Maryland’s cannabis market is booming—but the industry is far from thriving. While adult-use sales topped $700 million in the first year since legalization, business owners face regulatory delays, steep costs, and limited access to capital that threaten long-term success.
In this article, we explore the real challenges behind Maryland’s high-demand cannabis market and share CPA-backed strategies to help cannabis operators navigate the road ahead.
Maryland’s Cannabis Market: Growth Meets Friction
When Maryland officially launched adult-use cannabis sales in July 2023, the market response was immediate and impressive. Within the first year, retail sales soared past $700 million, with analysts forecasting continued double-digit growth into 2025.
Despite these promising numbers, local cannabis operators report significant difficulties scaling their businesses. Some of the most pressing issues include:
- Delays in license issuance for new entrants and social equity applicants
- Restrictive zoning laws limiting where facilities can operate
- Slow rollout of regulatory guidance, creating uncertainty
- Lack of access to banking services, complicating daily operations
These issues are not unique to Maryland’s cannabis market but are magnified by the state’s ambitious push to ensure equity and safety while also managing high consumer demand.
Let’s break down what’s really going on behind the scenes.
Conversion Fees and Ownership Limits Squeeze Operators
To enter the adult-use market, existing medical cannabis operators had to pay a one-time conversion fee equal to:
- 10% of 2022 gross revenue for cultivators/processors (capped at $2M)
- 8% for dispensaries (capped accordingly)
For many, this meant writing six- or seven-figure checks just to continue operating under the new adult-use rules.
Meanwhile, social equity licensees face a different set of challenges:
- Must retain 51% ownership, limiting access to outside investment.
- Cannot sell or transfer their license for five years, reducing flexibility and long-term appeal
These restrictions, while intended to prevent exploitation, have slowed investment and discouraged expansion at a critical growth point.
Licensing Delays Are Bottlenecking Maryland’s Cannabis Market
The Maryland cannabis market is suffering from a supply bottleneck. Many newly awarded licensees—especially social equity applicants—still haven’t launched operations, nearly a year after the state opened applications. Why?
- Prolonged zoning and facility approval processes.
- Delays in receiving final operational guidance.
- Difficulty meeting regulatory documentation and compliance requirements.
This means retail shelves stay understocked, consumers face limited product variety, and businesses burn through cash waiting to open.
Regulatory and Operational Challenges
Even businesses that are operational are navigating a maze of red tape:
- Strict packaging/labeling rules slow product rollouts.
- Advertising restrictions limit brand building and customer engagement.
- Local zoning bans make it difficult to find compliant properties.
Without clear, timely communication from regulators, these hurdles add time, cost, and risk for every operator.
Financial Pressure in a High-Demand Market
While revenues look impressive on paper, many cannabis businesses are operating on thin margins due to:
- Section 280E: Disallows most standard tax deductions, driving up effective tax rates.
- Cash-heavy transactions, which increase the risk of error or audit.
- Unclear financial forecasting, due to changing compliance and regulatory costs.
To stay profitable, cannabis businesses in Maryland must take proactive steps to control costs, optimize taxes, and maintain airtight compliance.
CPA-Backed Financial Tips for Maryland Cannabis Businesses
At GreenGrowth CPAs, we work with hundreds of cannabis operators in complex, evolving environments like Maryland’s cannabis market. Our team recommends:
1. Maximize COGS Allocations
Under 280E, Cost of Goods Sold (COGS) is your biggest deduction. Categorize all eligible expenses correctly to reduce taxable income.
2. Forecast Tax Liabilities Quarterly
Avoid surprises at tax time. Use cash flow modeling and estimated payments to plan ahead.
3. Prepare for Scrutiny
With high regulation and state-level oversight, your financial records need to be bulletproof. Keep clean, audit-ready books.
4. Monitor Local Compliance Shifts
Municipalities may change zoning, hours, or restrictions without warning. Stay ahead by working with advisors who track regulatory trends.
What’s Ahead for Maryland’s Cannabis Market in 2025?
While challenges persist, there are promising signs on the horizon:
- New licenses are expected to be issued and operational.
- Fintech and cannabis-friendly banking may ease cash burdens.
- State agencies are under pressure to provide clearer, faster guidance.
- Market consolidation could create growth opportunities for agile operators.
Why GreenGrowth CPAs?
We’re not your average accounting firm. GreenGrowth CPAs specializes in cannabis, offering deep expertise across:
- Tax planning & 280E strategies
- Licensing compliance & due diligence
- Multi-state operations & expansion strategies
- Financial modeling & investor readiness
We understand the pressures Maryland operators face. With a team of industry-savvy advisors, we help businesses like yours stay agile, compliant, and profitable—no matter how complex the regulatory environment.
Need Help Navigating Maryland’s Cannabis Market? Schedule a free consultation with GreenGrowth CPAs today. Let’s build a financial strategy that works in Maryland’s fast-moving cannabis landscape.
FAQ: Maryland Cannabis Market Insights
Is cannabis legal in Maryland now?
Yes, cannabis is legal for both medical and adult-use (recreational) purposes in Maryland. Adult-use sales commenced on July 1, 2023, following the passage of the Cannabis Reform Act.
Does Maryland have recreational dispensaries?
Yes, Maryland has licensed dispensaries that sell cannabis for recreational use. These began operating on July 1, 2023.
How much is the Maryland cannabis tax?
As of March 2025, Maryland imposes a 12% sales and use tax on retail sales of adult-use cannabis and cannabis products. This is an increase from the previous 9% tax rate.
How much is a cannabis license in Maryland?
The cost of obtaining a cannabis license in Maryland varies by license type:
Application Fees:
- Standard License: $5,000
- Micro License: $1,000
Licensing Fees (valid for a 5-year period):
- Standard Grower License: $50,000
- Standard Processor License: $25,000
- Standard Dispensary License: $25,000
- Micro Grower License: $10,000
- Micro Processor License: $10,000
- Micro Dispensary License: $10,000
Social equity licensees may be eligible for a 50% reduction in licensing fees.
What are the requirements to open a cannabis dispensary in Maryland?
To open a cannabis dispensary in Maryland, applicants must:
- Pay the application fee ($5,000 or $1,000)
- Register your business with the Maryland Department of Assessments and Taxation
- Submit an operational plan, business plan, and diversity plan
- Obtain local zoning approvals
How can I reduce my cannabis business tax liability under 280E?
Work with a cannabis CPA to identify deductible costs under COGS (Cost of Goods Sold), which remain allowable under Section 280E. A tax specialist can help structure your accounting to minimize liability and remain IRS-compliant.
How can GreenGrowth CPAs help my Maryland cannabis business?
We offer tailored accounting, tax, and financial advisory services for cannabis operators—helping you stay compliant, efficient, and profitable.
When will more cannabis licenses be issued in Maryland?
The Maryland Cannabis Administration is expected to issue additional licenses in 2025, particularly for social equity applicants. Keep an eye on official MCA updates and application windows to stay ahead.
