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Hemp businesses sue Maryland for 'monopolizing' recreational pot licensing process

BALTIMORE (WBFF) — As Maryland’s recreational marijuana industry goes from budding to booming, a group of hemp industry leaders has banded together to sue the state and cannabis regulators over a licensing process they claim is discriminatory and being monopolized.

The Maryland Hemp Coalition, along with several hemp farmers and business owners, filed the lawsuit against Gov. Wes Moore, the Maryland Cannabis Administration, and the Maryland Alcohol, Tobacco, and Cannabis Commission Monday in Circuit Court in Washington County.

“My clients, who have been lawfully selling these products for years, are suddenly in a

position where they are being told they can’t sell their products without a license, and yet the obstacles to get a license are nearly insurmountable,” said Nevin Young, an attorney representing the hemp industry in the suit.

During the latest legislative session, lawmakers worked to stand up the framework for recreational marijuana in Maryland. Included in the new framework – is language to cap the level of THC in hemp-derived products that could be sold without a recreational marijuana license as well as details surrounding the licensing process.

Attempts during the legislative session were made to create a carveout for the hemp industry to allow businesses to continue selling their products. Another amendment floated during session including creating new testing and regulation for hemp products; both plans failed to be included in the final law passed by lawmakers.

Without a recreational marijuana license, hemp-business owners were forced to close their doors on July 1.

Derek Spruill, founder and owner of Cherry Blossom Hemp, said many in the hemp industry have been pushing for regulations to standardize the hemp industry, but those efforts failed to become reality.

“Regulate us, bring us into the fold,” Spruill said. “I’m not ready to give up just because of this.”

The current licensing process in Maryland is a lottery; round 1 applicants must qualify as social equity applicants, which according to the state, is defined as an applicant with at least 65% ownership and control held by at least one person who:

  • Has lived in a disproportional impacted area for at least five of the last decade

  • Attended a public school in a disproportionately impacted area for at least five years, OR

  • Attended, for at least two years, a 4-year higher education institution in Maryland where at least 40% of the people attending the institution are eligible for a Pell Grant.

Maryland defines an area as disproportionately impacted by an area that had above 150% of the state’s 10-year average for cannabis possession charges. A map of the zip codes that qualify has yet to be provided by the state.

Spruill previously told FOX45 News that he wouldn’t be able to stay afloat while he applied for a recreational marijuana license, especially without a guarantee he would get one.

“What business do you know can close in July, July 1, with three months’ notice,” Spruill said. “What they are asking for most of these people is impossible. It’s almost like a spit in the face.”

The licensing process violates Maryland’s anti-monopoly laws “by creating a monopoly on licenses to sell cannabis-related products in the state of Maryland,” Young said during an interview about the lawsuit.

“[The lawsuit alleges] that they also violated the Equal Protection Act in Maryland by inventing certain categories of persons who will only be eligible to submit applications for the first round of licenses,” Young continued.

Levi Sellers, owner of South Mountain Microfarm, is also named as a plaintiff in the lawsuit. FOX45 News previously spoke with Sellers about the future of his hemp farm before the law passed the General Assembly and before Gov. Moore signed the plan into law.

“We see the small businesses, and hemp industry stakeholders, they got left behind during the legislative session,” Sellers said. “We are investigating options to move our facilities out of state to move as well as could potentially lose the whole farm in the process.”

In addition to the Maryland Hemp Coalition and South Mountain Microfarm, Derek Spruill and Cherry Blossom Hemp are part of the lawsuit, along with Cannon Ball Dispensary, Christopher Guy Cannon, Vicky Orem, and A Healing Leaf, LLC.

Young said while the lawsuit plays out in court, which is expected to be a lengthy legal process, he’s seeking a temporary restraining order and preliminary injunction to stop the state from enforcing the ban on hemp-derived products. A hearing date has not yet been scheduled for the case.

“They know that when the state grants monopolies, it’s an invitation to graft favoritism, it eliminates competition, it raises prices, and it limits consumer choice,” Young said. “As soon as a lot of money is on the table, a lot of our elected officials seem to forget about those basic principles.”

Gov. Moore’s office did not immediately respond to a request for comment regarding the lawsuit. Carter Elliott, spokesperson for Gov. Moore, issued a statement Tuesday to FOX45 News that did directly mention the lawsuit. Instead, the statement said Gov. Moore has "proudly overseen one of the smoothest and quickest recreational cannabis legalization transitions in the country" and is proud of Maryland's commitment to creating a growing economy with necessary guardrails.

"Maryland’s adult-use cannabis market provides continuity of operations for businesses and patients in the medical program while providing new regulations governing health, safety and security for recreational adult use," Elliott said. "Opening the market to adult use also will bolster our economy while directly benefiting those who were disproportionately affected by the war on drugs because of the commitment to equity from the Moore-Miller Administration,"


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