information, have provided sufficient information to prove eligibility, and select and develop a property within a 180 day period. If a lottery winner fails to comply with any of those provisions within the time allotted by the Department, the conditional license may be revoked.

Maryland: A "Limited Licensing" State

Unlike some states which operate on an "unlimited licensing" model – granting licenses to any qualifying applicant – Maryland operates on a limited licensing model. This means that there is a cap on the number of licenses available in each category, whether it be grower, processor, or dispensary.

Pros of Limited Licensing:

This may be a controversial opinion within the industry, but the limited licensing process does have some pros, including:

  1. Reduced Competition: For operators, a limited licensing approach can be perceived as a boon. It effectively curtails the number of competitors in the market, potentially allowing for better market penetration and increased profitability.

  2. Enhanced Oversight: A limited number of licenses facilitates state agencies to more closely monitor, regulate, and assist licensed entities, ensuring a more controlled and compliant cannabis industry.

Critiques of Limited Licensing:

Despite its apparent advantages, limited licensing doesn’t escape criticism. Detractors argue that it artificially constrains the competitive landscape, potentially hindering innovation and leading to monopolistic practices.

Maryland's Upcoming Licensing Rounds: A Glimpse

The limited licensing approach by Maryland ensures a structured, regulated, and somewhat predictable cannabis market landscape. For businesses, this model offers both challenges and opportunities. Success will favor those who not only understand the licensing landscape but also have the foresight to strategize, innovate, and adapt within these defined parameters. As Maryland’s cannabis market matures, it will be fascinating to observe how this limited licensing framework shapes the industry’s growth and dynamics. As we look ahead, Maryland has slated two major rounds for adult-use cannabis business applications in 2023 and 2024, each with different limitations on the number of cannabis business licenses available. Here’s the breakdown:

First Round of Applications: Focusing on Social Equity

The inaugural round of cannabis business applications in Maryland is exclusively reserved for social equity qualified applicants. This strategic decision underscores the state's commitment to rectifying past injustices and fostering an inclusive cannabis industry. It's crucial for prospective applicants to note that to be deemed a "social equity business," the entity must be at least 65% owned by a social equity qualified applicant. Moreover, there's an additional residency criterion: all those seeking to qualify under the social equity umbrella must be Maryland residents, ensuring that the benefits of this burgeoning industry are directly funneled back into local communities.

Standard Licenses Available:

  • Grower: 20

  • Processor: 40

  • Dispensary: 80

Micro Licenses Available:

  • Grower: 30

  • Processor: 30

  • Dispensary (delivery-based): 10

Incubator Space Licenses Available:

  • Total: 10

Second Round of Applications: Expanding the Opportunity

Diverging from the first round, Maryland's second round of cannabis business licensing is far more expansive. It doesn't necessitate applicants to meet social equity qualifications, thereby opening the doors to a broader spectrum of potential businesses. This round is poised to attract a diverse range of applicants, from industry novices to seasoned veterans. Another significant distinction in this round is the absence of a residency requirement, potentially enticing out-of-state players to participate in Maryland's flourishing cannabis scene. This approach showcases the state's dual objective: championing local social equity causes while also ensuring a vibrant, competitive, and diverse market landscape.

Standard Licenses Available:

  • Grower: 25

  • Processor: 25

  • Dispensary: 120

Micro Licenses Available:

  • Grower: 70

  • Processor: 70

Incubator Space Licenses Available:

  • Total: 10

On-site Consumption Licenses Available:

  • Total: 15

Rising Opportunity: Maryland's Cannabis Market Landscape

As the 23rd state in the nation to embrace the legalization of adult-use cannabis, Maryland is not just joining the chorus; it's setting itself up as a standout voice in the melody. Recent data provides a crystal-clear picture of the promising horizon awaiting the state's cannabis entrepreneurs.

According to projections by BDSA, a renowned cannabis market research firm, Maryland's nascent cannabis market is poised for rapid ascent. In 2023 alone, the state is forecasted to amass a whopping $642 million in legal cannabis sales. Remarkably, nearly one-third of this figure—indicating a substantial sum of over $200 million—is expected to emanate from the adult-use segment.

But the story doesn't end there. Maryland's trajectory on the cannabis market map is meteoric. By 2025, the state is anticipated to cross a significant milestone, with the cannabis market blossoming into a billion-dollar industry. Specifically, the projections highlight total sales reaching an impressive $1.1 billion. This upward trend is not fleeting—by 2027, Maryland's cannabis market size is predicted to burgeon to an astonishing $1.3 billion.

For stakeholders, these numbers are not just figures; they represent an unprecedented opportunity in the making. The data underscores Maryland's potential to emerge as a pivotal player in the U.S. cannabis arena. As the state gears up to harness this wave, businesses, investors, and entrepreneurs eyeing the cannabis sector would be wise to turn their attention to Maryland. The market beckons, and for those ready to dive in, the promise of lucrative returns looms large.


Securing an adult-use cannabis business license in Maryland is akin to running a marathon with hurdles, followed by a raffle ticket drawing. It requires foresight, meticulous planning, a deep understanding of the requirements, and, finally, a bit of luck with the lottery system.

As the cannabis landscape in Maryland becomes increasingly competitive, having experts by your side can make all the difference. Consulting firms can offer insights, assist in crafting impeccable plans, and ensure you're well-positioned for the lottery. With the right approach, you're not just relying on luck—you're actively stacking the odds in your favor.

As with any industry, it is important for cannabis entrepreneurs and investors to stay up-to-date on the latest developments in the market, including changes in regulations, market trends, and consumer preferences. With the right mix of regulations and opportunities, the cannabis industry in Maryland has the potential to become a significant player in the national and international cannabis market.

Taking the Next Step with Cann Strategy: Cannabis Business Consulting Firm

If you're poised to embark on the cannabis journey in Maryland, be it in the first or the second round of applications, choosing the right partner is paramount. At CANN Strategy, we don't just dabble in cannabis consulting – we excel at it. Our proven track record in securing licenses in limited licensing states stands as a testament to our expertise. But our relationship doesn't end at licensing. Once you secure your coveted spot, we're right by your side, ensuring your cannabis business not only takes off but soars to its highest potential. Ready to transform your cannabis vision into a thriving reality? Choose CANN Strategy, where excellence is our benchmark. Reach out today and invest in a future of unparalleled success.

16 views0 comments


bottom of page