Rendering via Port Covington
This article also appeared in the September 6th, 2019 edition of the Baltimore Business Journal.
In the 1960’s, nobody had heard of a small area south of San Francisco now known as Silicon Valley. After World War II, the United States government invested heavily in technical development and local business leaders and entrepreneurs capitalized on the opportunity, invested in technology and innovation, and leveraged top talent coming out of the area’s colleges and universities.
Today in Maryland, and the Greater Baltimore metro area, we’re seeing some of the same characteristics that Silicon Valley showed fifty years ago. Maryland boasts the world’s largest cyber workforce, with over 110,000 cyber-related engineering and science professionals. Some of the largest organizations in the world fueling development in the cyber industry are right here, including Johns Hopkins Applied Physics Lab, NSA, US Cyber Command and many other government agencies. From the looks of things, Port Covington and CyberTown, USA is set to make Baltimore synonymous with cybersecurity, just as Silicon Valley is with technology.
In support of this vision and further establish Maryland and CyberTown, USA as the worldwide cyber leader, the state has established financial incentives for local businesses to invest in the industry and do business with one another- further supporting the industry and our local economy. The state now offers the Buy Maryland Cybersecurity (BMC) tax credit for purchasing cybersecurity goods and services from qualified Maryland cybersecurity companies, the Cybersecurity Investment Incentive (CII) tax credit providing qualified investors a tax credit after investing in qualified Maryland cybersecurity companies, and the Employer Security Clearances Costs (ESCC) tax credit which provides tax credits to eligible businesses for expenses related to federal security clearances and other related costs.
The BMC tax credit was recently established to assist small businesses by subsidizing the cost of cybersecurity and also promote Maryland cybersecurity businesses. Companies with fewer than fifty employees in Maryland are eligible for the credit, which may be claimed for up to 50 percent of the net purchase price of cybersecurity technologies and services purchased from a Qualified Maryland Cybersecurity Seller. The Maryland Department of Commerce has $4 million available for the tax credit in 2019, which will be awarded on a first come, first served basis. 25 percent of the funding is available for cybersecurity services and 75 percent for cybersecurity technology purchases.
The CII tax credit was established to attract investment in Maryland cybersecurity companies to help them grow, create jobs, and retain intellectual property in Maryland. Qualified investors must be certified by the Department of Commerce and may receive a refundable tax credit equal to 33 percent of their investment into Qualified Maryland Cybersecurity Companies, up to $250 thousand per year.
Lastly, the ESSC tax credit was created to help small businesses reduce the cost burden associated with performing security-based contract work. The credit may be claimed for administrative costs incurred in connection with obtaining federal security clearances, construction or renovation of a Sensitive Compartmented Information Facility (SCIF) as well as first-year leasing costs. The Maryland Department of Commerce has $2 million available annually for this credit through 2022 and all eligible applicants will receive a proportional share of the funding.
These are exciting times for our region. Significant opportunities lay ahead for established cybersecurity companies, as well as small businesses eager to get started in the industry. These state incentives, combined with a steady stream of cyber-savvy graduates coming from local colleges and universities, , and some of the largest cyber security innovators in the world in our backyard, Maryland, and Cybertown, USA, are set to mimic the same success that propelled Silicon Valley to the world stage.