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Maryland raised nearly  million in marijuana sales tax revenue in the first quarter of 2024

“The growing cannabis industry has tremendous potential for economic growth in Maryland.”

By Bryan P. Sears, Maryland Matters

Cannabis taxes paid to the state of Maryland increased less than 1 percent in the first three months of 2024, although revenues varied widely regionally.

Maryland collected nearly $14.7 million in taxes on recreational cannabis sales in the first quarter of this year, an increase of less than 0.7 percent compared to the fourth quarter of 2023, according to the Office of the Comptroller. The data released Wednesday is only the third quarterly report since July 1, 2023, when Maryland residents 21 and older could legally purchase cannabis for recreational use.

“The growing cannabis industry holds tremendous potential for economic growth in Maryland,” Auditor Brooke Lierman said in a statement. “By reinvesting revenue from recreational cannabis sales in communities harmed by misguided policies, we can create a more equitable, resilient and prosperous future for all Marylanders.”

Maryland imposes a 9 percent sales tax on recreational cannabis products. There is no sales tax on medical purchases.

The Maryland Cannabis Administration divides the state into five regions: Capital, Central, Eastern, Southern and Western.

There are currently 96 dispensaries in the state’s 23 counties and the city of Baltimore. A spokesman for the comptroller declined Thursday to release tax revenues from each county because doing so could potentially lead to the identification of individual businesses and violate tax law.

Tax revenues in some regions fluctuated during the first nine months of recreational sales. Officials from the Court of Auditors and the Cannabis Administration could not immediately explain the discrepancies.

The Capital Region, which consists of Maryland’s two most populous counties – Montgomery and Prince George’s – accounted for more than $6.7 million in taxes, a 76 percent increase from the previous quarter. The amount represented 46 percent of all cannabis taxes collected in the first three months of the year, making the region the largest cannabis tax collector in the state for the first time.

In contrast, the $3.7 million transferred by businesses in the Central Region, which includes Baltimore City and Anne Arundel, Baltimore, Carroll, Harford and Howard counties, was down nearly 44 percent from the previous quarter.

In the Eastern Region, which includes nine East Coast counties from Cecil to Worcester, sales tax revenues rose to nearly $1.6 million, up 15 percent from the previous three months and the second consecutive quarter of revenue increases for the region.

Sales tax revenues in the Western Region increased more than 29 percent quarter-over-quarter. It was also the second consecutive quarter of growth for the region, which includes Allegany, Garrett, Frederick and Washington counties.

The Southern Region transferred $618,218, a decrease of more than 40 percent from the last three months of 2023. The amount is also lower than the more than $760,000 collected in the first three months of legal recreational sales. The region includes Calvert, Charles and St. Mary’s counties.

Taxes from recreational cannabis sales are split between counties, the state and the Maryland Cannabis Administration, which received nearly $2.8 million this quarter. The rest of the money is split between jurisdictions.

Areas that were disproportionately impacted by the enforcement of cannabis prohibition laws prior to last July will receive 35 percent of the quarterly taxes collected after the government deducts its share. This fund will receive nearly $4.2 million in revenue in the first quarter.

Five percent of the total taxes collected in a quarter are set aside for the state’s 24 major political subdivisions. During that quarter, the counties and the city of Baltimore will share more than $593,000. The split is based on the percentage of taxes collected by each county. Those counties then share 50 percent of their respective share with municipalities that have cannabis dispensaries that contributed to the collection of the sales and use tax.

A further 5 percent will go into a fund to combat the health effects of recreational cannabis use.

A fund set up to help small, minority- and women-owned businesses enter the adult-use cannabis industry will also receive 5 percent. This earmark will last through fiscal year 2028.

The remainder goes to the state. More than $5.9 million in taxes collected in the first three months of the year go directly into the general fund, according to the Comptroller General.

This story was first published by Maryland Matters.

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