Maryland Bill Targets Capital Bottlenecks Facing Social Equity Cannabis Operators

Maryland lawmakers are weighing a proposal that could meaningfully reshape how the state’s cannabis social equity operators are financed and regulated.

House Bill 1519 would shorten Maryland’s strict moratorium on transfers of controlling interests and clarify how regulators treat common deal structures such as management services agreements and option agreements. Supporters say the measure would unlock capital that operators have struggled to access and finally bring clarity to rules that have slowed the state’s social equity rollout.

Jonathan Wachs, an attorney in Dickinson Wright’s Washington, D.C. office, says the bill is a direct response to how far behind the program has fallen.

“In Maryland, we conducted a social equity lottery in 2024, and the state thought that most of these businesses could be up and running within 18 months,” Wachs says in an online interview. “So here we are, almost on the 24‑month anniversary, and only 20 of the 205 are actually open.”

That gap has put pressure on lawmakers and regulators to revisit rules that were designed to protect social equity ownership and prevent predatory deals, but may also be making it too difficult for licensees to attract investment and get to market.

Bill Shortens the Transfer Moratorium

One of the central changes in HB 1519 is a proposal to reduce the moratorium on transferring a controlling interest in a cannabis business from five years to three. Under current law, new licensees, including social equity operators, are subject to a five‑year period during which they cannot transfer control. That restriction can make recapitalizations, exits or major restructurings nearly impossible during the early, most fragile years of a business.

Wachs says that change alone could be transformative for businesses trying to open or finance growth.

“It’ll be easier for them to attract investment capital, knowing that the restricted period only lasts three years, not five years,” he says. “The bill would also give a lot of clarity around what companies can and can’t do under a management agreement or an option agreement, which are two tools that companies try to use to attract investment capital and lending capital. So I think it will increase the ability for industry operators to attract the capital and talent they need to be successful.”

Depending on when their licenses were issued by the Maryland Cannabis Administration, some existing operators could become eligible for full transfer of control as soon as July 1, 2026. That shift could make new investments and restructurings far easier to finance and underwrite.

Legislation Also Clarifies Option Agreements and MSAs

HB 1519 also takes aim at a longstanding pain point in Maryland: the blurry line between ordinary deal protections and what regulators might view as prohibited control.

The bill would make post‑moratorium buyout options easier to structure without creating early‑control risk. It would also address concerns about control in management services agreements by defining them broadly enough to cover the real‑world stack of services, intellectual property, real estate and financing that operators rely on. The measure sets a ceiling on MSA fees at the greater of 25% of gross revenue or 50% of gross profit, giving companies a clearer framework for negotiations.

Perhaps most importantly, the bill would impose a 45‑day deadline for regulators to review MSAs.

“There’s another provision in here called what I call a deemer clause, which says that if you submit a management agreement and the regulators don’t act or deny it within 45 days, it is deemed to be approved,” Wachs says. “That is huge. If other states adopt deemer clauses, that will either force regulators to act more quickly or live with the consequences of their failure to do so.”

For operators carrying rent and other overhead while they wait on regulatory decisions, that kind of certainty could be the difference between opening their doors and shutting down before they ever make a sale.

HB 1519 has been referred to the House Economic Matters Committee for consideration.