Remember when a group of marijuana proponents tried to establish a marijuana monopoly in Ohio using Buddie the mascot? Well, this time around, the Ohio legislature took control of things and Ohio’s new medical marijuana program isn’t going to look anything like Issue 3. In case you missed it, on Wednesday of last week, Ohio joined a growing number of states (now 25/26) that permit qualified patients to access cannabis for medical use when Governor John Kasich signed House Bill 523 into law.

The new law, which creates the Medical Marijuana Control Program (MMCP) and includes an impressive list of qualifying medical conditions, takes effect in 90 days, but the commercial licensing side of things doesn’t have to be up running (and probably won’t be) before two years from the effective date of the law. Right now, the law doesn’t provide for any tied house rules, but only licensed dispensaries will be selling MMJ to qualifying patients and their caregivers (where, in contrast, cultivators and processors will sell cannabis only to retailers). And there’s no mention of any MMJ entities having to be non-profit or that the owners of all of these entities must all be residents (with a narrow exception discussed below).

In addition, Ohio is going to strictly control both the forms of marijuana that can be administered to patients and how patients can consume that cannabis. Specifically, the new law states that “only the following forms of medical marijuana may be dispensed . . . oils; Tinctures; Plant material; Edibles; Patches; and any other form approved by the state board of pharmacy . . .” Regarding patient use of cannabis for medical reasons, “the smoking or combustion of medical marijuana is prohibited. The vaporization of medical marijuana is permitted; The state board of pharmacy may approve additional methods of using medical marijuana, other than smoking or combustion . . . [and] any form or method that is considered attractive to children, as specified in rules adopted by the board, is prohibited.” Lastly, “plant material” (which is currently undefined) can only contain THC up to 35%, and extracts can only have up to 70% THC content.

And in case you’re interested in pursuing a cultivation, processing, or dispensary license in Ohio under its relatively limited MMJ regime, here are some highlights from House Bill 523:

Cities and counties are free both to regulate and ban MMJ businesses. There are state buffer requirements. No licensee can be within 500 feet of “a school, church, public library, public playground, or public park.” The MMCP is going to be a part of the state’s department of commerce, and the MMCP is going to oversee licensing of testing facilities, cultivators, and processors. The state board of pharmacy is going to be in charge of licensing retail dispensaries, as well as registering patients and their caregivers. Both the MMCP and the board of pharmacy are going to “administer the program.” The state medical board will oversee physician recommendations of MMJ. The department of commerce is tasked with setting the usual rules associated with testing, growing and processing cannabis for medical use, which means everything from licensing standards and procedures and application fees to generating the criminal offenses that prevent an applicant from obtaining a license and deciding the number of licenses to be allowed. The board of pharmacy must also establish the same rules for retail dispensaries. The board of pharmacy will also have a medical marijuana advisory committee which shall consist of the following individuals (some of whom will be appointed by the Governor and the remainder of whom shall be chosen by various members of the legislature): “Two members who are practicing pharmacists, at least one of whom supports the use of marijuana for medical purposes and at least one of whom is a member of the board of pharmacy; Two members who are practicing physicians, at least one of whom supports the use of marijuana for medical purposes and at least one of whom is a member of the state medical board; A member who represents local law enforcement; A member who represents employers; A member who represents labor; A member who represents persons involved in mental health treatment; A member who is a nurse; A member who represents caregivers; A member who represents patients; A member who represents agriculture; A member who represents persons involved in the treatment of alcohol and drug addiction; and a member who engages in academic research.” The committee must be appointed within 30 days of the bill’s passage, and it will be dissolved in 5 years and 30 days. The department and the board of pharmacy will not issue less than 15% of available cultivator, processor, laboratory, or retail licenses to entities “owned and controlled” by United States citizens who are residents of Ohio and who “are members of one of the following economically disadvantaged groups: Blacks or African Americans, American Indians, Hispanics or Latinos, and Asians.” And if no applications or an insufficient number of applications are submitted by such entities, the licenses will issue in accordance with department rules. “Owned and controlled” means “at least fifty-one percent of the business, including corporate stock if a corporation, is owned by persons who belong to one or more of the [foregoing groups], and those owners have control over the management and day-to-day operations of the business and an interest in the capital, assets, and profits and losses of the business proportionate to their percentage of ownership.” Financial institutions that provide banking services to MMJ licensees won’t face any state prosecution for doing so, which was pretty much a foregone conclusion anyway with the release of the 2014 FinCEN guidelines.

Ohio’s MMJ program is looking like it will be as restrictive and as competitive as any we’ve seen in other states (New York and Minnesota come to mind). Especially given that the board of pharmacy is going to be calling many of the shots at the retail level. A common trajectory in states that pass MMJ laws post 2013 Cole Memo is to begin with a highly restrictive, low-THC program that eventually morphs into a more comprehensive and reasonably accessible medical marijuana regime. So, count this as just the beginning for Ohio MMJ.

Hilary Bricken is an attorney at Harris Moure, PLLC in Seattle and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at hilary@harrismoure.com.