Introduction
The cannabis industry in Ohio presents a unique opportunity for entrepreneurs and investors looking to enter a growing market. With the state’s medical marijuana program already in place and continuous efforts towards recreational legalization, the demand for licensed cannabis businesses is on th
e rise. This comprehensive guide on how to get a cannabis license in Ohio will help you navigate the complex process, from understanding the state’s cannabis landscape and history to crafting a strong business plan and ensuring regulatory compliance.
Historical Context
Ohio legalized medical marijuana in 2016, allowing patients with qualifying conditions to use marijuana for medicinal purposes. This led to the establishment of medical marijuana processors in the state, and the Ohio Board of Pharmacy was authorized to license up to 73 medical marijuana dispensaries. The state is now considering a ballot initiative that, if successful, would legalize recreational marijuana for adults aged 21 and older, with the potential for more businesses to apply for an Ohio dispensary license.
Ohio has seen a dynamic shift in its approach to cannabis, evolving from strict prohibition to a regulated medical marijuana program. This section will explore the legislative journey of cannabis legalization and medical marijuana dispensaries in Ohio, highlighting key milestones that have shaped the current landscape.
Following the passage of Issue 2, recreational marijuana has been legalized in Ohio. This significant development introduces a new licensing category for businesses interested in the cultivation, manufacturing, testing, and sale of recreational marijuana. The law, effective 30 days after the election, sets the framework for a regulated recreational cannabis market in Ohio.
Current Status of Recreational Marijuana Legalization in Ohio
In a surprising turn of events on December 7, 2023, Ohio’s GOP-controlled Senate committee approved a revised bill that expands the voter-approved marijuana legalization law. The full Senate then approved the legislation in a vote of 28-2.
The bill allows adults to start buying cannabis from existing medical dispensaries in as soon as 90 days. Home cultivation rights are maintained, with adults allowed to grow up to six plants per person (household limit of six plants). The bill also provides for automatic expungements of prior marijuana convictions. This is a significant departure from an earlier proposal that would have effectively re-criminalized possession of marijuana and eliminated home grow.
Key aspects of recreational marijuana legalization
If passed by the full General Assembly and signed into law by DeWine, the bill would:
- Adults are now allowed to cultivate up to 6 cannabis plant.
- Possession Limits: 2.5 Ounces of Cannabis Flower and 15 Grams of Cannabis Extracts.
- Role of the Division of Cannabis Control within the Ohio Department of Commerce in regulating the industry.
- Timeline for the Department of Commerce to finalize rules and issue licenses.
- Integration with Ohio’s existing medical marijuana program.
- Opportunities for existing medical marijuana licensees to obtain recreational licenses.
- Enable existing medical-use cannabis dispensaries to transition into selling both medical and recreational products.
- Eligibility and application process for businesses and individuals aged 21 and up.
- Limit marijuana retailers license to 350.
- Regulations for cultivation, manufacturing, testing, and sale of recreational marijuana.
- A 15% sales tax on recreational marijuana transactions. (up from 10% in the recent bill).
- House bill would impose a 10 percent tax on cultivators’ gross receipts.
This new legal landscape offers expanded opportunities for entrepreneurs and businesses in Ohio’s cannabis market, alongside the existing medical marijuana program.
Types of Cannabis Licenses in Ohio
Dispensary License
This license allows for the retail sale of marijuana to qualified patients and caregivers. It involves stringent compliance with Ohio’s medical marijuana control program, including security measures, product handling, and patient education.
Applicants must demonstrate a comprehensive understanding of the medical marijuana market, patient needs, and adherence to health and safety regulations.
Key aspects include:
- Eligibility criteria and application process.
- Operational guidelines and compliance requirements.
- Financial considerations, including fees and operational costs.
- Market analysis and patient demographics in Ohio.
Cultivator License
This license permits the cultivation of medical marijuana. It requires adherence to cultivation standards set by Ohio law, including facility requirements, plant tracking, and product quality assurance.
Cultivators play a crucial role in the supply chain, impacting product availability, cost and variety.
Key aspects include:
- Application requirements and cultivation limits.
- Facility specifications and security measures.
- Quality control and compliance with state regulations.
- Insights into the cultivation market and trends in Ohio.
Maximum Cultivation Footprint: A level III adult use cultivator’s cultivation area shall not exceed five thousand (5,000) square feet unless authorized by the division of cannabis control under this chapter.
Processor License
This license is for businesses that process medical marijuana into various forms, such as edibles, oils, and tinctures. Processors must comply with strict processing standards, including safety, labeling, and product testing.
This role is vital for diversifying the product offerings of dispensaries in the Ohio market.
Key aspects include:
- Processing standards and product safety requirements.
- Application process and operational guidelines.
- Market opportunities and product innovation in Ohio.
- Financial requirements and investment considerations.
Comprehensive information on the Processor License, including processing standards, compliance, and its significance in the Ohio cannabis industry.
How to Obtain a Cannabis License in Ohio
Step-by-Step Guide on the Application Process
Obtaining a cannabis license in Ohio involves several steps, as the process is regulated by the state to ensure compliance with legal and safety standards. Like in any limited market state, Ohio’s Licensing Method will be via Lottery.
Here’s a general step-by-step guide to help you understand the process:
Understand the Regulations
- Research Ohio’s Cannabis Laws to familiarize yourself with Ohio’s cannabis laws.
- Determine the type of cannabis license you need (e.g., cultivation, dispensary, processing).
- Municipal Opt-Outs: Municipalities have the right to opt-out of cannabis business or limit the number of cannabis operators in a municipality via ordinance.
Business Planning
- Develop a comprehensive business plan, including financial projections, marketing strategies, and operational plans.
- Decide on the legal structure of your business (e.g., LLC, corporation).
Location and Zoning Requirements: The applicant must demonstrate that the operations will not be located within five hundred feet of a prohibited facility.
No facility shall be located within five hundred (500) feet of the end boundaries of a parcel of real estate having situated on it a prohibited facility, as defined as a:
- Church
- Public library
- Public playground
- Public park
- School (K-12)
- Secure a location that meets state requirements for your type of cannabis business.
Licensing Application
- Monitor the Ohio Marijuana Control Program website for announcements about application availability.
- Gather required documents, which may include background checks, business plans, proof of financial responsibility, and operational plans.
- Prepare to pay the non-refundable application fee, which varies based on the type of license.
Ownership Restrictions:
- The adult-use cannabis operator applicant must demonstrate that it does not have an ownership or investment interest in or compensation arrangement with any current Ohio licensee
- The adult-use cannabis operator applicant must demonstrate that it does not share any corporate officers or employees with any current Ohio licensee.
Compliance and Inspection
- Ensure your operation is fully compliant with state regulations.
- Be prepared for a state inspection of your facility to verify compliance.
Operational Readiness
- Hire and train staff, ensuring they understand compliance and operational procedures.
- Implement an inventory control system as required by the state.
- Prepare to educate patients on products, usage, and safety.
Financial Requirements
- Financial requirements for an Ohio dispensary
- Application fee: $5,000
- License fee: $80,000
- Annual renewal: $80,000
- Dispensary certificate of operation fee $70,000
- Biennial renewal for a dispensary license fee $70,000
- Biennial renewal for a dispensary associated key employee card fee $500
- Biennial renewal for a dispensary key employee card fee $250
- Biennial renewal for a dispensary support employee card fee $100
- Reissued dispensary certificate of operation or employee identification card fee $50
- Change in ownership fee $5,000
- Relocation fee $5,000
- Major modification or renovation fee $5,000
Tax and Revenue Allocation for Dispensaries
- Expungements: $15 million in marijuana tax revenue will be dedicated to facilitating automatic expungements for specific cannabis convictions.
- Law Enforcement:
- Department of Public Safety training – 16%
- Attorney General’s Office training fund – 14%
- Drug law enforcement fund – 5%
- Public Health:
- Poison control fund – 2%
- Substance misuse treatment – 9%
- Suicide hotline services – 9%
- Other:
- Jail construction and renovation – 28%
- Safe driver training – 5%
Tax and Revenue Allocation for Cultivators
- A significant portion of the cultivator tax (72%) would be directed towards improving security and infrastructure.
- Jail construction and renovation – 36%
- Supporting county sheriffs – 36%
- Funding law enforcement training – 23%
- Providing assistance to victims of crime – 5%
NOTE: As of 11 Jan 2023, the State of Ohio Legislature is actively working to create licensing criteria.
Tips for a Successful Application
1. Thorough Research and Understanding of Regulations
- Stay Updated: Regulations can change. Regularly check for updates from the Ohio Medical Marijuana Control Program (OMMCP).
- Compliance: Ensure you understand all compliance requirements.
- Consulting with a lawyer or consultant who specializes in the cannabis space.
2. Comprehensive Business Plan
- Detail-Oriented: Include detailed business & operational plans, financial projections, marketing strategies, and risk management plans.
- Regulatory Alignment: Make sure your business plan aligns with state regulations and demonstrates an understanding of the legal environment.
3. Strong Financial Foundation
- Proof of Financial Responsibility: Be prepared to show evidence of sufficient capital or financial backing.
- Budgeting: Include a realistic budget that covers startup costs, operational expenses, and contingency funds.
4. Robust Security and Operational Plans
- Security Measures: Detail your security plans, including physical security and cybersecurity measures.
5. Community Engagement and Impact
- Local Support: Demonstrate how your business will positively impact the local community.
- Engagement Plan: Include plans for community engagement and any potential benefits your operation will bring.
Expert Insights
Ohio marijuana legalization is a step in the right direction as it provides more access to medicinal marijuana for those who need it and makes recreational use legal, albeit highly regulated. Additionally, it is estimated to bring in millions of dollars in tax revenue which can help fund needed services and initiatives.
Conclusion
Opening a dispensary in Ohio is a multifaceted process that requires careful planning, adherence to strict regulations, and a significant financial investment.
To successfully establish a dispensary, prospective business owners must navigate the above series of steps in order for a cannabis dispensary to be successful.
Frequently Asked Questions
How much does it cost to start a dispensary in Ohio?
Opening a dispensary in Ohio can be costly, with an application fee of $5,000, a licensure fee of $80,000, and a renewal fee of $80,000. Real estate and operational costs may also incur additional costs ranging from hundreds of thousands to millions of dollars.
What qualifications do you need to work at a dispensary in Ohio?
To work in an Ohio dispensary, you must be a minimum of 21 years old and possess a valid Ohio Medical Marijuana Card. You should also have some level of expertise in the cannabis industry and experience with customer service.
How much do dispensary owners make in Ohio?
Dispensary owners in Ohio can earn anywhere from $250,000 to $500,000 per year with many owners taking home a salary equal to 10% of their dispensary revenue. Employees in the cannabis industry also benefit from competitive wages.
What types of cannabis licenses are available in Ohio?
In Ohio, there are four types of cannabis business licenses available: medical marijuana dispensary, cultivator, processor, and testing laboratory.
What is the application fee for a medical marijuana dispensary license in Ohio?
The application fee for a medical marijuana dispensary license in Ohio is $5,000.
About the Author
Tom Howard, a Cannabis Industry Lawyer and Consultant has practiced commercial law since 2008 when he graduated from law school and got his Series 7 & 66 Securities licenses. He pivoted to practicing litigation for financial institutions before helping cannabis teams form, capitalize, and get licensed. He has concentrated on the cannabis business since Illinois legalized it in 2019. He won licenses for clients in Illinois, Connecticut, New Jersey, New Mexico, Massachusetts, Missouri and has gotten into lotteries in Ohio, Maryland, and Maine. He became a Certified Ganjier in 2021. He chairs the ISBA’s section council for Cannabis Law in 2023.
- Additional Resources & Websites that’ll help you open a dispensary in Ohio
