By Eric Schneider, a seasoned cannabis industry expert. He’s a sought-after speaker at industry seminars and a regular writer for respected cannabis journals such as the American Bar Association.
Cannabis was legalized completely in Ohio in November 2023, which means you can open up a dispensary and begin selling marijuana to consumers.
But before you kick off your dispensary and dive into selling marijuana, there’s a crucial step – applying for a dispensary license in Ohio.
Getting a dispensary license in Ohio involves a lot of paperwork and effort. If you read this guide carefully, you will know all the necessary steps to get a cannabis dispensary license in Ohio.
Overview and History of Ohio Dispensary Licenses
Ohio is the 24th state to legalize cannabis completely, but this decision took time and effort.
In June 2016, Ohio joined the ranks of states allowing medical marijuana, making it the 25th to do so. Governor John Kasich signed H.B. 523, setting up the groundwork. This law kicked in on September 8th, 2016.
This law put three groups in charge.
- The Department of Commerce was made in charge of rules for cultivators, processors, and testing labs.
- The Board of Pharmacy would handle the patient and caregiver registry and license retail dispensaries.
- The State Medical Board would supervise physicians and give them a “certificate to recommend” patients.
For residents looking to use marijuana for medical reasons, a few things are needed. You must be 18 or older, an Ohio resident, and have a qualifying condition like AIDS/HIV, Alzheimer’s, epilepsy, or cancer. Huntington’s disease, terminal illness, and spasticity joined this list on June 9th, 2021.
There have been a total of 398,057 registered patients in the state of Ohio. Out of these, 184,958 patients are both actively registered and recommended currently.
During the 2023 election, Issue 2 was brought to the table by the Coalition to Regulate Marijuana Like Alcohol and was approved. Now, if you’re 21 or older, you can legally enjoy recreational marijuana in Ohio.
But they’re still setting up the Ohio Division of Cannabis Control to keep things in check. This division will handle the rules and licenses for about 40 places growing cannabis for adults and 50 dispensaries. The ball gets rolling on December 7th, 2023, when Issue 2 kicks in and lays the groundwork for the Division of Cannabis Control.
Ohio has four kinds of cannabis business licenses:
Current Status of the Cannabis Market in State
Ever since Ohio gave the green light to medical cannabis, people’s interest in marijuana has shot up. Back in April 2019, the state saw a hefty $5.2 million in marijuana sales.
By the end of December 2019 and 2020, the total sales for medical marijuana had stacked up to a whopping $56 million and $277.2 million, respectively. That’s quite a leap in demand, showing how things have been buzzing since legalization.
The state finally hit the $1 billion mark in September 2022, just 41 months after medical marijuana had started being sold legally. According to the Ohio Department of Commerce Medical Marijuana Control Program, the total product sales were $1.5 billion by November 2023.
Types of Dispensary Licenses in Ohio
There is currently only one type of dispensary license in Ohio for medical marijuana retail dispensaries, where retailers purchase marijuana from processors and sell it to patients.
The Ohio law permits the sale of marijuana solely for medicinal use at the moment, and there are precise guidelines dictating who is eligible to apply for and obtain licenses for various cannabis-related establishments.
Note: As mentioned above, Issue 2 has been approved, and very soon, the people of Ohio will be able to enjoy a recreational marijuana license as well. But, it is not available at the moment, and it may take some time before people interested can apply for it. You will have to keep checking the official website for regular updates.
Steps to Getting a Dispensary License in Ohio
Here are the steps to apply for a dispensary license in Ohio.
Research and Prepare
Before you begin filling out an application for a dispensary license in Ohio, you must do your research. You need to find out all the requirements and criteria to be fulfilled for successfully obtaining a dispensary license and opening up a dispensary.
You need to understand the financial expenses you will have to undergo in obtaining the license and in the future. You must also familiarize yourself with the eligibility criteria and what changes you must make to fulfill them.
Applications for medical marijuana facilities in Ohio are not open all year round and have specific open periods. When they are open, there’s a limited timeframe for submission. With only a set number of licenses available, competition can be tough.
That’s why it’s vital to approach your application with thorough preparation and understand all the efforts and steps needed to be taken to get a dispensary license in Ohio.
No new applications are being accepted for a dispensary license at the moment. So, you need to keep visiting the official website from time to time and be prepared with all the requirements so that you can apply as soon as the application period begins, as there’s a cap on how many licenses can be given out, and the total number allowed at one time.
Develop a Solid Business Plan
Not only is developing an in-depth business plan important for the success of your business, but it is also a mandatory requirement to be attached to the application.
In your business plan, you need to identify the location of your dispensary, the cost of setting up the dispensary, and the insurance company you will be opting for.
You also need to show how you will manage your business’s finances and how soon you expect to break even. The business plan should also include the market analysis, the compliance strategies, and the security measures taken. The business plan should also discuss the consumer and your advertising plans.
Overall, while developing your business plan, ensure you follow the rules of the State of Ohio and do not include anything that goes against the rules and regulations.
You can also get help from consulting companies to help you design a business plan that adheres to the State of Ohio Board of Pharmacy requirements. This will reduce the chances of your application getting rejected and will also help you grow your business in the long term.
Assemble the Necessary Documentation
We have worked in the cannabis industry for a long time and understand that an individual should assemble all the necessary documentation before submitting the application. Here is a list of some of the necessary documents you must have to complete the application:
- Proof of identification and residency in Ohio
- A financial plan and proof of liquid assets that can cover all the expenses of the first year of business
- Property and lease agreements for the dispensary compliant with Ohio’s regulations
- A business plan
- A plan to educate and train the staff after conducting thorough background checks
- An operational plan
- Security plans such as operational CCTV cameras and warning signs
Submitting the Application
Pay the non-refundable application fee of $5000 and recheck your application along with all the documents attached before submitting it. Make sure that there are no mistakes or any false promises in your application.
Ensure that your background knowledge about the cannabis industry in Ohio is reflected through your application. This will increase the chances of successfully getting a dispensary license.
Application Review and Compliance Inspection
Once you submit your application, you will have to wait for a response from the State of Ohio Board of Pharmacy, which will inspect your dispensary before handing you a license.
Some of the things that will be checked during the inspection include external signage compliance, external trash security, security lighting, and whether the delivery/receiving protocol is being followed. The dispensary’s method of record keeping and employee training records will also be checked.
You will also be questioned about the signs inside the dispensary (including but not limited to Edible Marijuana and Do Not Enter warning placards).
The video surveillance and alarm systems should work when the inspecting officer visits and the staff should be properly trained and aware of the METRC system. Ensure following the landscaping guidelines; otherwise, your application will be rejected.
Note: These are just some of the guidelines that need to be followed, and a proper list is available on the official website.
Remaining Compliant with Ohio’s Rules and Regulations
Once you have obtained the dispensary license, make sure to regularly renew it on time and follow all the guidelines mentioned by the State of Ohio Board of Pharmacy.
- Ensure proper record keeping and training of the staff at all times.
- Ensure all employees have a license to work at the dispensary and are insured and that all the consumers have their medical card, which allows them to purchase marijuana.
- Ensure that the CCTV cameras are working 24/7.
- Do not sell any marijuana for recreational purposes, as this will lead to serious consequences. This is because there will be a separate license for recreational marijuana, which isn’t available just yet. There are still a few months left for guidelines to be released regarding the selling and purchasing of recreational marijuana.
If any incident takes place at the dispensary, inform the State of Ohio Board of Pharmacy. Similarly, if there are any changes, update the State of Ohio Board of Pharmacy through the appropriate form, and if you cannot find a form for it, email them. Ensure to read all the latest dispensary licensee newsletters released to stay updated.
Remember, if you fail to comply with the State of Ohio Board of Pharmacy, your license will not get renewed next year or might even be canceled.
Insurance Requirements for a Dispensary
Getting insurance for your dispensary is not only a requirement by the state but also a great idea. This is because it helps businesses recover financially from accidents such as fires and lawsuits.
Types of Policies
There are several types of insurance plans to choose for a cannabis dispensary. This includes:
- General Liability
- Product Liability Insurance
- Property Insurance
- Directors and Officers Insurance
- Workers’ Compensation Insurance
As Ohio evolves its rules and regulations, teaming up with experts will boost long-term success and prepare you for the worst.
Costs of Opening and Running a Dispensary License in Ohio
Running a licensed dispensary in Ohio comes with high costs. You need substantial funds to kickstart your business and a steady income to keep your license, which needs renewal annually or biannually, depending on the license type.
Even though Ohio currently only allows medical marijuana, there are still crucial fees tied to getting your dispensary up and running. The specific fees will depend on the type of facility you want to open and the cultivation level you aim to achieve.
Application and License Fees
The application fee for a dispensary license is $5,000, whereas the certificate of operating fee is $70,000. Apart from the first application and license fees, there is the biennial renewal fee, which is $70,000 when it comes to a dispensary license.
The Ohio Board of Pharmacy also needs license holders to keep escrow accounts with minimum balances to keep and get their licenses.
Taxes and Fees
The Ohio Department of Taxation is responsible for Ohio’s local and state taxes for cannabis sales and cultivation. According to H.B. 523, all medical marijuana is subject to a 5.75% sales tax. Local authorities can also collect cannabis sales tax varying from 0.25% to 2.25%.
Non-medical cannabis will be subject to regular state and local sales tax as you would expect. On top of that, there will be an excise tax, which is an extra 10% on non-medical cannabis buys.
This extra tax money will be divided up to support a bunch of things: a social equity and jobs program, mental health and addiction services, local governments, and the nitty-gritty costs of the Ohio Department of Taxation and the Division of Cannabis Control.
So, that 10% isn’t just disappearing – it’s doing some good in the community.
How much does opening and running a dispensary cost?
The entire cost of opening up a dispensary and running it can cost between $500,000 to $2,000,000 approximately. The application fee for running a dispensary in Ohio costs $5,000, and the license fee is $80,000. An employee licensing fee ranges from $100 to $500 per employee.
What are the location requirements for a dispensary?
A dispensary in Ohio must be at least 500 feet from a school, church, public library, public playground, or public park.
What types of insurance policies are required for a dispensary?
Various insurance policies are required, including general liability, product liability insurance, property insurance, workers’ compensation insurance, and lastly, directors and officers insurance.
How long does it take to obtain a dispensary license in Ohio?
The entire process of filling out an application, submitting it, and getting approved for a dispensary license can take up to 9 months.
What are the regulations for advertising a dispensary in Ohio?
To advertise a dispensary in Ohio, the licensee must get approval from the State Board of Pharmacy before they begin advertising. There is a proper checklist and guidelines on the Ohio Medical Marijuana Control Program’s website that must be followed throughout the advertising process.
Can I have more than one dispensary location in Ohio?
Yes, you can have up to 8 dispensary licenses at a time, but they must all be approved.
Visit the official websites of regulatory authorities and learn of the ever-evolving marijuana landscape in Ohio.