The Maryland Department of Commerce (“DOC”) is currently accepting applications for the Cannabis Business Assistance Loan/Grant Fund (“CBAF”) and released further guidance on the application process and eligibility criteria. The CBAF is a financing resource operated by the DOC for the purpose of providing grants and loans for small businesses, including small minority-owned and small women-owned businesses entering the adult-use cannabis industry. The CBAF will also provide funding to business development organization, including incubators.

Eligible Use of Funds

1. Grants or loans to small businesses, including small, minority-owned or small women-owned businesses, for:
   • License application assistance for participation in the adult-use cannabis industry;
   • Assistance with the operating or capital expenses of a business participating in the adult-use cannabis industry; or
   • Targeted training to support participation in the adult-use cannabis industry
2. Grants to historically black colleges and universities for cannabis-related programs and to business development organizations, including incubators, to train and assist small, minority and women business owners and entrepreneurs seeking to become licensed to participate in the adult-use cannabis industry.

Medical License Fee Grants

As part of the CBAF program, qualifying medical-use cannabis license holder who intend to convert their license pursuant to the new Maryland cannabis regulations may apply for assistance.

Grants will be provided to qualifying businesses as follows:

1. Existing Dispensary License Holders – $25,000 per license
2. Existing Processor License Holders – $50,000 per license
3. Existing Grower License Holders – $50,000 per license

License holders who have already paid the license conversion fee will be eligible for reimbursement under this program.

How To Qualify For A License Conversion Fee Grant

To qualify for a License Conversion Fee, a license holder must meet the following criteria:

• Small Business Qualification – Applicants must be a small business, defined as an existing license holder with 0-50 employees per license as of May 1, 2023; and
• Personal Net Worth Qualification – The business must be at least 51% owned by individuals whose personal net worth does not exceed $1.7 million. For the purposes of this program, net worth is defined as: the value of the assets of an individual remaining after total liabilities are deducted including the individual’s assets held jointly or as community property with the individual’s spouse. Net worth does not include:
  • • The individuals’ ownership interest in the applicant
    • The individual’s equity in the individual’s primary place of residence; or
    • The cash value of any qualified retirement savings plans or individual retirement accounts.

Applications submitted by those who qualify under the following categories will be prioritized for funding:

• A primary owner is a member of a population that was disproportionately impacted by the criminalization of cannabis. (List of eligible zip codes).
• A Primary Owner that has been convicted of a cannabis-related offense.
• A Social Equity Licensee, defined as a grower, processor or dispensary that held a Stage One pre-approval for a license on or before October 1, 2022, but was not operational before October 1, 2022.

Application Process

The deadline to apply for a License Conversion Fee grant will be June 30, 2023. For applications to be considered the below-noted information must be provided.

1. Medical License Conversion Fee Application with all supporting documentation requested
2. Statement of Personal Net Worth
3. Copy of existing license(s)
4. W9
5. Evidence of Good Standing with the State

Completed applications should be submitted via email to cannabis.financing@maryland.gov

Terms

• There are no fees or costs to apply for a grant from the Fund. Please note that grants are taxable.
• Grants may be provided to applicants prior to or after license conversion.
• Grantees are subject to random audit for compliance with the intended purpose of the grant.
• Applicants who do not complete the license conversion process are subject to repayment of the grant in full.

Future Funding Opportunities and Key Dates

• August 1, 2023 – A second round of applications will open to assist holders of a Stage One Pre-approval issued before October 1, 2022, that need resources to become operational to participate in the medical and adult-use cannabis industry. Assistance in the form of startup capital and operating expenses will be available as conditional grants or loans. Applicants will need to demonstrate that with a requested amount of funding, they will become operational in a period of time to be announced. Further information on the second round of applications will soon be released.
• The DOC will announce future rounds of funding to assist small, minority and women-owned businesses entering the adult-use cannabis industry.

For more information, visit https://commerce.maryland.gov/fund/programs-for-businesses/cannabis-business-assistance-fund. If you would like to schedule a call to discuss how these developments may impact you or your business, please contact Jonathan Wachs at jwachs@offitkurman.com or 301-575-0302.