Maryland Cannabis Startup Guide

Starting a cannabis company in Maryland? We’ve put together a state-specific guide covering everything from available license types to fees, local rules, and what you should include in a Maryland cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.
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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Maryland?
What to include in a business plan
Helpful links
Get expert help

Overview of legal cannabis in Maryland

Since Maryland passed SB 923 and HB 881 in 2014, Maryland adults can possess up to 120 grams (4.23 ounces) of cannabis flower and 36 grams of THC-infused products every 30 days if they have a written recommendation from a doctor certified to recommend marijuana. About 30,000 patients have registered for medical marijuana use. Sales in 2018 from medical marijuana dispensaries in Maryland could be as high as $75 million.

Maryland is a rare state that does not allow counties or municipalities to forbid medical cannabis companies from operating. In a 2015 letter to Sen. Robert Zirkin, Assistant Attorney General Kathryn Rowe wrote, “Because [Maryland] State law expressly permits these activities [manufacture and sale of medical marijuana], a local jurisdiction may not prohibit them.” This means that medical marijuana businesses can operate in any Maryland city and county.

Cannabis business license types

Maryland issues licenses for five categories of medicinal cannabis businesses: dispensaries, cultivators (aka grow operations), cultivator/dispensary combos, processors, and testing labs.

Dispensary: This is a retail storefront where consumers with a valid medical recommendation can purchase processed or dried marijuana. Maryland dispensaries are allowed to process, transport, and sell cannabis, as well as related supplies and products such as food, oils, tinctures, ointments, and aerosols. Maryland dispensaries can also deliver! See Maryland medical marijuana dispensary FAQs here.

Marijuana cultivator: These businesses, also called grow operations, grow cannabis plants indoors or outdoors. Maryland cannabis cultivators can manufacture, process, and package cannabis. Marijuana is then either sold through a dispensary or to a processor. See Maryland medical marijuana grower FAQs here.

Cultivator/dispensary: These businesses are “vertically integrated,” meaning they both grow and sell cannabis to the public.

Processor: Processors create products like concentrates, extracts, tinctures, capsules, and creams and sell them to dispensaries. They may also package and label marijuana. See Maryland medical marijuana processor FAQs here.

Testing lab: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. These labs use methods like liquid or gas chromatography to analyze products for CBD and THC content, pesticides, terpenes, bacteria, fungi, and heavy metals, to name a few.

Ancillary business: If you don’t want to grow or sell cannabis, you still have plenty of options. You can create an app, payment processing service, advertising and branding agency, ad network, consulting firm, pest management product, automated plant watering system, security service, packaging and labeling service, or legal firm--and that’s just the tip of the iceberg!

Maryland medical and recreational marijuana business plan facts callout.

Fees and other barriers to entry

Application fees: Maryland marijuana business applicants have two stages of application fees: everyone pays the first stage fee, and if your business gets approved, then you pay the second stage fee as well. The application fees total $11,000 for a cultivator/dispensary ($3,000 if they don’t make it to stage 2), $6,000 for a cultivator or processor ($2,000 if they don’t make it to stage 2), $5,000 for a dispensary ($1,000 if they don’t make it to stage 2), or $100 for a testing lab.

License fees: Brace yourself for some sticker shock. Annual license fees are $165,000 for a cultivator/dispensary, $125,000 for a cultivator, $40,000 for a dispensary or processor, and $100 for a testing lab.

Registration card: Anyone who works at, volunteers at, or owns a medical marijuana business in Maryland has to get a registration card. You also have to get fingerprinted and undergo a criminal background check. If you’ve been convicted of a felony drug offense, you aren’t eligible for a registration card.

Do you need a cannabis business plan in Maryland?

A business plan is not required to get a medical marijuana business license in Maryland, but it will certainly make the process easier. Your application already has to include an operating plan, including storage procedures, which could be included in a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan

Here’s what a medical marijuana business plan for Maryland should include:
  • Product/service description: Will you run a dispensary, grow operation, testing lab, processor, or something else? What’s unique about your business? Be as specific as possible. If you’ll open a marijuana dispensary, which strains of flower or whose manufactured products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale flower or edibles, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. (Think of it as a shorter, “greatest hits” version of your resume.) Obviously include cannabis industry experience, but it’s fine if you don’t have any. Highlight leadership skills, customer service, and business development experience in other industries.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Maryland-specific requirements: If not included elsewhere in your application, you should include details in your business plan about your security system, product tracking, secure product transport, manufacturing waste plan, and anything else required by the Maryland Medical Cannabis Commission.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
Helpful Links
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Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:
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