Over the years, rampant medical and recreational legalization of marijuana has created a multibillion dollar industry.  With the passage of House Bill 523, Ohio entrepreneurs now have the opportunity to get involved in this lucrative market by opening retail dispensaries and selling medical marijuana products to patients with qualifying medical conditions.  But dispensary applicants must be prepared for a complex and competitive licensing process.

The administrative rules that will govern the licensing standards and procedures are currently in draft form.  The draft rules discussed in this post will be reviewed by the Joint Committee on Agency Rule Review (JCARR) before they are finalized and adopted by September 8, 2017.

Prospective business owners will likely face a steep entry fee before they can obtain a retail dispensary license.  The dispensary application fee alone is proposed to be $5,000.00.  The state Board of Pharmacy will then review the application.  From there,  if the applicant is able to obtain a certificate of operation, an additional fee of $70,000.00 will be due.  Every two years, the certificate of operation will have to be renewed, and the renewal fee will be another $70,000.00.  Dispensary owners will also have to pay fees for their employees.  These employee licensing fees will range from $100.00 to $500.00 per employee.

When the application process for retail dispensaries goes live, the state Board of Pharmacy will likely be inundated with applications.  To start, the state will only issue 60 dispensary licenses.  However, the draft rules leave open the possibility to issue additional licenses in the future.  After September 8, 2018, the Board of Pharmacy will essentially reevaluate the demand for additional dispensaries based on factors such as population, number of patients, and number of interested dispensary applicants.

So how does someone vying for one of those initial 60 licenses increase maximize their chances of getting their application approved?  Comprehensive planning and attention to detail will surely help.  First and foremost, an incomplete application submitted to the Board of Pharmacy will not be evaluated.  Completed applications will be scored based on various point values for each portion of the application.  Applications with the highest scores will be issued licenses.

Applicants will be required to disclose extensive information related to their proposed retail dispensary.  Basic information such as the name of the dispensary, type of business organization, physical address, and contact information for the applicant will be required.  But the application becomes more complex when applicants gather information to prove they are in compliance with local zoning ordinances and applicable state tax laws.  Additionally, a detailed financial plan is required to establish that the applicant has sufficient resources to cover all expenses and costs of the first year of operation, which the draft rules estimate to be no less than $250,000.00.

Disclosure of all owners, officers, and board members is also required.  Applicants have to make sure that they are not going into business with people who have past disqualifying criminal convictions.  The full list of disqualifying offenses can be found in section 3796:1-1-01 of the Administrative Code.  Thankfully for some, I’m sure, misdemeanor convictions for marijuana-related crimes do not constitute a disqualifying offense under this provision of the law.

One potentially controversial aspect House Bill 523 is the requirement that 15% of the dispensary licenses be issued to minority-owned and controlled businesses.  An applicant qualifies under this provision if the business has an officer or member who is African American, American Indian, Hispanic, Latino, or Asian with at least a 51% ownership interest in the company.  Some expect legal challenges are on the horizon for this provision, but for now, it stands.

The remaining information that must be addressed in the initial application includes the following:  the plan of the proposed dispensary for the care, quality, and safekeeping of medical marijuana from delivery to sale, a description of the inventory control plans for the proposed dispensary, evidence that the applicant has a plan to staff, educate, and manage the proposed dispensary on a daily basis, a proposal demonstrating how the prospective dispensary will meet the needs of patients and caregivers, a detailed description of any other services or products to be offered by the proposed dispensary, and documents related to any program to assist veterans or the indigent in obtaining medical marijuana that the proposed dispensary intends to offer.

When it comes to the location of the dispensary, the law mandates that no dispensary shall be located within 500 feet of a school, church, public library, public playground, public park, or community addiction services provider.  Unlike other states, Ohio has decided to ban delivery, meaning patients and caregivers will have to travel to the dispensary in order to obtain their medical marijuana.  Dispensaries will be able to operate between the hours of 7AM – 9PM.

You can view all 105 pages of the draft retail dispensary rules here.  But if you do not want to sift through all of this information yourself, you can call us at Jeffcott Law.  We will continue to monitor this process and provide updates as additional information is released.