CLEVELAND — Legal marijuana is coming to Ohio one way or another, many industry experts agree. The questions are: will Ohio be ready when it happens and how will it change the state’s existing, heavily-regulated medical program?
At the federal level, Democrats have already introduced the MORE Act, which would decriminalize marijuana at the federal level, expunge criminal records, and clear the way to resolve some banking issues that cannabis companies across the nation say they’ve experienced because of cannabis’ dubious legal position.
Ohio is watching two separate paths to adult-use legalization develop, one through the traditional legislative process and the other through an initiated statute by a group called Coalition to Regulate Marijuana like Alcohol.
Both would legalize the possession of marijuana for personal use for anyone older than 21 years of age, potentially creating a substantial tax revenue stream that doesn’t exist right now.
Here are the main ways each option would change marijuana law in Ohio:
Initiated Statute
- End marijuana prohibition
- Creates the Division of Cannabis Control in the Ohio Department of Commerce for regulation
- Allows medical marijuana cultivators and dispensaries to expand to the adult-use market
- Creates a Social Equity Fund
Proposed Legislation
- Allow for cultivation and possession of marijuana
- Expunge certain marijuana convictions
- Create a tax on marijuana products
Taxes
The initiated statute would use 36% of the tax on cannabis products to create the Cannabis Social Equity and Jobs Fund, providing assistance to people who meet certain criteria to help them get into the recreational marijuana industry.
The legislation’s proposed tax would help fund education, road and bridges maintenance, and fund marijuana research.
How did we get here?
Ohio’s Medical Marijuana Control Program was created by House Bill 523, which took effect on September 8, 2016.
After some licensing delays, four dispensaries opened on January 16, 2019.
Soon after, Laura DeAngelis became a medical marijuana patient to treat the chronic pain she struggles with because of her fibromyalgia.
“[Medical Marijuana] has helped me so much so that I’m able to get out of the house, move around, where I would be stuck in bed-rest for days,” said DeAngelis.
The issue in her first two years as a patient is that there aren’t many dispensaries near her home around Geneva-on-the-Lake, the price is high when she can get to a dispensary, and Ohio’s medical product supply is sometimes unpredictable.
“I buy [medical marijuana edibles] in bulk because the local dispensary is about 40 minutes away so it’s kind of hard to me to get out there all the time,” said DeAngelis.
Her hope is that even as a medical patient, she’d benefit from legalized marijuana in Ohio. In other states, that move often results in more dispensaries, more product selection, and lower prices.
“I think she’s exactly right and that’s generally the intent of transitioning into an adult-use market,” said cannabis attorney and Frantz Ward LLP Partner Tom Haren, who represents some of Ohio’s medical marijuana companies and also the Coalition to Regulate Marijuana like Alcohol.
How things change
If either proposed legislation becomes law, Ohio’s existing medical marijuana businesses would have a sizable advantage because they would be able to instantly shift their operations to create products for the recreational market. Other businesses would be allowed to go through an application process to get additional marijuana licenses, but that process and building their facilities would take time.
“What we wanted to ensure is that when the program launches, we have product available in the market because if you don’t do that, then it is not really a meaningful alternative to the unregulated [illegal] market,” said Haren.
Geoff Korff’s cannabis business, Galenas, started in Ohio and expanded to Michigan’s recreational market during the pandemic. He’s allowed to have a much larger operation in Michigan because different state laws, he says, fosters a much more robust legal market.
“Ultimately, what happens in the Michigan market is there’s a lot more supply, demand is still high, so prices are comfortable for everyone,” said Korff.
While the eventual shift from medical-only to adult-use could be lucrative, Haren says it wasn’t always something companies were willing to depend on.
“I think there were certainly some companies that looked at Ohio’s medical program and were thinking five or 10 or four years down the road, to eventual adult-use,” said Haren, pointing out that many of them also were simply focused on helping Ohio medical marijuana patients because legalization wasn’t as inevitable as it seems to be in 2021.
Buying “Local”
Galenas is a Level II Cultivator, the smaller of Ohio’s two cultivation levels. Level I Cultivators can build up to 25,000 square feet of growing space, Level II Cultivators can build up to 3,000 square feet. Licenses are supposed to be able to apply to build more space but that process has been slow in the program's first few years.
If the initiated statute becomes law, the bigger growers would be able to expand to 100,000 square feet and the smaller growers could expand to 15,000 square feet, which Korff fears wouldn’t be enough to keep up with a rapidly expanding recreational use market.
“It’s an advantage being a first mover, but at the same time, we’ve got a relatively small operation here,” said Korff. “In order to really compete in an adult-use market, we have to grow this business pretty significantly.”
Korff says that ability to compete matters because while all medical marijuana operations have to employ local people in local facilities right now, his business is headquartered in Akron. Other cannabis companies have individual state operations to follow state laws, but are often based elsewhere.
“If you allow those small businesses to grow, the money stays home,” said Korff. “If you allow big businesses to grow often times that means the money is going elsewhere.”
Haren points out that larger growers would only be able to quadruple their space while smaller growers can quintuple theirs and that those numbers are just starting guidelines, with the potential to be expanded later on. He also says at a moment when the cannabis industry is getting larger and trying to standardize practices and build trust with consumers, larger national companies can help do that in the same way consumers know and trust national brands in other industries.
“We’re still building the industry here in Ohio so there’s a lot of great perspectives that these companies bring from other states,” said Haren.
It’s a trust that Laura DeAngelis already has and wants to see other people develop too in a recreational program in Ohio.
“I would love to see it,” said DeAngelis.
How it could happen
The bill that would legalize adult-use marijuana in Ohio is House Bill 382 from Representatives Upchurch and Weinstein.
The federal legislation that has the most momentum appears to be the MORE Act.
The initiated statute is gathering signatures to send their language to the Ohio legislature right now. If the legislature doesn’t take action on the bill, organizers could gather more signatures and put the issue on the ballot in Ohio as early as November 2022.
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