The lowly worm is trying to wriggle its way into the heart of Maryland investors, but it may have to get around state securities regulations first.

Maryland Attorney General Francis (Bill) Burch has his eye on the sellers of wormgrowing kits, which made a recent appearance on the Maryland market in newspaper advertisements.

When the kits are accompanied by promises that the sellers will buy the worms that are produced, then they may constitute securities and, as such, would fall under state regulation, according to Burch.

Burch's securities division is conducting an inquiry to come up with the state's official word on worms.

Maryland is not the first state to tackle the subject. Some, in fact, have already declared that the worm-selling ventures do fall under securities regulations.

"We take issue with that position," says John Carlson, of the American Worm Growers Association, a Denverbased trade group. "Several states in the recent past have taken the position that the worm is a security. . . . The general feeling is the industry should be under some kind of governmental body, but we don't feel the securities commission is the right place."

The retail sale of worms annually, says Carlson, is a billion-dollar industry. The worms' are sold for bait in fishing areas, for natural fertilization of soil in agricultural areas, for use in medical research for use as a means of breaking down sewage sludge, and for use as a protein supplement in animal feed he said.

But a securities investigator in Burch's office says as far as he can determine the sludge usage is now only in the pilot project stage and worms are only "proposed" for use in dog food.

A small worm investor would receive 25 pounds of worms in a cardboard box, materials to build a three-by-eight-foot bin, a cover to keep the worms at the right temperature and humidity and information on how to grow them - all for a $595 investment, according to William McKee of Ellicott City, Md., who took his plunge into the worm market two months ago.

"The normal harvest will bring 10 pounds and you can harvest every 30 days. They reproduce that rapidly," said McKee, who is farming and selling worms for the National Federation of Vermiculturists Inc. McKee said the company does not guarantee to buy the worms back, but instead states it wants "first option" on the harvests. It also offers for the initial purchase price a brokerage service that will quote the farmer the latest worm prices and offer to buy. The farmer can refuse and sell elsewhere.

Deputy Attorney General George Nilson said the office inquiry "is not at the point" where any specific charges are being made. "This is just a warning to potential buyers and sellers as to what the issues are."

Burch has noted that many of the worm sellers are inducing citizens to invest by emphasizing the "profit potential" and holding out their "marketing expertise in the purported national and even international market for worms."

But despite his concerns, it appears the worms are selling like hotcakes.

"There are a lot of Maryland residents involved in this," said Howard Carolan, an investigator with the Securities Division. "I've had 25 calls on this in the last two days.