Maryland Cannabis Tax Guide: 2025 Edition

Updated on July 1, 2025

Key Points

• Maryland imposes a 12% cannabis‑specific sales and use tax on all adult‑use cannabis products as of July 1, 2025.

• De-coupling from IRC 280E, meaning business are treated like any other business for tax purposes at the state level.

• There are no additional local cannabis excise or gross‑receipts taxes — the rate is uniform statewide.

• Medical cannabis is exempt from that 12% tax and is treated like a prescription drug.

• Retailers must file timely and accurate returns; failure to comply can mean penalties, interest, and even jeopardized licenses.

How Maryland Handles Federal §280E at the State Level

1. Full Deduction of Business Expenses
   Maryland does not follow federal §280E for state income taxes, so cannabis businesses can deduct ordinary and necessary expenses when calculating their state taxable income.

2. Improved Cash Flow
   Being able to deduct those expenses lowers state income tax bills and frees up cash.

3. Reinvestment Incentives
   Businesses can reinvest savings into operations, staffing, and compliance.

4. Lower Audit Risk
   Aligning with standard expense rules reduces the chance of state audits.

5. Industry Support
   Fairer tax treatment helps the cannabis industry grow and remain stable.

Cannabis Sales & Use Tax (Excise Tax)

• Rate: 12% on every retail sale of adult‑use cannabis products.

• Uniformity: The same rate applies everywhere in Maryland — no city or county add‑ons.

• Who Pays: Licensed adult‑use cannabis retailers collect and remit this tax.

• Medical Sales: Sales to qualified medical‑card holders are exempt.

Local Sales or Gross Receipts Tax

• State Base Rate: 12% cannabis‑specific tax.

• Local Add‑Ons: None; Maryland keeps it simple with a single statewide rate.

• Calculation: The 12% is applied to the total retail price of the cannabis product.

Medical Cannabis Exemptions & Requirements

• Excise Tax: 0% — fully exempt for medical sales.

• Sales/GRT: No cannabis‑specific tax on medical transactions.

• Documentation: Retailers must keep patient‑card records and report medical versus adult‑use sales separately, typically on the standard sales tax return.

Filing & Payment Deadlines

• Filing Frequency: Determined by your sales volume — either monthly or quarterly.

• Due Date: Returns are due on the 20th day after the end of the filing period.

• Required Forms: Use Maryland’s Sales & Use Tax Return (Form 202), which includes a section for cannabis.

• E‑Filing: You must file electronically through the Maryland Tax Connect portal.

• Zero Sales: Even if you have no sales, you still must file a return.

Penalties & Risks

• Late Filing: Subject to statutory late charges and interest.

• Non‑Compliance: Can lead to fines and potentially losing your license.

• Audit Risk: Discrepancies between medical and adult‑use reporting raise red flags.

Calculating Your Total Cannabis Tax

1. Confirm the 12% rate for your location (statewide).

2. Multiply your retail price by 12% to determine the excise tax.

3. Add any general sales tax — in Maryland, none applies to adult‑use.

4. Exclude medical sales (they’re tax‑exempt).

Important Trade Associations

• Maryland Wholesale Cannabis Trade Organization: Statewide advocacy and education.

• National Cannabis Industry Association (NCIA): Federal and state policy updates.

• Minority Cannabis Business Association (MCBA): Reform efforts, social equity, and education resources.

Government Contacts

Maryland Cannabis Administration

• Main Phone: 410-487-8100  -or-  1-844-421-2571

• General Inquiries: mca.information@maryland.gov

• Licensing: mca.policy@maryland.gov

• Compliance: mca.compliance@maryland.gov

Comptroller of Maryland

• Administers the cannabis sales & use tax

• Make online payments here.

Financial Calendar (as of July 2025)

Note: Always verify deadlines and forms with the IRS and Maryland agencies. This guide is for informational purposes only — consult a qualified professional before making any business, taxation, or compliance decisions.