Maryland collected more than $72 million from the sales tax on recreational cannabis last year, according to state Comptroller Brooke Lierman. But some in the cannabis business say the revenue fell short of expectations.

Maryland imposes a 9% sales tax on retail sales of adult-use recreational cannabis and cannabis products. Medical marijuana purchases are not taxed.

Recreational cannabis and alcoholic beverages both have the same sales tax rate; that tax yielded $17.6 million between October and December 2024 for cannabis sales, according to Lierman’s quarterly report.

The rest of 2024 saw sales tax revenue of $14.7 million in quarter one, $22.4 million in quarter two and $18.3 in quarter three.

“The revenue generated from the sale of cannabis in Maryland can provide additional support for community reinvestment opportunities across the state,” Lierman said. “My hope is that these revenues continue to serve as a resource for further addressing inequities and support business owners of diverse backgrounds as they create and discover new opportunities in this growing industry.”

The Cannabis Reform Act, which legalized recreational cannabis use in 2023, established where cannabis sales tax is allocated:

• Maryland Cannabis Administration receives funds to cover operations and administrative expenses
• Community Reinvestment and Repair Fund receives 35% of quarterly revenue to fund community-based initiatives
• Maryland counties receive 5% of quarterly revenue based on the percentage of revenue collected
• Cannabis Public Health Fund receives 5% of quarterly revenue
• Cannabis Business Assistance Fund receives 5% of quarterly revenue
• The remainder of quarterly revenue goes to the general fund

Nearly half of the fourth quarter’s total revenue was generated in Maryland’s central region, which includes Baltimore City and Anne Arundel, Baltimore, Carroll, Harford and Howard counties. The central region topped statewide sales tax revenue in all four quarters.

Those six locales totaled more than $8 million in the fourth quarter and exceeded $34.5 million in sales tax throughout the year. The Office of the Comptroller is prohibited by federal law from providing the sales tax revenue of individual counties because it could be used to infer confidential tax information, according to a spokesperson from the Office of the Comptroller.

Regardless of county earnings, Shad Ewart, a professor at Anne Arundel Community College who teaches a class on the business of cannabis, said total tax revenue in the state is low.

From July 2023 to July 2024 — the first year of recreational cannabis legalization in the state — sales totaled more than $1.1 billion. If sales had matched the last calendar year, the state would have collected about $99 million from its 9% sales tax.

Gov. Wes Moore’s current budget proposal would raise the tax on recreational cannabis from 9% to 15% beginning in fiscal 2027. Ewart said the underperforming revenue source could make that a difficult decision.

“I have to tell you that seems low, I think they anticipated more,” Ewart said. “The problem is you can’t just change these rates. The consumers have other options. Even though those other options are illegal, they’re going to go to [Washington D.C], another state, or to their legacy dealer who is still out there right now.”

The Maryland Cannabis Administration, the agency responsible for measuring total cannabis sales, did not respond for comment.

Maryland faces a $3 billion budget deficit in the coming fiscal year, which could grow as thousands of federal workers in the state are laid off and will cease contributing income tax revenue, Ewart said.

Moore’s office did not immediately respond to a request for comment on Tuesday.

“All that matters is the trickle down to retail rate: what are you paying for an ounce? What are you paying for a gram?” Ewart said. “As a consumer, I don’t think people care what the tax rates are. … All consumers are looking at is, ‘Where am I going to get the best deal?’”

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