You probably don’t know that in 2025 dispensaries must apply SKU‑level excise rates and itemize time‑stamped receipts, while your medical purchases stay exempt from certain adult‑use taxes only if your MMCC registration and physician certification are active at checkout. You’ll need valid ID, consistent records, and proof for audits, and some expenses still aren’t deductible. Payment method rules and documentation standards also tighten. Here’s how to avoid surprise costs—and keep your benefits intact.
Key Differences Between Medical and Recreational Cannabis Taxes in Maryland
Although both programs are state-regulated, Maryland taxes medical and adult-use cannabis differently, and you must apply the correct rate. You’ll verify a purchaser’s status, document eligibility, and charge taxes accordingly to uphold patient exemptions where authorized and prevent misapplication. For adult-use sales, you’ll assess the applicable sales and excise components; for registered patients, you’ll follow mandated reductions or exclusions when the statute provides them. Maintain tax parity only where the law explicitly requires it, not by assumption. Reconcile point-of-sale records with registry data, retain exemption certificates, and audit receipts. When in doubt, seek written guidance, update procedures, and train staff.
2025 Maryland Sales and Excise Tax Changes That Affect Patient Pricing
Before you update pricing for registered patients, identify five Maryland tax changes that alter how you calculate sales and excise obligations at the counter. First, confirm revised excise rates by product category and apply them at the SKU level. Second, monitor monthly sales thresholds that trigger higher marginal excise on incremental units. Third, separate medical sales from adult-use for accurate sourcing and reporting. Fourth, implement point‑of‑sale flags for exempt or reduced-rate items to prevent overcollection. Fifth, reconcile allowable tax credits against remittances, ensuring credits don’t reduce excise below statutory minimums. Document rate tables, audit trails, and reconciliation schedules to protect patients and remain compliant.
Eligibility Criteria and Documentation to Qualify for Medical Tax Benefits
To claim Maryland medical cannabis tax benefits at the register, you must verify a patient’s active Maryland Medical Cannabis Commission (MMCC) registration, valid government‑issued photo ID, and current physician certification tied to the transaction date. Confirm the patient’s name, MMCC number, and certification expiration. Match the certification to qualifying purchases and quantities.
Maintain medical documentation supporting the qualifying condition noted by the certifying provider. If income‑based concessions apply under local programs, retain income verification consistent with current thresholds. Record the dispensary license number, transaction timestamp, and itemized products. Deny benefits if credentials are expired, mismatched, or incomplete. Document refusals and corrective steps for audit readiness.
IRS Updates on Cash, Electronic Payments, and Recordkeeping for Patients
While federal law still disallows deductions for controlled substances under IRC §280E, the IRS has reiterated how you must handle payment methods and records when purchasing medical cannabis in Maryland. You must maintain contemporaneous receipts, invoices, and payment confirmations for each transaction. For cash handling, record exact amounts, dates, dispensary details, and purpose; reconcile daily with bank deposits or cash-on-hand logs. For electronic payments and digital wallets, retain statements, app transaction IDs, and screenshots if necessary. Preserve documentation for at least three years. Avoid mixing personal and caregiver funds; use separate accounts. Note sales tax, fees, and discounts. Document caregiver purchases with patient authorization.
Deductibility, Reimbursements, and What Expenses You Can’t Write Off
Even though Maryland permits medical cannabis, federal tax law controls deductibility and makes most patient costs non-deductible. You can’t claim marijuana purchases as medical expenses under IRC §213; Schedule A disallows them. Employer plans and HSAs can’t reimburse cannabis either, given federal illegality and plan-document exclusions. Apply medical deductibility rules narrowly and respect reimbursement limits to serve patients with integrity.
- You may not deduct flower, vapes, edibles, tinctures, or topicals; they’re disallowed medical expenses.
- Travel, delivery, paraphernalia, and membership fees tied to cannabis remain non-deductible.
- Only physician evaluation fees may qualify if they’re ordinary, necessary medical care and exceed AGI thresholds.
Dispensary Receipts, Tracking Tools, and Year‑End Reporting Tips
Keep your dispensary records tight from day one, because clean documentation drives compliant year‑end reporting. Use receipt organization that captures issuer, date, product category, quantity, price, tax, and payment method. Retain itemized e‑receipts and reconcile to bank statements monthly. Name files consistently; preserve PDFs with immutable timestamps.
Adopt digital trackers to log purchase purpose, dosage, and physician‑aligned use. Align entries with Maryland patient ID and applicable state tax fields. Avoid cash gaps; document every refund or exchange. At year‑end, produce a summary ledger, subtotaled by month and category, plus a reconciliation report. Secure records for statutory retention periods and encrypt backups.
Action Steps Baltimore Patients Should Take Now to Avoid Surprises
Start by mapping your 2025 obligations: confirm your active Maryland Medical Cannabis Commission (MMCC) patient registration, update your ID expiration date, and verify your designated dispensaries. Align purchases, documentation, and dosage logs with lawful use, secure medication storage, and timely renewals. Maintain doctor communication to substantiate medical necessity and dosing continuity.
- Reconcile 2024 receipts with current inventory; retain compliant records (invoices, batch numbers, dates, amounts) to support tax and audit inquiries.
- Calendar MMCC renewal, physician certification, and dispensary policy updates; document each confirmation.
- Standardize at-home controls: locked medication storage, labeled quantities, disposal protocols, and transport documentation; cross-reference with physician directives and purchase limits to avoid discrepancies.
Conclusion
As we navigate these new tax regulations together, I want to remind you that we’re here to support you every step of the way. At Fells Point Cannabis Docs of Maryland, we understand that staying informed can be overwhelming, but you don’t have to do it alone! Whether you have questions about your MMCC status, need help with documentation, or just want to chat about your experience, we’re just a visit or a phone call away. Feel free to drop by our office or give us a call at (410) 401-4200. We’re always happy to help and look forward to seeing you soon!
