On 2.17.2023 – LBS testified on House Bill 556 concerning reform and regulation of the cannabis industry. Lawrence Grandpre, discussed the necessity of high tax revenues to fund the Community Repair and Reinvestment Fund. Dayvon Love argued that Black jurisdictions should benefit the most, financially, from the Community Repair and Reinvestment Fund – considering that those areas have been impacted the most by the War on Drugs.
Cannabis regulation as it relates to Black business
The regulation of the recreational cannabis industry is extremely complex, especially with the added objective of making sure that Black people in MD have substantial access to and participation in the industry. There are limitations of adhering to racial neutral language, due to recent Supreme Court rulings. In addition, there is a huge disparity in access to capital between Black people and white people. This means there are limited ways to make sure Black people get a significant foothold into the industry.
Cannabis Taxation
In 2022 the legislature established the Cannabis Business Assistance Fund. Its purpose is to provide support for “minorities” (Black people) to get access to the various aspects of the industry. Governor Moore invested $40 Million into this fund back in January 2023, which is a great start. More investment needs to be put in this fund to address the disparity in wealth between Black people and white people that puts our community at a competitive disadvantage in the cannabis industry.
The tax rate in MD for recreational cannabis is starting at 6% and will graduate to 10% in 2028. This would make MD’s tax rate the lowest in the country. The stated purpose of such a low tax rate is to make sure that prices for regulated cannabis businesses are competitive with illegal market prices. We recommend that Maryland start with a 10% tax rate and then graduate to 15%. With the limitations on getting Black people access to the most lucrative areas of the industry, the most effective way of getting Black people (particularly working class Black people) access to the resources is through the Cannabis Repair and Reinvestment Fund. A low tax rate means less money for the fund. If the legislature is not willing to raise the tax rate, then it should raise the annual percentage of the tax revenue that goes to the fund from 30% to 60%.
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