Friday Five | September 15, 2023

A recap of this week’s top-five news items and resources from the intersection of business and government.

1. Four steps to unlock Maryland’s economic potential

The commentary continues following Governor Moore’s “lazy Maryland economy” remarks from MACoCon last month. A recent op-ed in the Baltimore Sun plainly poses four areas where Annapolis can do better for Maryland’s economy. First and foremost, the need to improve the state’s business-enabling ranking. Leaders must adopt national best practices to lower the comparative transactional costs for entrepreneurs, reduce permitting and licensing times for small businesses and reel in the regulations. Other points referenced Maryland’s fundamental strengths, the fluidity of human capital and a call for economic focus beyond the Baltimore-Washington corridor.

Bottom line: Maryland’s economy is stagnant, but Marylanders are not afraid to work — and are not lazy. The economic stagnation plighting our state is a result of government policies and the changing needs of today’s businesses and workforce. More needs be done to make Maryland better for business and workers.

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2. State inching forward with building energy performance standards

The state is inching closer to finalizing new energy performance standards for large buildings. The draft Building Energy Performance Standards regulation proposes major changes to the state’s building standards and creates significant challenges and costs for existing building owners and businesses. Regulations would apply to covered buildings over 35,000 square feet, like warehouses, office spaces and retail centers. The Climate Solutions Now Act, which became law in 2022, authorized the Maryland Department of the Environment to adopt regulations to reduce net direct greenhouse gas emissions from covered buildings. However, an Energy Use Intensity (EUI) standard was included in the proposed regulation that would count other metrics beyond direct, onsite building emissions — greatly expanding the regulation’s scope. Additionally, if a building owner fails to comply with the EUI standards, they would be subject to penalties of up to $25,000 per day. Stakeholders believe that the intent of the Act is to regulate direct, onsite greenhouse gas emissions, and not include EUI mandates.

What’s next: Large building owners should be prepared for increased costs in new sources of energy and changed practices if this regulation goes into effect as proposed. MDE plans to file the regulations in the Maryland Register this fall to begin the formal adoption process, where there will be additional opportunity for public comment.

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3. An upcoming child care cliff may wreak havoc on workers

The American Rescue Plan Act, passed in 2021, gave states nearly $40 billion in funding for child care relief, and federal data shows the money went to 220,000 child care providers, saved more than 1 million in early educator jobs and enabled 9.6 million children to continue receiving care. That funding is set to run out at the end of September — and a new report by The Century Foundation describes what is ahead as a “child care cliff.” Child care for millions of parents has long been a challenge, but the pandemic dealt a blow to what already was a rickety, ad-hoc system of day care centers and in-home care, with thousands of centers shutting down and burned-out workers leaving in droves.

What’s at stake? Julie Kashen, author of the Century Foundation report, said the potential impacts include the likely closure of 70,000 programs, the loss of 3.2 million child care spots and $10.6 billion in annual economic activity, as well as $9 billion in lost earnings for parents.

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4. You’re paying more for houses in Maryland now, here’s why

Home prices are rising in Maryland. A lack of supply — not high mortgage rates — continues to be the biggest constraint in the market. The number of homes available for sale at the end of August is down 11.4% compared to last August, and is more than 60% lower compared to the inventory available five years ago. Affordability is a growing challenge for homebuyers, but despite the high rates and rising prices, buyers remain active. Our region’s suburban submarkets have stayed particularly competitive. Low inventory continues to drive price growth and there is no expectation of significant supply increases this year.

Residual effects: Businesses cannot base here if their workers do not have readily available housing options, resulting in a less economically competitive Maryland.

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5. A county-by-county breakdown of the 179 cannabis business licenses available later this year

The Maryland Cannabis Administration announced that the first application round for cannabis business licenses opens Nov. 13. More than 175 standard and micro cannabis grower, processor and dispensary licenses that are available in the first round will be exclusive to social equity applicants. Under the Cannabis Reform Act, MCA will conduct the lottery on or before January 1, 2024. The county distribution of standard dispensary licenses gives higher population centers like Baltimore, Prince George’s and Montgomery Counties a greater number of available licenses than those jurisdictions with smaller populations.

What’s next: The application round will be open from Nov. 13 to Dec. 12. Any applicant who meets the minimum requirements for licensure on a pass-fail basis will be placed in a randomized lottery based on license type (grower, processor, dispensary) and county or region for which the application was submitted.

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