Maryland Grocers Face $3 Billion Budget Gap, Rising Costs in 2027

Maryland lawmakers will confront a projected $3 billion structural budget gap for fiscal 2028 when the 2027 legislative session opens in January, and grocers operating on 1 to 2 percent margins are bracing for the fallout.

"I would describe Maryland's grocery industry today as resilient but under tremendous pressure," said Cailey Locklair, president of the Maryland Retailers Alliance. "The demand for groceries isn't going anywhere, but we need to make sure Maryland remains a place where grocers of all sizes, especially independents, can afford to operate, compete and grow."

Locklair told The Griffin Report a year ago that tariffs, thin margins, regulatory costs and inflation could drive consolidation. Those pressures persist. Labor, utilities, transportation, regulatory requirements and goods costs keep rising. "I wouldn't say consolidation is inevitable, but it's certainly a concern, particularly for independent grocers who don't have the same purchasing power or resources as larger chains," she said.

Independents still find openings. "They can be more flexible, offer specialty and locally sourced products, provide personalized service and respond quickly to what their customers want," Locklair said. "Many are also serving communities where larger chains may not see the same opportunity."

What is the state of Maryland's economy?

Maryland's unemployment rate fell to 3.9 percent in September, its lowest since April 2025 and below the national 4.2 percent. Labor force participation held at 63.7 percent, versus 61.8 percent nationally. The state lost 8,800 nonfarm jobs in September, though the Maryland Department of Labor attributed recent swings to data collection challenges rather than real employment changes. Unemployment claims fell from August and from the prior two Septembers.

Through eight months, Maryland added 20,100 jobs, growing 0.7 percent against the national 0.4 percent. A Comptroller's office analysis published by Brookings found the state lost 29,200 federal government jobs between January 2025 and April 2026. Second-quarter employment remained about 26,500 jobs below year-earlier levels.

"When people lose their jobs or are concerned about job security, they naturally become more cautious about spending," Locklair said. Shoppers are seeking discounts, store brands and more selective purchases.

How will the budget gap hit retailers?

Executive agencies face reduction targets of about 3 percent, and two dozen cabinet-level agencies must plan cuts of up to 10 percent. During the 2026 session, Locklair said, "while we were able to avoid some of the proposals that would have directly impacted retailers, the larger fiscal challenges haven't gone away."

"For grocers, it's not just about one particular tax. It's the cumulative cost of doing business in Maryland," she said. MRA is watching for business tax increases, sales tax expansion and new employer fees. It also fears cost shifts to counties. "There are meetings occurring looking at localities and their ability to assess delivery fees and a variety of additional taxes," Locklair said.

Bills that failed in 2026 — bottle deposit legislation, added warning labels and several labor mandates — "will return," she warned.

What new laws took effect?

Gov. Wes Moore's Protection From Predatory Pricing Act took effect Oct. 1. The first-in-the-nation law bars large food retailers and third-party delivery services from using dynamic pricing or consumer surveillance data to charge individual shoppers more. Consumer groups criticize exemptions for loyalty programs and consent-based pricing, but Locklair said the industry "wasn't using personal consumer data to increase prices on individual shoppers in the first place."

A cash-rounding law took effect May 12 under emergency passage. Merchants may round the final price or the change due to the nearest 5 cents, but not both. Locklair called for a federal standard to avoid state-by-state complications.

Beer and wine in grocery stores remain MRA's top priority after the Alcoholic Beverages Modernization Act of 2026 stalled again. MRA will introduce "our most thoughtful piece of legislation yet" in 2027.

On SNAP, Maryland must pay 15 percent of benefit costs starting October 2027 because its 13.08 percent fiscal 2025 payment error rate topped the 10 percent federal threshold. The year-old organized retail crime law has produced prosecutions, though Locklair reported no dramatic theft reduction yet. MRA's 2027 agenda adds gift card fraud penalties, predatory lending protections, pharmacy reimbursement and employee safety measures.