Aug 2023
3 min

How to Start a Dispensary in Maryland: The Essential Guide

Stepping into the spotlight as the 23rd state to legalize recreational cannabis, Maryland is not just creating a framework for cannabis businesses but is laying the foundations for an inclusive, diverse, and sustainable industry model.

From its comprehensive licensing strategy tailored to accommodate both behemoths and boutique businesses to its deep commitment towards social equity, Maryland is blazing a trail that many states will likely follow. The budding entrepreneurs and industry veterans alike are presented with a golden ticket, offering access to what could potentially be one of the most prosperous cannabis markets in the United States.

In this article, we will take a deep dive into Maryland’s licensing process, the diverse types of licenses on offer, and the critical components of application assessment. Moreover, with the state’s market projected to skyrocket in the coming years, understanding the dynamics and potential of this market will be crucial for any player hoping to stake their claim in Maryland's green gold rush. So, whether you're a seasoned industry professional or a curious newcomer, strap in and let's navigate the promising terrain of Maryland's cannabis market.

License Types

The cannabis industry in Maryland continues to mature, with the 2023 and 2024 license application rounds ushering in varied opportunities for businesses, both big and small. To cater to a wide range of business aspirations and models, the state offers different license tiers and types. Whether you're a large-scale cultivator or a small business looking to carve a niche in the cannabis delivery space, Maryland has a license tailored for you.

Standard License

The Standard License is for those aiming big. It caters to sizable operations, befitting well-established players or those with substantial capital backing.

  • Growers: With this license, cultivators can operate a space ranging from over 10,000 square feet up to 300,000 square feet of indoor canopy or its equivalent.
  • Processors: Licensed processors in this category can handle more than 1,000 pounds of cannabis annually.
  • Dispensaries: This license permits operation of a brick-and-mortar retail location where customers can purchase cannabis or cannabis-related products.

Micro License

The Micro License is designed with smaller businesses in mind, presenting a great entry point for startups or those with limited capital. However, there's a stipulation – such businesses can employ no more than 10 individuals.

  • Growers: Limited to a maximum of 10,000 square feet of indoor canopy or its equivalent.
  • Processors: A ceiling of 1,000 pounds of cannabis processing per annum.
  • Dispensaries: Unlike the standard license, this permits the operation of a cannabis delivery service. Instead of a physical store, micro license holders can deliver products directly to consumers.

Incubator Space License

The Incubator Space License is all about growth and teamwork. Think of it as a shared workspace for those holding micro licenses, giving small businesses a leg up. It's like a community garden for cannabis entrepreneurs, offering a space to thrive and support one another.

On-site Consumption License

Here's where the party vibes come into play. The On-site Consumption License lets businesses set up spots where folks can chill and enjoy their cannabis. From outdoor areas for a smoke session to cozy indoor spaces for vaping, it's like the cool coffee shop or bar, but for cannabis enthusiasts.

Navigating Maryland's Licensing Pathway: What to Expect

Maryland's decision to adopt a restricted licensing model is set to create a well-ordered, transparent, and somewhat foreseeable cannabis market. For enterprises, this method presents both potential hurdles and golden opportunities. The key to success will hinge on applicants who grasp the contours of the licensing terrain and can astutely plan, invent, and pivot within these confines. As the state's cannabis sector evolves, it promises to be intriguing to see how this capped licensing structure influences the sector's expansion and character. Gazing forward, Maryland has earmarked two prominent application periods for recreational cannabis businesses in 2023 and 2024, each harboring distinct quotas for available cannabis business licenses. Here's a deeper dive:

First Application Wave : Spotlight on Social Equity

Maryland's maiden cannabis business application cycle holds a special reservation for applicants meeting the social equity criteria. This calculated move accentuates Maryland's resolve to amend historical wrongs and pave the way for a diverse cannabis industry. It's imperative for potential contenders to realize that a "social equity business" tag requires the organization to have a minimum of 65% ownership by a social equity eligible individual. Further, a crucial residency stipulation exists: aspiring social equity applicants must be Maryland denizens, anchoring the industry's rewards firmly within the local domain.

Available Standard Licenses:

  • Grower: 20
  • Processor: 40
  • Dispensary: 80

Micro Licenses on Offer:

  • Grower: 30
  • Processor: 30
  • Dispensary (focused on delivery): 10

Incubator Space Licenses Up for Grabs:

  • Total: 10

Second Application Wave: Casting a Wider Net

In contrast to the prior cycle, Maryland's subsequent licensing round is more inclusive. There's no mandate for applicants to meet the social equity benchmarks, inviting a broader pool of aspiring businesses. This phase is geared to attract a colorful mix—from industry newcomers to well-versed stalwarts. A notable difference here is the removal of the residency clause, potentially luring businesses from outside Maryland to join the state's blossoming cannabis marketplace. This strategy mirrors Maryland's dual aim: to advocate for local social equity initiatives while simultaneously promoting a lively, competitive, and varied market.

Standard Licenses up for Grabs:

  • Grower: 25
  • Processor: 25
  • Dispensary: 120

Available Micro Licenses:

  • Grower: 70
  • Processor: 70

Incubator Space Licenses on Offer:

  • Total: 10

On-site Consumption Licenses Available:

  • Total: 15

What You Need to Know: The Three-Pronged Check

Ready to dive into Maryland's booming cannabis world? With the next licensing phase just around the corner, it's essential to know the ropes. So, let’s break down the nitty-gritty of Maryland's application checks, focusing specifically on the section, which spells out what they’re looking for in the required Operational Plan, Business Plan and Diversity Plan.

1. Operational Plan

This is your game plan. It’s all about showing that you've got a handle on the ins and outs of running a cannabis business. An operational plan isn't just a document; it's a testament to your commitment and readiness to navigate the intricate landscape of the cannabis industry. The Maryland Cannabis Administration wants assurance that dispensaries aren’t stepping into the scene blindly, but with a clear, comprehensive strategy.

Here’s what the rules say: "A detailed operational plan for the safe, secure, and effective operation of the business." So, what does that mean for you?

Security: Running a Fortified Establishment

In an industry as sensitive and regulated as cannabis, security isn’t a mere afterthought—it's paramount. It’s about safeguarding not just your assets but your reputation, employees, and customers. Show that you've got a tight ship. This means clear security measures, from camera surveillance to strict visitor checks, and a solid plan for emergencies.

Dive deep into your security infrastructure. Will you employ 24/7 surveillance, using high-definition cameras placed strategically around your premises? Consider elaborating on your controlled access points, ensuring only authorized personnel can navigate sensitive areas. Highlight your visitor protocol: will they sign in, wear identification badges, be accompanied at all times? Moreover, emergencies are unpredictable; your preparedness for them shouldn't be. Develop and discuss your comprehensive emergency response plan, ensuring swift action during unforeseen crises.

Surveillance System

  • Type and quality of cameras (e.g., HD, infrared).
  • Placement strategy for comprehensive coverage.
  • Monitoring and recording system details.
  • Data storage duration and backup procedures.

Access Control

  • Controlled entry points (doors, gates).
  • Keycard access or biometric systems.
  • Protocol for granting/denying access.
  • Log system for tracking entries/exits.

Visitor Protocol

  • Sign-in/sign-out system.
  • ID verification process.
  • Badge or identification provision for visitors.
  • Escorted access rules.

Emergency Response

  • Fire safety measures (extinguishers, sprinklers, alarms).
  • Procedure for medical emergencies.
  • Evacuation plan and routes.
  • Employee training on emergency protocols.

Safety: Upholding Quality and Trust

While the allure of the cannabis industry is undeniable, it's the commitment to safety and quality that transforms a business into a trusted brand. Ensuring that every product under your roof is safe for consumption is a responsibility of monumental importance. Show that you've got a tight ship. This means clear security measures, from camera surveillance to strict visitor checks, and a solid plan for emergencies.

Begin by discussing your product vetting process. How do you ensure that every product you stock is of premium quality? Touch on your storage protocols, ensuring optimal product freshness and integrity. Discuss your proactive measures for product recalls, ensuring consumer safety remains un-compromised. Address loss prevention strategies, underlining mechanisms to deter and detect theft.

Product Vetting

  • Supplier verification process.
  • Product testing protocols.
  • Quality assurance checks upon delivery.

Storage Protocols

  • Temperature and humidity control measures.
  • Segregation of products (e.g., edibles vs. flowers).
  • Security measures within storage areas.
  • Rotation system to ensure product freshness.

Product Recall Procedure

  • Monitoring system for problematic batches.
  • Notification strategy for affected customers.
  • Return and refund/exchange process.
  • Reporting mechanisms to authorities.

Loss Prevention

  • Anti-theft devices or tags.
  • Inventory audit frequency.
  • Employee training against internal theft.
  • Reporting and investigation procedure for theft incidents.

Efficiency: Beyond Transactions, Building Loyalty

At its core, every dispensary sells cannabis. But what distinguishes a successful venture from others is the effectiveness of its operations. It’s about offering not just products, but memorable experiences to your customers, all while abiding by the regulatory framework. It's not just about selling; it's about selling right. Think about how you'll source products, manage stock, train staff, handle money, promote your business, and, super important, stay on the right side of the law.

Delve into your product acquisition strategies. From where and how do you intend to source your products? Your inventory management system is the backbone of your operations, ensuring you're well-stocked and equipped to meet demands. Touch on your staff training modules, ensuring they are knowledgeable, compliant, and customer-centric. Financial transactions in the cannabis world can be intricate; showcase your robust cash-handling protocols. Dive into your promotional strategies, underlining how you intend to attract and retain customers. Lastly, compliance isn't optional—it's essential. Highlight your strategies to keep abreast of the ever-evolving legal landscape, ensuring every operation aligns perfectly with the state’s mandates.

Product Acquisition

  • List of trusted suppliers/vendors.
  • Product selection criteria.
  • Order frequency and volume considerations.
  • Payment terms and negotiation strategies.

Inventory Management

  • Inventory tracking software/system.
  • Restocking triggers and procedures.
  • Shelf organization for efficient customer service.
  • Product expiry tracking and disposal.

Staff Training

  • Onboarding process and duration.
  • Ongoing training sessions (product, service, legal).
  • Certification or training completion tracking.
  • Customer service role play and feedback loops.

Financial Protocols

  • Cash handling and storage procedures.
  • Daily reconciliation and deposit schedules.
  • Electronic payment handling, if applicable.
  • Financial audit frequency.

Promotional Strategies

  • Marketing and advertising plans.
  • Loyalty programs and customer retention initiatives.
  • Special event days or sales.
  • Community engagement initiatives.


  • Regular updates on state and local cannabis laws.
  • Compliance officer or team designation.
  • Regular compliance audits.
  • Reporting mechanisms for any issues or breaches.

2. Business Plan

Think of your business plan as the GPS for your cannabis venture. It’s all about showcasing that you've got the map to make your business thrive, and you've got the best crew on board for the journey.

The rulebook says you need "a business plan showing a good chance of success, a skilled and experienced team, and a great environment for employees."

Road to Success: Financial Mapping

The Maryland Cannabis Administration is keenly interested in fostering a financially stable and prosperous cannabis sector. Ensuring that every dispensary is built on a solid financial foundation is not just about individual success; it's about nurturing an industry that can contribute positively to the state's economy. This section underscores the economic viability of your business, guaranteeing that you're not only here to start but to stay and thrive. Give a peek into your financial toolbox. Share your startup plan, available funds, and your investment game plan.

  • Financial Toolbox Overview: Start by introducing your financial position. This should be a snapshot of your assets, debts, and liquidity.
  • Startup Plan: Begin with an introduction to the dispensary concept. What will your dispensary look like? Who's your target audience? Provide a projected income statement, balance sheet, and cash flow statement for at least the first year. Break down your startup costs – from licensing to inventory procurement, to interior design, and initial marketing campaigns.
  • Available Funds: Clearly outline your capital on hand, any secured loans, or potential investors. If you have investors, detail the terms of their investment and what equity or repayments they expect in return.
  • Investment Game Plan: This should be a forward-looking projection. After the initial setup, where will you reinvest? Will you open more branches, go into product development, or expand online sales? What are your projected ROI and the expected timeline for achieving them?

Dream Team: The Heart of the Dispensary

People drive success. The Maryland Cannabis Administration values dispensaries backed by a competent and experienced team. This emphasizes the notion that a skilled workforce, equipped with the right expertise, can uphold the standards and vision the state has for its cannabis industry. By spotlighting your team's background and capabilities, you're showcasing a commitment to professionalism and industry excellence. Brag about your squad! Share some stories about your team's past victories, maybe a bit about their journey in and outside the cannabis world, and a who's-who chart to let everyone know who’s in charge.

  • Team Introduction: Start by painting a broad picture of your team's collective experience and strengths.
  • Past Victories: Highlight significant achievements by your team members. Maybe someone played a pivotal role in a previous startup, or another person might have a deep understanding of the cannabis cultivation world. These anecdotes humanize your team and show their competence.
  • Journey Insights: Share some stories of your team's experiences, both within the cannabis industry and in other sectors. This can show adaptability and a diverse range of expertise.
  • Organizational Chart: A visual representation of roles within your dispensary will help. It clarifies responsibilities and shows you have a well-thought-out hierarchy or team structure.

Employee VIP Treatment: Cultivating a Thriving Work Environment

A flourishing cannabis industry is built on more than just profits and products; it's founded on the well-being and growth of its people. The Maryland Cannabis Administration recognizes the importance of a supportive work environment. By prioritizing your employees' welfare and development, you're not only ensuring a content and efficient workforce but also aligning with the state's ethos of promoting a responsible and human-centric cannabis industry. Yep, it's a bit off the beaten track for a business plan, but dive into how you’ll treat your team. Talk about the perks, work schedules, and how you plan to play nice with rules and regulations, like OSHA and FMLA.

  • Workplace Perks: Start by listing the benefits you offer, such as health insurance, retirement plans, stock options, or even fun stuff like monthly team outings, wellness programs, or on-site yoga classes.
  • Work Schedules: Touch upon how you plan to schedule shifts. Emphasize flexibility if you're offering it, which is a big perk for many employees.
  • Rules and Regulations Adherence: Delve into the training programs you’ll have in place, ensuring your team's safety and adherence to regulations. Mention the systems you’ll implement to remain compliant with OSHA and FMLA. Also, discuss how you'll ensure regular updates, as the cannabis industry regulations can evolve quite rapidly.
  • Growth Opportunities: A significant part of employee satisfaction is knowing there's room to grow. Outline potential career paths within your dispensary and any training or educational opportunities you'll offer.

3. Diversity Plan

Maryland's got its heart in the right place, pushing for a cannabis scene that’s diverse and inclusive. Your diversity plan is your chance to shine a light on how you’re going to celebrate and uplift folks from all walks of life in your business. Think about the people you'll hire, the suppliers you'll partner with, and how you're going to make sure everyone feels welcomed and valued.

A good diversity plan isn't just about ticking boxes but is an authentic reflection of a company's commitment to inclusivity. Not only is this good for business, but it's also a step towards creating a more inclusive and equitable society. When developing your plan, keep these guidelines in mind, but also remember to tailor them to the unique needs and opportunities present in the community surrounding your dispensary. (Get a ready to go Diversity Plan here!)

Hiring Practices

  • Equal Opportunity: Begin with a clear statement that underlines your commitment to being an equal opportunity employer. Ensure that hiring decisions are made without regard to race, gender, religion, age, disability, or any other protected status.
  • Outreach: Partner with diverse local community organizations, colleges, and job fairs to attract a wider pool of applicants. Collaborations with minority-focused associations can help tap into talented professionals.
  • Training: Offer regular diversity and inclusion training sessions to all employees to promote awareness, sensitivity, and a culture of acceptance.
  • Metrics: Set measurable hiring goals. For instance, committing to a certain percentage of hires from minority or underrepresented backgrounds can be a step in the right direction. Regularly review and adjust these goals based on the evolving dynamics of the business and local community.

Supplier Diversity

  • Vendor Selection: Actively seek out and prioritize minority-owned, women-owned, veteran-owned, or LGBTQ+-owned suppliers. This can be done by creating a vendor diversity program or dedicating a percentage of your supplier contracts to diverse businesses.
  • Networking: Attend trade fairs, conventions, or workshops focused on minority business enterprises. Building relationships in these spaces can be vital in diversifying your supplier list.
  • Database: Maintain an internal database of diverse suppliers. Periodically review and update this list, ensuring it reflects the wider community.

Creating an Inclusive Environment

  • Inclusive Marketing: Ensure your marketing campaigns represent a diverse set of people. By portraying various backgrounds, cultures, and lifestyles, you are signaling your commitment to inclusivity to your customers.
  • Feedback System: Set up a feedback system where employees and customers can share their experiences. By understanding their experiences, you can make informed decisions to better cater to their needs.
  • In-store Initiatives: Offer products and promotions that cater to diverse communities, celebrating different cultural events, histories, and traditions.
  • Community Engagement: Engage with diverse local communities through sponsorships, partnerships, or charitable events. This not only enhances your brand's reputation but also underscores your commitment to inclusivity.

Employee Well-being & Growth

  • Mentorship Programs: Develop mentorship programs to support the growth of employees from underrepresented backgrounds. By pairing them with seasoned professionals, you help in their career advancement.
  • Support Groups: Consider forming or supporting in-house groups that cater to different demographics. These can be safe spaces for discussions, networking, or sharing experiences.

Social Equity in Maryland's Cannabis Licensing

As Maryland gears up for its inaugural round of adult-use cannabis business licensing in September 2023, the state has taken a unique stance, prioritizing social equity qualified licensees. Social equity qualified applicants will be the only ones eligible for the first round of adult use cannabis business license applications in Maryland. But what does this focus on social equity mean, and why is it essential?

Social equity in the cannabis industry is an effort to rectify past injustices related to cannabis criminalization. It recognizes that certain communities, often marginalized ones, have disproportionately borne the brunt of strict cannabis laws and the war on drugs. By prioritizing such communities in the emerging legal cannabis industry, Maryland aims to promote fair distribution of economic opportunities and to mend past disparities.

To qualify as a social equity applicant in Maryland, an entity must have at least 65% ownership and operational control by individuals meeting one or more of these criteria:

Residential Criteria

Individuals who have resided in a disproportionately impacted area for a minimum of five out of the last ten years. Maryland's Cannabis Reform Act (HB556/SB516) characterizes these areas as those which have seen cannabis possession charges exceeding 150% of the state's decade-long average. A detailed map highlighting these zones and relevant zip codes is set to be released soon.

Educational Background

Those who have attended public schools situated in these disproportionately impacted areas for at least five years. This criterion ensures that individuals who have grown up and been educated in these communities, even if they later moved, still qualify under the social equity framework.

Higher Education Criterion

Alternatively, individuals who have spent at least two years at a Maryland 4-year higher education institution, where 40% or more of its student populace are Pell grant-eligible, also fit the bill. This provision acknowledges the socio-economic challenges many students face and aims to promote diversity in the cannabis business space.

Racing Against the Clock: The Application Process

Maryland's regulatory body provides a span of 30 to 60 days to submit applications. Though it may sound like a considerable time, the intricate nature of the process can make it feel much shorter. Aspiring business owners should be alert, ensuring they submit detailed, punctual applications. Falling outside this timeframe might force hopefuls to wait for the next round, which could be years away or might not materialize.

Application Release

September 2023

Submission Phase

Commences 60 days post the application's release and stretches for a subsequent 30 days. Within this period, each submission undergoes evaluation, culminating in either a pass or fail verdict. In Maryland, the licensing procedure does away with a typical points-based scoring system. Instead, it's a clear-cut "pass-fail" method. This method streamlines the initial evaluation by focusing solely on whether the application fulfills the necessary standards. Those that do move on, while the rest get stopped in their tracks.

The License Lottery

A mere pass doesn't assure a license. It only guarantees entry into a lottery. Introduced to uphold fairness, this method comes into play when qualified applications outnumber available licenses. While a dash of fortune is involved, only top-notch, complete applications get this far.

License Granting

By January 1, 2024, Maryland will start the first round of license distributions, with a second round slated for post May 1, 2024. Those fortunate in the lottery will get notified within five days post selection. The first license conferred is termed "Conditional." This implies recipients must provide further data, verify eligibility, and finalize a property, all within a six-month frame. Should they fail to meet these stipulations in the specified duration, the Department has the right to retract the provisional license.

After Lottery Selection: What's Next?

Imagine that you've been selected in Maryland's cannabis licensing lottery? Congratulations! But while it's a monumental first step, it's essential to understand that this just grants you a conditional license. This is the starting line, not the finish. Transitioning from this provisional status to becoming an active and operational dispensary owner in Maryland involves traversing a complex regulatory landscape. But fear not! We're here to guide you through every nuance and requirement of the process. Let's delve into the roadmap that lies ahead for your cannabis venture.

1. The Conditional License Journey

Kickoff Date
The adventure begins on the day the state grants you a conditional license.

Time Span
This license period stretches over 18 months from the issued date. Need more time? Fret not! There's a chance for an extension, which we'll cover next.

You might be eligible for an extra 6-month window if you've been showing genuine efforts to get your cannabis enterprise up and running.

Must-dos During this Period
You'll be a tad busy, as you need to:

  • Submit a supplementary license application.
  • Secure legal control (think leases or purchases) of your intended cannabis business site.
  • Bag zoning or planning approvals if required.
  • Register the business with the State Department of Assessment and Taxation.

No-go Zones
Be wary of pitfalls during this period. For instance:

  • Don't jump the gun by purchasing, cultivating, or selling cannabis.
  • Refrain from any transfers that alter the main ownership or control.
  • If you're under the 'social equity' tag, any ownership changes shouldn't make you lose that status.

Adding More Resources
You can bolster your venture by:

  • Securing grants or loans from additional sources not initially listed.
  • Onboarding new owners and passive investors.
  • Keep it legal! Any new resources should comply with the state's regulations and codes.

2. How Can a Conditional License Be Revoked?

The state can pull your conditional license if:

  • Any associated individual engages in fraudulent or deceptive actions.
  • Any related person has a questionable criminal record.
  • There are any undisclosed facts about eligibility.
  • Licensing and operations aren't achieved within the stipulated or extended timeframe.
  • There are tax discrepancies or arrears.

3. Earning Your Full License:

The big win! The state might grant you the full license if:

  • Your supplementary license application is in order.
  • You've paid the specified license fee.
  • Your business site meets all the legal, zoning, and planning criteria.
  • All required inspections are green-lit, and your business matches the approved application specifics.

4. Business Operations Green Signal:

You can't grow, process, or sell cannabis until the state approves written documentation under the full license conditions.

5. Naming Your Business:

Naming is crucial. The state won't be too pleased if you:

  • Use terms directly associated with cannabis or other controlled substances.
  • Suggest cannabis' intoxicating nature.
  • Incorporate any copyrighted or trademarked material.

6. Watch Out! License Troubles:

The state has the power to suspend, fine, restrict, or revoke licenses if:

  • False or deceptive documents are submitted.
  • There's a violation of the Alcoholic Beverages and Cannabis Article.
  • You start operations before official approval.

We hope this breakdown clarifies Maryland's licensing process. Starting a cannabis business is no small feat, but with due diligence and understanding, the journey can be smoother. Here's to your green success!

Your Maryland Dispensary Dream Awaits

As the curtains draw on our deep dive into Maryland's cannabis landscape for 2023 and 2024, one thing is evident: the state's vibrant and inclusive approach offers a unique canvas for cannabis entrepreneurs. Navigating the intricate maze of regulations, licensing rounds, and social equity considerations might seem daunting, but with the right tools and knowledge, the path to establishing a thriving dispensary becomes clear. Remember, preparation and understanding are your best allies in this journey.

If you're keen on ensuring your dispensary application stands out and resonates with Maryland's vision, the right operating plan is indispensable. Dive deeper and access meticulously crafted operating plans tailored for success at Your dream dispensary in Maryland isn't just a vision; it's a future waiting to be realized. Embark on your green journey today!

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