Ohio Could Launch Adult-Use Cannabis Sales in June

Every day, patient care representatives at The Landing Dispensary’s Ohio locations have customers arrive to their stores, ready to purchase products, unaware that they still need a medical card to buy cannabis in the state.

Ohio voters ushered in adult-use cannabis legalization Nov. 7, 2023, and the initiated statute has been effective since Dec. 7, which made possession and home grows legal in the state.

But Jeff McCourt, CEO and founder of Firelands Scientific, a cannabis cultivator and processor and parent company of The Landing Dispensary, which has five retail locations in Ohio, says many state residents are confusing that with commercial sales, which takes time to implement.

“People show up at the store, and they don’t realize they needed to renew [their medical recommendation and registration] because they thought [adult-use legalization] passed in November,” McCourt says. “We’re losing patients month over month at a pretty dramatic clip.”

But that could all change, and very soon, as cannabis sales to adults 21 and older could launch as early as June, according to a state representative overseeing a committee reviewing the program’s regulations.

As of Feb. 29, there were about 14,500 fewer registered patients in the program since Oct. 31, 2023, just before the ballot measure Issue 2 passed, according to data from the Ohio Department of Commerce, which oversees the newly established Division of Cannabis Control (DCC) and is drafting rules for the adult-use program. McCourt, who also founded the trade group Ohio Cannabis Coalition, says the program is losing about 5,000 patients each month.

That’s one reason why the DCC is working to “ensure legal sales begin as soon as possible under the process laid out by the initiated statute,” says Jamie Crawford, a spokesperson for the DCC.

“The [Gov. Mike] DeWine administration has endorsed a legislative proposal to allow medical marijuana dispensaries to sell nonmedical cannabis as soon as the legislation can become effective,” he says.

The other reason is to combat the illicit market, which has taken hold in other states where there is a long delay between legalization and the launch of adult-use sales. New York City is one of the most infamous examples, where unlicensed stores have flourished as the state has struggled to roll out more licensed dispensaries.

Although the statute includes a timeline for adult-use licensing applications to be available and a goal for when those will be awarded, there isn’t a set date for exactly when sales will launch.

That leaves medical cannabis operators in a hurry-up-and-wait situation, where they must be prepared for the increased demand that they aren’t quite sure when is coming. But operators say despite this limbo period, they are ready, and this comes with the territory when expanding a cannabis market from medical to adult use.

The stated deadline for initial license applications to be available is June 7, 2024, and medical cannabis companies already operating in the program should be able to receive license approval—known as a “dual-use” license—relatively quickly, Crawford said, though he could not specify an exact timeframe.

“Sales of nonmedical cannabis cannot happen until licenses are issued and facilities are certified,” Crawford says.DCC has published drafts of proposed rules and elicited stakeholder feedback. The most recent version was made public April 3. So far, Crawford says the agency is on track, but there are factors that could cause setbacks. And because the ballot initiative was a statutory measure and not a constitutional amendment, the state legislature can amend it at any time, which could delay rulemaking, licensing and, ultimately, sales.

“Anything that holds up the process like delays in rulemaking or a lawsuit could delay those deadlines, but the division is always working with stakeholders and doing everything possible at this point to meet the deadlines as laid out in the initiated statute approved by voters,” Crawford says. “There is confusion on why nonmedical sales haven’t happened yet, but the way the initiated statute was written requires a rules-making process, and an application process that takes time.”

Stakeholder Concerns

While Crawford emphasized that public health, safety, business security and efficiency remain the top priorities for DCC officials in their rollout of an adult-use program, they’ve addressed feedback from cannabis cultivation and dispensary business owners and other stakeholders in the state, as well. Safe access is one that comes up a lot.

Until an adult-use program is in place, one way the DCC is trying to improve access and encourage patients to renew their registrations (or initiate one) is by reducing the card fee to just 1 cent. However, that does not account for the fee caregivers charge for a medical marijuana recommendation, which varies. Both must be renewed annually.

Since Ohio’s medical cannabis program launched five years ago, there have been more than 419,630 registered patients. As of Feb. 29, 167,431 patients had both an active registration and recommendation, which is required to purchase cannabis, as well as having an approved qualifying condition.

“And it appears like that might be accelerating from a base of patients that's already relatively suppressed if you look at the other markets like Pennsylvania next door and how relatively functional their program has been for access and patient adoption,” McCourt says.

Pennsylvania has a similar state population but, as of March 1, nearly 440,950 active patient certifications.

“Our hope is that patients do recognize that there’s still value to renewing their card … the favorable tax rate, potentially access to certain hours and inventory depending on how those rules shake out; there should be increasing benefits for patients to stay engaged in the program going forward,” McCourt says.

An adult-use program only requires that a person is 21 or older and has a valid ID to purchase cannabis from a licensed dispensary, so access will be expanded once sales launch. Another consideration is dispensary location to ensure reach, Crawford says.

“We want to make sure there is fair access to Ohio consumers. We also want to make sure we do everything we can to eliminate the illicit market, and so the division will be mindful of where nonmedical dispensaries will be located to avoid large pockets where an illicit market can flourish in the absence of legal facilities,” Crawford says. “But the division wants to avoid an over-concentration of facilities in the same geographic region, which in a business sense, could lead to a higher failure rate of facilities.”

However, as is the case in other states, Ohio municipalities have the option to opt out of an adult-use program, which could limit access for people living in certain areas of the state.For example, North Olmsted City Council voted to ban the sale of adult-use cannabis in December.

Despite the potential hurdles that could delay the adult-use program launch, McCourt is confident that with Canepa’s leadership, it will be smooth.

“It's been great to see [Canepa] take over the reins. He's been very engaged, very transparent, very proactive in reaching out to the industry,” McCourt says, adding that he’s been meeting not only with business and government leaders, but also patients and dispensary teams. “There's somebody that is steering the ship that both has a lot of experience … and he's been through a lot of evolutions where things were not right. He's basically a fixer, and that's been a really great breath of fresh air from where we sit as licensees who opened up the program five years ago. But it's been an evolution and a long process, trying to work with the regulators and the agencies to get to a functional program.”

“The rules aim to ensure that individuals under 21 years of age do not access a dispensary and are not sold nonmedical cannabis. The safety of minors is also why the DeWine administration is urging the general assembly to ban or regulate products containing delta-8 THC, which is widely available in stores throughout the state without a minimum age limit to purchase,” Crawford says. “The division wants to ensure legal sales begin as soon as possible under the process laid out by the initiated statute requiring licensing applications and the timelines discussed above, in order to disincentivize the illicit market.”  

The hemp-derived products are also not taxed the same way. Although the original proposed adult-use program called for a 10% excise tax to help create a social equity and jobs program, support municipalities that host adult-use dispensaries, and pay for education, substance abuse and addiction treatment programs, state lawmakers have proposed increasing the excise tax to 15% and funneling those revenues to other areas, including a county jail construction fund (28%), law enforcement training, and a “marijuana poison control fund,” details that were not part of the original ballot measure approved by voters. DeWine has urged the state’s house lawmakers to approve the senate-backed proposal that would also allow for sales, but also would add limitations to THC potency, effectively banning most vape sales, among other changes. But Callender has said that the bill’s provisions are not aligned with provisions that voters overwhelmingly approved.

Gearing Up

With a state population of nearly 12 million, many have anticipated (and betted on) Ohio being one of the largest, fastest-growing cannabis markets in the U.S. once it gets off the ground.

Market intelligence firm BDSA projects that Ohio would be a $1 billion cannabis market by 2027, growing from the roughly $484.5 million the medical market generated in sales in 2023.

Operators say they are ready for this increased demand and the boost in sales and have plans to expand dispensary staffing, registers and supply ahead of launch.

On the cultivation side, the DCC issued an application recently that allows cultivators to expand to the full square footage permitted under the medical rules to accommodate the additional demand, Crawford says.

Timing can be complicated with cannabis, as it can take six to eight months (or more) to launch a new cultivar when accounting for the plant's lifecycle and the regulatory requirements to get products and packaging approved. And, as McCourt pointed out, raising capital for improvements and upgrades is incredibly challenging in the cannabis industry, and it can take years to build out new facilities.

But otherwise, the experience, education and product selection patients have come to expect will remain, McCourt says. The proposed rules include provisions to prioritize patients, with accommodations ranging from a consistent supply of products to ensure patients are served to designated areas and point-of-sale stations to expedite checkout and patient-only hours.

“We have educational materials literally all over the wall about how your endocannabinoid system interacts with different terpenes, the processes that we use, particularly in our solventless products, and how products are made to provide that visual engagement experience for patients,” McCourt says. “Our patient care representatives are all trained specifically on how to both make sure that more experienced, sophisticated patients can get what they want, and if they want to move quickly through the process, they can.”

For consumers who are new to cannabis and want more information, the retail team is there to walk them through product options depending on the experience they are looking for, McCourt says.

“Even if somebody doesn't have a [medical] recommendation that they're coming in for, if it's an enjoyment product or it's a general wellness product, it's a similar pathway and experience regardless of their reason for why they're choosing a cannabis product. It's just how do we manage the volume of demand to make sure that we can have it be a good experience for everybody, knowing that there's a wide variety of patients and consumers that we're going to be seeing in the same store,” McCourt says. “We want to make sure that we can have that high-touch, high-quality experience with all of them, regardless of their experience level with cannabis.”

This article was produced in collaboration with The Land, a nonprofit news organization reporting on Cleveland's neighborhoods.