Prior to initiating an agreement that involves a security interest in a cannabis license, a creditor shall register with the Administration in the manner specified by the Administration. A security agreement may not contain provisions that authorize the creditor to: Require the security agreement to become due earlier than the terms specified in the agreement, except if the licensee materially breaches or defaults on its material obligations as set forth in the security agreement; Convert the debt under the security agreement to equity whether present, optional, or future, in a manner that violates Maryland law concerning ownership and control of a license, including restrictions on transfers of a license; Deprive the licensee of the right to operate the license; Restrict the ability of the licensee to make payment on the security agreement through a third party unless the payment restriction would cause the creditor to violate a law by which it is governed; or Restrict the ability of the licensee to exercise control over the licensed entity as defined in COMAR 14.17.01. A creditor or licensee shall make a copy of the security agreement available to the Administration upon request. The Administration may invalidate a provision of a security agreement if it violates §B of this regulation. Any person who files any receivership or trustee action involving any cannabis licensee shall provide the Administration with original notice of the action: Within 1 business day; and In a manner specified by the Administration. The Administration will find a licensee compliant with this chapter only if it receives original notice of the action and the receiver is registered consistent with Administration requirements. A creditor may select an eligible receiver who is registered with the Administration to oversee the disposition of a cannabis license if the licensee is the subject of a court order requiring appointment of a receiver. Within 10 business days of a court order requiring appointment of a receiver, the creditor shall submit to the Administration: Proof of the creditor’s secured interest in the proceeds from a sale of the license of the associated licensee; Proof of a court order requiring appointment of a receiver; and Any additional information requested by the Administration. Prior to serving as a receiver under this chapter, a prospective receiver shall register with the Administration. The prospective receiver shall submit to the Administration a completed registration form, in a manner specified by the Administration, accompanied by the following: Documentation establishing the prospective receiver’s qualifications and ability to oversee the orderly disposition of the secured license and the licensee’s cannabis inventory, in a manner that facilitates continuity of the licensee’s operations to the extent possible, including demonstrated understanding of the laws and regulations that apply to: The license type; and Receivership, including the provisions of this chapter. A list of all owners and principal officers of the applicant and supporting documentation, including: Certificate of incorporation; Bylaws; Articles of organization; Operating agreements; Certificate of limited partnership; Resolution of a board of directors; or Other similar business formation documents; Documentation establishing that the individual or entity is eligible to do business in Maryland throughout the term of the receivership; Criminal history record information demonstrating that the applicant for receivership does not have any disqualifying criminal conviction applicable to licensees under this subtitle; Financial records, including a record of tax payments in all jurisdictions in which an applicant has operated a business for the 3 years before the filing of the application; An affidavit confirming that the applicant does not have a financial or ownership interest in any licensee in Maryland; A disposition of license plan, subject to Administration approval, which includes: A detailed description of the plan for the orderly disposition of the license and the licensee’s cannabis inventory, to satisfy the security interest in the right to the proceeds from the sale of the license; and A proposed timeline for the orderly disposition of the license of the associated licensee and the licensee’s cannabis inventory; and Any additional information requested by the Administration. The application shall be accompanied by a non-refundable receivership registration fee specified in COMAR 14.17.21. Administration Determination of Receivership. Upon receipt of a completed receiver registration application and associated fee, the Administration shall either approve, deny, or request additional information from the applicant. If the applicant fails to provide any additional requested information to the Administration within 30 days of the request, the application shall be considered denied. The approved receiver: Shall maintain compliance with the eligibility requirements under this chapter, as evidenced by submitting an annual report to the Administration attesting to continued compliance beginning 1 calendar year after the date the receiver is approved; Shall be a third party that is not affiliated with a creditor that has or asserts rights regarding a Maryland cannabis licensee; and May not have a financial or ownership interest in any Maryland cannabis licensee during the period the receiver is actively carrying out its responsibilities under this chapter. A receiver may only initiate the disposition of license and the licensee’s cannabis inventory if: The creditor and receiver are registered with the Administration; and The Administration has approved its disposition of license plan. The Administration may not approve the plan for disposition of license and the licensee’s cannabis inventory earlier than 10 days after receiving a complete receivership registration application as described in §B of this regulation. The receiver may not implement any disposition of license plan modifications prior to receiving Administration approval of the plan modifications. A receiver may only engage in growing, processing, or dispensing cannabis, including any plant touching activity associated with operational cannabis licensure, necessary to execute the disposition of license plan approved by the Administration. A receiver shall comply with the provisions in this subtitle and Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland, governing a Maryland cannabis licensee that is subject to the receivership. Material Violation. In the event of a material violation by the receiver, the Administration shall provide the creditor associated with the receivership with written notice of the violation and an opportunity to cure within 45 days after receipt of the written notice, unless the Administration determines that the violation is an imminent threat to public health and safety, in which case the Administration shall terminate the receivership immediately. The Administration shall terminate the receivership if after providing notice and the opportunity to cure, the material violation is not cured within the 45-day period. Whenever the Administration terminates a receivership under this regulation, the creditor may select another prospective receiver for Administration approval under Regulation .04 of this chapter. If a court is overseeing the matter for which a receiver has been appointed, the Administration shall provide notice to the court of a material violation by the receiver. If the violation is an imminent threat to public health and safety, the Administration shall terminate the receivership immediately and notify the court within 1 business day of terminating the receivership. A receiver appointed under this chapter shall initiate and oversee the orderly disposition of a license and associated business assets in accordance with a disposition of license plan submitted to the Administration that includes: A detailed description of the plan for the orderly disposition of the license and associated business assets; and A proposed timeline for the orderly disposition of the license of the associated licensed grower, processor, or dispensary. Notification. A receiver shall: Issue public notice of the method, manner, time, place, and other terms of the disposition in a newspaper of general circulation in the jurisdiction in which the licensee is located and authorized to do business at least 60 days prior to the planned disposition, including the following information in clear, bold type: Name and contact information of the creditor; Name of licensee, and doing business as (d/b/a) or trade name, if applicable; License number; License classification; Date, time, and location of planned disposition; Deadline for obtaining pre-approval from the Administration to qualify as an eligible bidder at the planned disposition; and Terms and conditions imposed by the creditor on the disposition process and on the successful bidder; and Provide a copy of the information in §B(1) of this regulation to the Administration for the purpose of posting on the Administration’s website. To qualify as an eligible bidder seeking to obtain the cannabis license, an individual, or in the case of an entity, each individual who would acquire an ownership interest of 5 percent or more of the cannabis license that is the subject of the disposition, shall provide the following information to the Administration not later than 30 days before the deadline for obtaining Administration approval to qualify as a bidder at the planned disposition of the license: Name and contact information; Criminal history record information; Completed ownership and control attestation form provided by the Administration for each individual who intends to hold an ownership interest of 5 percent or more; Evidence of immediately available financial resources sufficient to pay the deposit at the planned disposition and to close the transaction within 10 days of the ratified and final disposition; Demonstration that the bidder meets all material requirements for licensure; and Any additional information requested by the Administration. An individual, entity, or an entity’s parent company, subsidiary, or affiliate, may not bid on or obtain a cannabis license that is subject to disposition under this chapter if it has any security interest in the cannabis license. The Administration shall deny the transfer and sale of any cannabis license to an individual or entity, or an entity’s parent company, subsidiary, or affiliate, if it has any security interest in the cannabis license. Process for Final Disposition. Upon completion of the planned disposition, the successful bidder shall prepare and submit to the Administration, within 3 days after the conclusion of the planned disposition, the necessary documentation to obtain final approval for the transfer and sale of the license, including a completed request to transfer ownership of a cannabis license provided by the Administration. Upon receipt of final approval of the transfer and sale of the license by the Administration, the disposition shall be considered ratified and final. To facilitate the orderly disposition of a secured license and associated assets, the provisions set forth in Alcoholic Beverages and Cannabis Article, §36-503, Annotated Code of Maryland, do not apply to the sale or transfer of the license pursuant to this chapter. Notwithstanding §E of this regulation, the sale or transfer of a license in accordance with this chapter shall be conducted in good faith, and the provisions of this chapter may not be used as a mechanism to circumvent the sale or transfer of ownership requirements under Alcoholic Beverages and Cannabis Article, §36-503, Annotated Code of Maryland. All cannabis, as defined in Alcoholic Beverages and Cannabis Article, §36-101, Annotated Code of Maryland, shall be disposed of in accordance with this subtitle and Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland. Termination of Receivership. Upon ratified and final disposition of the cannabis license and associated assets: The receivership terminates; and The receiver shall be immediately released of any responsibility associated with the receivership, and from liability for any actions or omissions that occur after the termination of the receivership. Nothing in this regulation shall be construed as limiting the liability of the receiver for any actions or omissions that occurred during the period that the receivership was in effect. Notwithstanding any provision of this regulation, a cannabis license may not be transferred or operated without express approval of the Administration. Alcoholic Beverages and Cannabis Article, §§36-202, 36-203, and 36-503, Annotated Code of Maryland Effective date: Regulations .01—.08 adopted as an emergency provision effective July 1, 2023 (50:14 Md. R. 559); emergency status expired June 30, 2024 Regulations .01—.07 adopted as an emergency provision effective June 7, 2024 (51:14 Md. R. 676) Regulations .01—.07 adopted effective July 22, 2024 (51:14 Md. R. 678) Regulation .01 amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .02 amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .03 amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .04A—D amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .04E —G adopted effective May 26, 2025 (52:10 Md. R. 436) Regulation .05A adopted effective May 26, 2025 (52:10 Md. R. 436) Regulation .05B,C amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .06B amended effective May 26, 2025 (52:10 Md. R. 436) Regulation .06D, E adopted effective May 26, 2025 (52:10 Md. R. 436) Regulation .06F—J amended effective May 26, 2025 (52:10 Md. R. 436)