How to Get a Cannabis License in Ohio

Historical Context

Ohio was one of the first US states to decriminalize cannabis. In 2019, Ohio State announced that it would be giving licenses for medical marijuana dispensaries under the Medical Marijuana Control Programme.

Earlier in November 2023, the majority of Ohio voters approved the legalization of cannabis for adult-use, creating the need for a new system for licensing, taxation, and regulation of adult-use marijuana businesses.

Three state government agencies oversee the implementation of the Medical Marijuana Control Programme (MMCP) in Ohio marijuana dispensaries:

Patients who want to use marijuana for therapeutic purposes must be at least 18 years old, a resident of Ohio, and have a qualifying ailment for Ohio medical marijuana card, such as AIDS/HIV, Alzheimer’s disease, epilepsy, or cancer. Huntington’s disease, terminal illness, and spasticity were added to the list on June 9th, 2021.

Since the program’s inception in 2019, Ohio has registered 377,384 patients for medicinal marijuana as of June 30, 2023. There are 22,342 veterans, 23,405 indigents, and 1,346 patients with a terminal diagnosis.

Apart from that, Ohio became the 24th state to legalize adult-use cannabis on November 7, 2023, when 57% of voters approved Issue 2, also known as An Act to Control and Regulate Adult Use Cannabis.

Types of Cannabis Licenses in California

Cultivation Licenses

Permits for growing cannabis, with various tiers based on facility size and growing conditions.

Manufacturing Licenses

Allows for processing cannabis into various products, including extracts and edibles.

Retail Licenses

Required for transporting cannabis products between licensed facilities.

Distribution Licenses

Required for transporting cannabis products between licensed facilities.

How to Obtain a Cannabis License in Ohio

1

Research and Preparation

The first step is to research the cannabis license you’re interested in and prepare for the application accordingly. Find out the specific details, application costs, compliance laws, and other paperwork, like proof of residence, and start to prepare all the documents well before time.

Another important aspect is to conduct a market survey to understand what works in Ohio’s cannabis industry.

Cannabis Market Landscape in Ohio

According to an analysis by the cannabis industry market intelligence organization, BDSA, Ohio’s newly legal medical cannabis market is projected to reach $520 million in 2023.

BDSA projects that by 2025, this market will grow to an estimated amount of $820 million, with a further growth up to $1.65 Billion in 2027.

2

Develop a Solid Business Plan

When you apply to the Board of Pharmacy, you may be required to provide facility designs, specifications, and other business plans.

Having a business plan on hand offers you a better understanding of everything that will need to happen after your license is issued.

The Ohio Board of Pharmacy has divided the state into 31 dispensary districts in September 2021, allowing it to map the locations of its 56 licensed dispensaries.

Your business plan should include a basic overview of how the company will operate, such as:

Details regarding the intended location
Plans for the physical storefront, including security and surveillance information
A financial summary, including a suggested budget and how you expect to finance the firm.
Applicants must have at least liquid assets of $250,000 to cover all costs and expenses of the first year.
Plans to ensure regulatory compliance
Inventory information, including prospective sources for medical cannabis products

3

Assemble the Necessary Documentation

Provide a checklist of the required documentation specific to Ohio, including but not limited to

Complete application and proof of fee payment
Documentation proving compliance with Ohio tax laws and in any jurisdiction where the applicant has operated in the last three years.
A financial plan, including financial statements, evidence of committed funds from owners or board members, and proof of sufficient funds (at least $250,000).
Your business’ organizational structure.
Background checks for each owner, officer, or board member.
Documentation of the dispensary’s size and capacity to meet patient and caregiver needs, including building and construction plans.
Plans for the care, quality, and safekeeping of medical marijuana.
A proposal showing how the dispensary will meet patient and caregiver needs.
Description of services or products offered.
Documentation of any programs to assist veterans or the indigent in obtaining medical marijuana.
A criminal records check report to demonstrate no disqualifying offenses or that such offenses occurred over five years prior to the application.
Assurance that the applicant has no investment or ownership interests in a licensed marijuana laboratory or an applicant for laboratory testing licensure.
Confirmation that the applicant does not share corporate officers or employees with a licensed marijuana laboratory or laboratory testing license applicant.
Certification that the dispensary location is not within 500 feet of a school, church, public library, public playground, or public park.

4

Submitting the Application

Once you’ve gathered all the documents, you must submit your application. It goes without saying that you must ensure it’s complete, accurate, and compliant with state laws.

It’s best to review your application before submitting it or have it reviewed by independent attorneys and insurers for your peace of mind.

The winning applications are chosen by a “drawing” procedure in which each district’s submissions are sorted randomly.

This technique would limit the number of dispensaries in the state to 130, but may now need to increase it. The new distribution method aims to have roughly 1,200 registered patients in each dispensary area in the state. Per capita, Ohio would have more dispensaries than neighboring Pennsylvania.

Only the chosen applications will be evaluated to ensure they match the state’s criteria. If they succeed, they will be granted temporary dispensary licenses and will be able to begin building the facility.

Payment and Fees

Note: Fee structures are subject to change. Consult the official Ohio cannabis regulatory website for current fee schedules.

Application Fees

The application fee covers the initial costs associated with processing and reviewing cannabis business license submissions in Ohio. These fees vary depending on the type of license and the size of the proposed operation. It’s essential to ensure all application materials are complete and accurate to avoid delays or additional costs.

License Fees

License fees are required to maintain compliance and secure operating privileges for cannabis businesses in Ohio. These fees are determined based on the license type, such as retail, cultivation, or distribution, and are typically due annually. Staying current with license payments is crucial to avoid penalties or disruptions in business operations.

Application Review and Compliance Inspection

Compliance inspection typically follows within 90 days after the application is approved or selected. So, it’s best to start preparing for it beforehand. For more information, you can read the 2023 Ohio cannabis legalization summary.

Here’s how you can ensure compliance:

Understanding Regulatory Bodies:

In Ohio, the Medical Marijuana Control Program (MMCP) is overseen by the Division of Marijuana Control (DMC) within the Department of Commerce, and the Division of Cannabis Control (DCC) regulates adult-use cannabis.

Compliance involves regular interaction with these entities, so ensure that your team closely works along the local Marijuana control laws and co-operates with them whenever there’s an inspection due.

Adapting to Regulatory Changes:

Businesses must stay informed about changes to laws and regulations, such as transitioning responsibilities from the Board of Pharmacy (BOP) and Commerce to DMC for medical marijuana.

Common Compliance Requirements in Ohio

Some basic compliance requirements throughout the United States are:

Record-Keeping: Businesses should always maintain accurate records of all transactions, inventories, and activities. This includes patient and caregiver registrations and details of all product movements.
Security Measures: You must implement robust security protocols to prevent unauthorized access to cannabis products and facilities. This also involves informing the regulatory authority about any security system installment or any breaches that have led to vandalism or theft.
Product Testing and Labeling: Ensure all products meet Ohio’s standards for safety and quality, with appropriate testing and accurate labeling that complies with DMC and DCC regulations.
Adherence to Licensing Conditions: Respect the conditions of your license, such as limits on the quantity and type of product that can be sold or cultivated and complying with zoning regulations.

Risk and Compliance Factors From AlphaRoot

The cannabis industry, while burgeoning with opportunities, is not without its complexities and inherent risks. Understanding and mitigating these risks is crucial for long-term success. AlphaRoot, a prominent insurance and risk management firm specializing conduct business in the cannabis sector, sheds light on the key risk and compliance factors

1. Regulatory and Legal Risks

Labyrinthine Regulations The cannabis industry is highly regulated, and compliance with state and local laws is paramount for cannabis establishments. Navigating the intricate web of regulations, which can vary significantly from one jurisdiction to another, poses a substantial challenge for cannabis establishments. Failure to comply can result in fines, license revocation, or legal consequences.

Federal Ambiguity Cannabis remains illegal at the federal level in the United States, despite state-level legalization of recreational marijuana. This dichotomy creates uncertainties and exposes businesses that sell recreational marijuana here to potential federal enforcement actions.

2. Financial Risks

Cash-Intensive Operations Due to federal banking restrictions, many cannabis businesses operate primarily in cash. This not only presents security risks but also complicates financial management and taxation.

Taxation Challenges Cannabis businesses face unique tax challenges, including limitations on deductions and potential audits. Understanding and complying with tax regulations is essential to avoid financial penalties.

3. Security Risks

Theft and Robbery Cannabis businesses are susceptible to theft and robbery due to the high value of their products. Implementing robust security measures at a marijuana cultivation facility, including surveillance systems and secure storage, is vital to mitigate these risks.

Cybersecurity As with any industry, cannabis businesses are vulnerable to cyberattacks. Protecting sensitive customer data and business information is critical.

4. Product Liability and Quality Control

Product Liability Claims Ensuring the safety and quality of cannabis products is crucial to prevent product liability claims. Contaminated or mislabeled products can lead to legal and financial repercussions.

Testing and Quality Assurance Collaborating with reputable independent testing laboratory and facilities, as required by regulations, is essential to verify the safety and potency of cannabis products. Consistent quality control is essential to maintain consumer trust.

5. Market Competition and Volatility

Saturated Markets in regions with a high concentration of cannabis businesses, competition can be fierce. Navigating market saturation requires effective differentiation and marketing strategies.

Price Volatility The price of cannabis products can fluctuate significantly, impacting profitability. Businesses must adapt to market dynamics and price changes.

6. Environmental and Sustainability Concerns

Resource Intensity Cannabis cultivation and processing can be resource-intensive, including water and energy consumption. Businesses need to address sustainability concerns and adhere to environmental regulations.

Waste Management Proper waste disposal and recycling practices are essential to minimize environmental impact and meet regulatory requirements.

7. Talent and Workforce Challenges

Talent Shortages the cannabis industry often faces challenges in recruiting and retaining qualified personnel due to its specialized nature. Employee turnover can disrupt operations.

Training and Compliance Businesses must invest to ensure employees are well-informed about compliance and safety protocols.

Cannabis License in Ohio FAQ

How Do I Renew My Ohio Cannabis Establishment License?

You can simply visit the Board of Pharmacy’s website, which oversees the licensing for medical cannabis businesses, to know about the renewal application process. You have to pay the necessary application fee for your license type. The board will review your application and renew your license if you’re compliant with Ohio laws.

What Are the Tax Rates for Cannabis in Ohio?

Medical marijuana is subject to a state sales tax of 5.75% by the Ohio Department of Taxation, and local authorities, such as municipalities, can impose additional cannabis sales taxes ranging from 0.25% to 2.25%.

Cultivators and processors may also need to pay tax based on the market value of the cannabis plant cultivated on a property.

What Are the Advertising Guidelines for Cannabis in Ohio?

Any ads that are likely to reach persons under 18 are banned. Cannabis ads should not suggest non-medical or recreational marijuana use or imply the legality or health benefits of such use.

All advertisements must be submitted to the Ohio Department of Commerce or the Ohio State Board of Pharmacy with applicable fees beforehand. They must not be misleading, include certain images or statements, or suggest non-qualifying conditions for use.

There are also specific prohibitions on where ads can be placed (e.g., within 500 feet of prohibited facilities, on billboards, public transit, etc.).

How Can I Work in the Cannabis Industry in Ohio?

You can reach out to the dispensary, processor, or testing laboratory business you want to work for and get familiar with the exact job requirements. Generally, it’s important to have specific know-how of the cannabis industry, support academic qualifications, be of legal age, and have no criminal record if you’re looking to work in the Ohio cannabis industry.

About the Author

AlphaRoot Team

The AlphaRoot marketing team are seasoned experts with deep knowledge of the cannabis industry. Our informative articles help cannabis businesses thrive in a competitive landscape. From compliance to insurance tips, we’re dedicated to providing advice tailored to your needs.

Curated Insights

“Cannabis and Inflation: What Costs Are Going Up”

By AlphaRoot Team

“Cannabis Insurance Trends 2020”