Policy does not allow granting permissions at this level to one or more of the recipient(s). Please select another permission level and send the sharing invite again.
This occurred for us after changing a user's on-prem AD account, in and Azure Synced environment.
On the computer trying to share the Calendar - download nk2edit.
Go through and delete any entries for the person they are trying to send to.
Save the file.
Re-open outlook and retry.
Disclaimer
This information is intended for general information purposes only and to assist customers in understanding system functionality. It should not be construed as legal advice or opinion on any specific facts or circumstances. You are advised to consult your own compliance staff or attorney regarding your specific questions or situation to ensure your compliance with company policies & procedures, applicable laws, and regulations.