Ohio seeks tighter control over medical marijuana dispensary owners

Jackie Borchardt | Cincinnati Enquirer

COLUMBUS – Ohio officials plan to rein in medical marijuana companies that change hands or promise to in the future without first obtaining state approval.

The Ohio Board of Pharmacy bars dispensary ownership changes until after a shop has been open for 12 months. The board released draft rules Thursday to clearly define what's allowed as multi-state operators and others try to enter Ohio's closed market.

The proposed rules specifically address options to acquire licenses in the future, loans and management service agreements for other companies to perform certain duties, such as payroll and marketing. The Enquirer uncovered more than 20 such arrangements among publicly traded companies in an October investigation.

The rules stipulate that any services provided have to be paid for with a flat fee. The Enquirer found one situation where the company was to be paid 90% of the dispensary's net profits.

“We have publicly traded companies in Ohio and that’s presented some challenges," Erin Reed, the pharmacy board's director of medical marijuana, told the Ohio Medical Marijuana Advisory Committee on Thursday.

The pharmacy board's interpretation of ownership changes has caused delays for several businesses. Three of Greenleaf Apothecaries' five dispensaries were on hold for five months after the pharmacy board concluded its management services agreement with Acreage Holdings was a change in ownership. Greenleaf agreed to pay a $300,000 fine to settle the dispute.

Licenses for Harvest of Ohio's dispensaries in Athens, Columbus and Dayton are still on hold, Reed said Thursday. Harvest claimed it was majority-owned by an African-American Cleveland businesswoman, which gave it an advantage under Ohio law requiring 15% of all licenses go to businesses owned by minorities.

State regulators say the business was actually owned and controlled by executives of multi-state operator Harvest Health and Recreation.

Harvest has requested a hearing to argue its case against the board's findings. Of the 56 initially licensed dispensaries, 11 still are not operational.

The Ohio Department of Commerce, which regulates medical marijuana growers and product manufacturers, does not allow ownership changes until after the business is approved to open. The agency issued guidance for ownership changes last month.

About Ohio's medical marijuana program

More than 74,700 patients have registered to buy and use medical marijuana to treat chronic pain, PTSD and other illnesses through November.

Ohio has sold $49.4 million of medical marijuana since January. Data from the Department of Commerce shows the average price has gone down to about $330 for an ounce of dried flower from about $480 an ounce in January.

Have your say on rule changes

The dispensary ownership rules are part of a larger package proposed by the pharmacy board. Public comment is being sought on the rules until Jan. 10, 2020.

Other rule changes being considered:

allowing use of non-child resistant packaging upon request,

using a standard THC! label on all products containing the intoxicating compound,

allowing former state employees receiving disability benefits through a state retirement system to obtain product discounts,

standardizing units of dried flower so the smallest container is equivalent to one day of a patient's 90-day supply.

The rules and instructions for comment can be found at https://www.medicalmarijuana.ohio.gov/Rules

The Enquirer has the largest team of journalists covering Ohio's medical marijuana program and cannabis industry. Support this work by signing up for an Enquirer subscription.