Sales and Use Tax - Sales Between Cannabis Businesses and Cannabis Nurseries - Exemption
Summary
HB619 expands Maryland’s sales and use tax exemption for certain cannabis transactions. Under current law, sales of medical cannabis and sales of cannabis between licensed cannabis businesses are exempt from the sales tax; this bill adds sales of cannabis between a licensed cannabis business and a registered cannabis nursery to that exemption. The measure is narrow and technical, focused on aligning tax treatment with the structure of the state’s regulated cannabis market.
The bill amends Section 11-245 of the Tax-General Article to expressly include cannabis nurseries in the exemption. As a result, qualifying transactions between licensed cannabis businesses and registered cannabis nurseries will no longer be subject to Maryland sales and use tax once the act takes effect on July 1, 2025. The change affects cannabis industry participants by reducing tax costs on inter-business transfers and nursery-related transactions, but it does not alter the tax treatment of retail cannabis sales to consumers.
The voting history suggests the bill was generally well received and advanced with substantial support in both chambers. It passed the House 109-23 and the Senate 38-9, indicating broad bipartisan approval despite some opposition. No committee transcript was provided, so the available record does not show detailed floor debate or amendments.
Because the bill is limited to a specific tax exemption within the cannabis regulatory framework, the main point of contention appears to be whether cannabis-related transactions should receive additional tax preferences. The recorded nay votes suggest some lawmakers may have objected to expanding tax exemptions for the cannabis industry, but the overall legislative sentiment was favorable and the bill was enacted into law.
Impact
HB619 amends Maryland Tax-General Article § 11-245 to expand the sales and use tax exemption for cannabis transactions. It adds sales between a cannabis business licensed under Title 36 of the Alcoholic Beverages and Cannabis Article and a cannabis nursery registered under that same title. The practical effect is to exempt qualifying wholesale or business-to-business cannabis transactions involving nurseries from sales and use tax, reducing costs for regulated cannabis operators and nurseries. The bill takes effect July 1, 2025.
Sentiment
The bill appears to have had broadly positive support in the General Assembly, as reflected by strong passage margins in both chambers. The vote totals suggest the measure was not especially controversial overall, though it did attract a minority of opposition. With no committee transcript available, the record shows approval of a targeted tax adjustment for the cannabis industry rather than a highly debated policy change.
Contention
The main likely point of contention is the policy choice to extend a tax exemption to another category of cannabis-related transactions. Opponents may have viewed the measure as a tax preference for a still-developing industry or as a reduction in state tax revenue, while supporters likely saw it as a technical correction that aligns tax law with the regulated cannabis supply chain. The recorded nay votes indicate some resistance, but the bill’s strong final passage suggests that objections were limited.