Earlier this year, the Maryland legislature passed the Natalie M. LaPrade Medical Cannabis Reform Act in an effort to address various aspects of the medical cannabis program. A significant issue addressed in the reform legislation is the promotion and inclusion of diverse participants in the state medical cannabis program. Specifically, the legislation required the Maryland Medical Cannabis Commission (“MMCC”) to promulgate regulations related to diversity prior to issuing additional grower and processor licenses. Last month, the MMCC voted to approve new diversity-related regulations, which provide that 15 of the 100 total points awarded will relate to diversity, which is defined to include race, ethnicity, gender, veteran status, individuals with disabilities, and socio-economic status. The 15 points will be divided equally among three separate aspects of the application process: the diversity plan, whether the applicant(s) satisfy the criteria for “disadvantaged equity” status, and whether the individuals listed on the application live in an “economically disadvantaged area.”
The diversity plan is pretty straightforward and similar to the requirements of other states like Pennsylvania and New Jersey, requiring information on general practices and policies that the proposed operator will use to engage with diverse participants in the community. The second component requires submission of documentation demonstrating the percentage of owners, employees, investors, and independent contractors who fit the “disadvantaged equity” criteria as defined by the new regulations. This means an individual who is a minority or woman with a personal net worth of approximately $1.7 million or less, which is the requirement for certification under the disadvantaged minority business enterprise program. Applicants who demonstrate 51% or more of ownership falls within the “disadvantaged equity” category will receive up to 3 points and up to 2 additional points will be granted to groups showing 51% or more of ownership is comprised of individuals from the most disadvantaged groups in the medical cannabis industry. Additionally, 1 point will be awarded if 25-50% of ownership is held by individuals from one of the most disadvantaged groups in the medical cannabis industry.
The final component relates to the percentage of individuals who live, or previously lived, in an economically disadvantaged area. While the regulations indicate that factors like median household income and the unemployment rate are relevant, MMCC officials will ultimately determine whether a location is an economically disadvantaged area. The regulations also indicate that documentation showing a “good faith effort” to identify and include individuals that fall in the disadvantaged equity category may be satisfactory as well, so theoretically an applicant could satisfy diversity-related components of the application through documented recruitment efforts alone.
Needless to say, Maryland’s medical cannabis industry is moving in the right direction with the development of regulations that account for diversity in the application process that hopefully provide greater opportunities to compete for medical cannabis grower and processor licenses in the coming months. Please feel free to contact me by email (email@example.com) or phone (410-910-9699) if you are interested in learning more.