Ohio bill to overhaul medical marijuana program could kill industry, critics warn

COLUMBUS, Ohio (WCMH) – Growers, processors and sellers of Ohio’s medical marijuana sounded the alarm Tuesday about lawmakers’ approach to keeping the drug’s industry afloat.

Amid a medical marijuana program that’s hindered by a surplus of product and a dwindling patient population, Sens. Stephen Huffman (R-Tipp City) and Kirk Schuring (R-Canton) revived in January a proposal to reverse the 6-year-old program’s troubling tide. But critics – including one of the first Ohioans to earn a medical marijuana license – said it could destroy the already oversaturated market.

“It’s about economics 101. It’s supply and demand,” said Matt Close, executive director of the Ohio Medical Cannabis Industry Association. “And this is simply a massive marijuana expansion bill.”

Senate Bill 9 would expand who’s eligible for a medical marijuana recommendation, increase the number of dispensaries and give cultivators more square footage to grow the plant. It would create the Division of Marijuana Control (DMC), a new state agency under the Department of Commerce, to lead the program – transferring current authority from three state agencies, including the State Board of Pharmacy.

Huffman, who is also a doctor, helped spearhead the state’s medical marijuana infrastructure when voters legalized the drug in 2016. Since then, lawmakers and industry leaders alike have learned more about the ins and outs of the market, making SB 9 a good opportunity to fine-tune the current laws on the books.

“In 2016, we didn’t know what we didn’t know,” Huffman said. “We made this bill (with) a lot of safeguards, and a lot of those safeguards is costing the business, the industry money.”

There are more than 338,000 patients registered with the medical marijuana program, but only half of them are actively using their card, according to Feb. 21 data from the Ohio Medical Marijuana Control Program. That could be a sign, Schuring said, that Ohioans are traveling to Michigan or tapping into the black market for the product.

To recruit more patients, SB 9 requires the Division of Marijuana Control to aim to have 1,000 patients per dispensary, facilitating more dispensary locations across the state. Once the total number of registered patients hits 300,000 – which Ohio has already surpassed – the DMC can add additional dispensaries on an as-needed basis.

“There’ll be more dispensaries, better access, and more product, lower prices. We think that should be good for Ohio, particularly as some others would like to go to the ballot now," Schuring said, citing an advocacy group's efforts to fully legalize marijuana via the November ballot.

Close, however, whose organization represents more than 70 medical marijuana license-holders in Ohio, said the dispensary-patient ratio proposed in SB 9 is unsustainable. There are 66 dispensaries in Ohio and more than 163,000 active patients – meaning each dispensary has about 2,500 patients – yet they still struggle to stay open, he said.

When Larry Pegram won a Level 1 cultivator license at the onset of Ohio’s medical marijuana program, he told lawmakers he spent $200,000 for the application alone and another $5 million to get his Springfield-based Pure Ohio Wellness up and running. 

Today, Pegram said he has nearly $20 million in debt. That could be exacerbated by SB 9’s provisions that let too many cooks – in this case dispensaries – into the kitchen, he said. As a cultivator license-holder, Pegram would be eligible for two additional dispensary licenses under SB 9 – an enticing yet unfeasible offer.

“I would love two more dispensaries. We have two now, I would love two more,” he said. “But I say no to this, and that should tell you how much I believe in not oversaturating this market with a dispensary on every corner.”

“If my business fails, I lose everything,” he said.

More Ohioans would qualify for a medical marijuana recommendation under SB 9, too. The bill adds migraines, autism, spasticity or chronic muscle spasms, hospice care or terminal illness, and opioid use disorder to the list of qualifying conditions. Doctors can also recommend it for “debilitating” conditions as they see fit.

SB 9 would also:

• Create a 13-member Medical Marijuana Oversight Commission to oversee the DMC
• Allow dispensaries to advertise on social media without prior approval from the DMC
• Prohibits dispensaries from opening within one mile of each other
• Establishes a merit-based system for awarding dispensary licenses as opposed to a lottery system

“To me, this bill is about business,” Huffman said. “In medicine, the number one thing is to keep your patient’s best interest in mind, and that is what this bill does.”