.03 Social Equity Partnership Grant Program.

A. The Social Equity Partnership Grant Program shall promote qualifying partnerships between operational cannabis licensees and social equity licensees.

B. The Office of Social Equity shall implement and administer the grant program, including approving qualifying partnerships.

C. The Office of Social Equity may approve a qualifying partnership where a cost or other fee is imposed by an operational cannabis licensee, if it determines the cost or other fee is substantially reduced from the market value.

D. The Office of Social Equity shall determine the grant amounts based on:

(1) The number of partnership applications;

(2) Programmatic needs;

(3) Availability of funds; and

(4) Equitable distribution of qualifying partnerships across license types.

E. If an operational cannabis licensee has a license that was converted under Alcoholic Beverages and Cannabis Article, §36-401(b)(1)(ii), Annotated Code of Maryland, the total amount of grants issued to the licensee may not exceed the lesser of:

(1) The cost of the conversion fee that was paid by the licensee to date; or

(2) $250,000 per year per qualifying partnership.

F. Qualifying partnerships under this regulation may not:

(1) Explicitly or implicitly transfer, including through convertible debt, any ownership or control from the social equity licensee to the operational cannabis licensee;

(2) Require the social equity licensee to conform with any branding, messaging, standard operating procedures, or other infringement on the social equity licensees’ operations;

(3) Otherwise restrict, hinder, exploit, or unfairly treat the social equity licensee to benefit the operational cannabis licensee; or

(4) Exist between entities that have common ownership or control.

G. The Office of Social Equity may deny an application or terminate any qualifying partnership agreement that includes false or misleading information.

H. In addition to any other applicable penalties established in this subtitle, including suspending, fining, restricting, or revoking a license, an operational cannabis licensee found in violation of §F of this regulation may be subject to any of the following sanctions:

(1) Restriction, revocation, or invalidation of any qualifying partnership approved by the Office of Social Equity;

(2) Rescission or invalidation of any attempted transfer of ownership or control; or

(3) Repayment of any grant funding received by the operational cannabis licensee.

I. The Office of Social Equity shall evaluate grant applications on a pass or fail basis according to the following criteria:

(1) Demonstration that the operational cannabis licensee has capacity to support a social equity licensee;

(2) A comprehensive estimation of the value of services provided that assigns a value to each element of services provided;

(3) Demonstration that the operational cannabis licensee has been compliant with the Maryland Cannabis Administration regulation related to:

(a) Health and safety;

(b) Diversion and theft; and

(c) Any area material to the proposed partnership;

(4) Attestation that both the operational cannabis licensee and social equity licensee will have an equal role in addressing any changes required in the partnership; and

(5) Any additional criteria the Office of Social Equity may include to assist with the review of each application, including but not limited to a party’s prior conduct within the Social Equity Partnership Grant Program.

J. Requests for Information.

(1) The Office of Social Equity may request an applicant submit supporting documentation related to the applicant’s efforts to establish any of the application criteria outlined in §I of this regulation.

(2) Any information requested by the Office of Social Equity is due within 10 business days of the date of the request, unless otherwise noted.

(3) The Office of Social Equity may deny an application if its request for information is not fulfilled within 10 days.

K. To select passing applications, the Office of Social Equity shall conduct a lottery that is impartial, random, and in a format selected by the Office of Social Equity.

L. Application and Award Limits.

(1) An operational cannabis licensee without common ownership or control of another operational cannabis licensee submitting an application:

(a) May submit only one application per award period; and

(b) May be awarded up to one qualifying partnership per award period.

(2) Operational cannabis licensees who share common ownership or control submitting applications:

(a) May collectively submit up to two applications per award period; and

(b) May collectively be awarded up to two qualifying partnerships per award period.

(3) A social equity licensee may submit one application per award period.

M. Partnership Disputes.

(1) If a cannabis licensee engaged in a qualifying partnership claims a breach in their qualifying partnership has occurred, the licensee shall submit a written complaint in the manner specified by the Office of Social Equity.

(2) The Office of Social Equity may request additional information necessary to investigate the complaint.

(3) After reviewing the complaint and any additional information, the Office of Social Equity may:

(a) Make a determination about whether a breach of a partnership agreement has occurred; or

(b) Refer the complaint to the Office of Administrative Hearings for mandatory mediation.

(4) Mediation procedures shall be in accordance with COMAR 28.02.01.18.

(5) The Office of Social Equity may establish written standards of conduct with which the parties shall comply during the mediation process.

(6) The Office of Social Equity shall disclose all written standards of conduct to the parties at the time the matter is referred to the Office of Administrative Hearings for mediation.

(7) A party’s failure to abide by a written standard of conduct may result in termination of the mediation process.

(8) If an agreement is reached by the parties as a result of mediation, the parties shall provide a written statement outlining the agreement terms to the Office of Social Equity.

(9) If the parties fail to reach an agreement, the mediator shall give written notice to the Office of Social Equity that an agreement was not reached at mediation.

(10) If the Office of Social Equity determines that a licensee has breached its agreement, it may:

(a) Restrict, revoke, or invalidate a partnership agreement;

(b) Require repayment of any grant funding received by the operational cannabis licensee; or

(c) Require amendments to the partnership agreement as determined by the terms of any mediation agreement reached by the parties as a result of mediation before the Office of Administrative Hearings.

(11) The Office of Social Equity will monitor compliance of the parties with the terms of any mediation agreement and will then make a determination about the partnership dispute and shall notify both licensees of its determination.

N. An aggrieved party shall exhaust all administrative remedies provided in this subtitle before seeking review in any other forum.

O. The Office of Social Equity may refer any suspected violation of this subtitle or Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland to the Maryland Cannabis Administration for further investigation.