A tax credit that Gov. Robert L. Ehrlich Jr. signed into law Tuesday provides incentives of up to $250,000 for investing in Maryland's biotechnology companies.

But while it goes into effect July 1, a glitch in the law means that investors will probably have to wait another year before they can take advantage of the program.

The bill, from Del. Brian J. Feldman (D-Dist. 15) of Potomac, adds Maryland to the growing list of states attempting to draw more venture capital into their biotechnology sectors.

Ehrlich (R) proposed a similar bill this year. But the General Assembly chose to pass Feldman's bill, which he first introduced in 2003. Co-sponsored by Sen. Jennie M. Forehand (D-Dist. 17) of Rockville, the bill provides 50 percent tax credits for investments in qualifying companies.

"For better or worse, states compete to bring in biotech business, and the recent stem cell initiative in California has heightened the competition," said Michael Kaleko, president and chief scientific officer of Advanced Vision Therapies Inc. in Rockville. "This bill will strengthen Maryland's position."

Feldman said the bill, a bipartisan effort, was the product of much negotiating.

"It's a bill that, as it emerged, isn't quite the same as I first introduced it," he said. "But it does break new ground. That's an important first step."

Unlike his original proposal, the bill that passed lacks a dedicated funding source. The program now relies on the governor to appropriate money each year for the credit.

Feldman said the change is not necessarily a negative. Tax credits are sometimes criticized, he said, because they claim money from the budget regardless of how much the credits are being used or promoted.

"This way, you have a governor who talked about the bill as recently as [Tuesday] as a priority issue," he said. "If it is a priority issue, it should be funding accordingly."

The funding issue has also cast the effective start date into uncertainty. The law bars the state from granting approval for tax credits that add up to more than the appropriated amount for that fiscal year.

Because no money has been appropriated for the fiscal year that begins July 1, it appears that investors cannot apply for any tax credits before July 1, 2006.

The new law also caps the credit available to an individual at $25,000, and for a corporate investor or venture capital firm at $250,000. Feldman, who had envisioned higher caps, said he wants to try next year to raise the ceiling for venture capital firms, as they often invest millions, not thousands, of dollars at a time.

Jonathan Cohen, president and CEO of 20/20 Gene Systems in Rockville, predicted that at least half of the 50 states and maybe even Congress will adopt similar legislation over the next five years.

"There is growing recognition by policymakers that free market forces alone are insufficient to provide the needed capital to bring to market the high-risk technologies that our nation needs to defeat cancer and protect our homeland from bioterror threats," Cohen said.

Most importantly, the law sends a message about Maryland to venture capitalists, said Jerry Parrott, vice president of communications and public policy for Human Genome Sciences in Rockville.

"It's probably not as strong as Delegate Feldman and Senator Forehand would have liked," he said, "but it shows we're serious."