The legalization of adult use cannabis brought on a number of changes to licensing regulations.

The Cannabis Reform Act of 2023 creates the framework for adult-use sales in Maryland beginning on July 1, 2023. In order to participate, existing businesses must convert their current medical license to a new standard cannabis license. Converted licenses will be valid for five years and will authorize businesses to grow, process or dispense cannabis to patients and consumers ages 21 years or older. Licenses that do not convert will not be able to operate beginning on July 1.

Notably, the number of standard licenses the state will issue is now 75 for cultivators and 300 for retailers. For micro licenses, they will issue 100 cultivator licenses and 200 retail licenses. The issuances will happen over at least 2 rounds, one in the fall of 2023, one sometime in 2024, and more to follow if the state sees fit.

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July 2023 | TerraAscend Corp completed its acquisition of Herbiculture for $8MM

June 2023 | TerraAscend Corp completed its acquisition of Blue Ridge Wellness for $7MM

June 2023 | TerrAscend Corp completed its acquisition of Derby 1 for $22MM

April 2023 | Ascend Wellness Holdings completed its acquisition of 4 licensed dispensaries for $19MM

January 2023 | TerrAscend Corp completed its acquisition of Allegany Medical Marijuana Dispensary for $10MM

January 2022 | MariMed announced its acquisition of Kind Therapeutics USA, LLC for $20MM

August 2021 | Cresco acquired dispensary Blair Wellness Center

November 2020 | TerrAscend acquired HMS Health from Curaleaf

September 2020 | 4Front sold three dispensaries to Ethos

Adult use sales first hit the market in July 2023 and suffice it to say Marylanders could not have been more ready. Sales reached over $87.0MM in July alone, up from ~$43.0MM in June. Demand is there creating plenty of opportunity in the state. MSOs should establish/expand their position in the state especially with the modest number of licenses the state has stated they will issue. Profits will continue to be attractive in the near term, especially for those who can operate at scale.

Once the an operator has converted to adult-use, the license cannot be traded for five years. Look for the regulation to be challenged to allow for m&a in this state.

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