With 24 Grow Licenses Up for Grabs in Ohio, Who Will Profit?

At Medicine Man Technologies, we’ve been keeping a close eye on the news as more and more states legalize recreational and medical marijuana. What we’ve seen is that the vast majority of new laws are being passed without clearly defined regulations or infrastructure. This has left the door open for debate as the government agencies tasked with implementation start to roll out rule-making plans.

In Ohio, the state’s Department of Commerce is responsible for determining how many cultivators the state will allow based on the anticipated demand. Currently, the agency plans to grant 12 large-scale and 12 small-scale grow licenses. According to recent estimates, these 24 license holders stand to profit from a medical-marijuana market with a projected net worth between $200 million and $400 million.

Because Ohio is the 25th state to legalize medical marijuana, there are numerous, more experienced cultivators from several other states eyeing Ohio as their next lucrative venture. Of course, this is not sitting well with native Ohioan growers looking to establish a foothold in the new industry. That brings us to the question at hand: With just 24 grow licenses up for grabs in Ohio, who will profit?

Status of Legalized Medial Marijuana in Ohio

Ohio’s Governor, John Kasich, signed H.B. 523 into law on June 8, 2016, establishing the state’s new medical marijuana law. The House voted its approval a few weeks earlier on May 10, followed by the Senate on May 25, and the new law went into effect on September 8, 2016.

Now, Ohioans who have a qualifying condition (listed in Ohio’s medical marijuana law) and a written statement from their physician will have legal protections for possessing a 90-day medical marijuana supply. Like many other states, Ohio requires an established physician-patient relationship.

Until the cultivation rules are hashed out, patients are required to purchase their medical marijuana from other states where it’s legal and bring it back to Ohio. Unfortunately, home growing for personal use is not allowed in Ohio, neither is smoking cannabis. However, marijuana may be vaporized, and patients also have the option to use extracts and infused products such as food items.

Cultivation & Ohio Department of Commerce

As mentioned earlier, those who want to commercially grow medical marijuana will be required to apply with the Ohio Department of Commerce. Some basics have already been established such as not being able to grow within 500 feet of a school, public playground, church, public park, or public library. Those who apply for a license may also be disqualified due to certain criminal convictions.

Now, here’s what’s causing a lot of debate amongst growers contending for one of the 24 licenses being made available. Factoring into the review, but not required, is proof that the company is headquartered in Ohio, owned by Ohioans and has plans to hire in-state workers.

“Competition for the required license will be tough for Ohioans going up against more versed companies from out of state.”

According to Kevin Schmidt from the Marijuana Policy Project, competition for the required license will be tough for Ohioans going up against more versed companies from out of state. And many Ohioans are calling for the Department of Commerce to make residency a requirement throughout the first year at the very least. Competition isn’t the only reason, either. Local companies and cultivators also state that:

• Ohioans were the ones on the ground, fighting to pass the law
• Out-of-state companies will want to bring out-of-state workers
• Such a workforce will not improve Ohio’s unemployment stats
• Profits and generated revenue will not benefit Ohio or Ohioans

The bottom line is many believe that Ohioans should be given a chance to establish themselves first.

At Medicine Man Technologies, we know very well that such a request is certainly reasonable. Here in Colorado, license applicants were initially required to live in the state for at least two years. The state has only recently reduced that time to one year to open the market to out-of-state investors.

A Case for Allowing Out-of-State Companies

On the other side of the argument are companies pointing out the fact that licensing in Ohio comes with hefty fees and financial requirements, which has led them to seek out-of-state partnerships. Here’s a look at those figures:

• Level I: $20,000 application fee and $180,000 license fee
• Level II: $2,000 application fee and $18,000 license fee
• Applicants would have to show liquid assets by level $500,000 / $50,000
• An escrow account or surety bond of $750,000 / $75,000 will be required

Along with gaining access to the necessary capital, these Ohio-based companies are looking to their experienced out-of-state investors to help with the complicated process of applying for a cultivation license, as well as properly establishing a successful marijuana business.

Also lumped into the out-of-state group are actual Ohio natives who moved to states with legalized marijuana to learn the industry and bring their knowledge back home.

When to Expect a Decision on Residency

All fees, residency requirements, and other licensing matters will be reviewed by a panel of Ohio state lawmakers and were expected to be finalized by May 6, 2017. At Medicine Man Technologies, we’ll certainly be keeping an eye on the decision so that we can guide our Ohio clients through next steps.

Looking to enter the emerging cannabis industry in Ohio or any other state? Medicine Man offers the experience and knowledge you need to plan, apply and launch a successful, fully-compliant enterprise. Contact us for details, and we’ll start with a personal consultation to discuss your needs and plans.