How legal marijuana could affect Ohio’s medical dispensaries

COLUMBUS, Ohio (WCMH) – Ohio’s medical marijuana industry has too much pot and not enough patients to consume it.

And, as an effort to fully legalize the drug inches closer to making its way onto the November ballot, the already-oversaturated medical marijuana market in the Buckeye State could encounter another problem: cannabis competition.

“Since adult-use has been legal in Michigan, we’ve seen hundreds of thousands of people leave the medical marijuana program and stop renewing their cards, simply because their needs are being satisfied by the legal market,” said Rick Thompson, the head of Michigan’s chapter of the National Organization to Reform Marijuana Laws.

The Ohio Coalition to Regulate Marijuana Like Alcohol has its sights set on placing the cannabis question on the November ballot, and if it succeeds, the state’s medical marijuana patients might see a rift in the industry.

“We want to make sure we have the best program possible to sustain current licensees –  the cultivators, the processors, and the dispensaries – and not a market that cannibalizes itself,” said Matt Close, executive director of the Ohio Medical Cannabis Industry Association.

Adult-use vs. medical marijuana: Can the markets coexist?

Since Michigan became the first Midwestern state to legalize both medical and adult-use marijuana in 2018, Thompson said retailers with medical-only licenses have struggled to retain customers in the face of adult-use dispensaries that don’t require a doctor’s recommendation.

“Right now, the product offering is identical between both medical and adult-use industries, so the people that have been seeking relief no longer need a card in order to obtain that,” Thompson said.

More than 268,000 patients were enrolled in Michigan’s medicinal program in December 2019; three years later, that number fell to 180,000, according to data from the Michigan Marijuana Regulatory Agency.

With a dwindling consumer base comes dwindling profits, forcing many of Michigan’s medical licensees to bite the bullet and apply for an adult-use license to keep their heads above water, Thompson said.

Close, whose organization represents about 30 medical marijuana licensees across Ohio, said the emergence of legal adult-use weed could push the OMCIA’s members to do the same.

“If they didn’t, they were probably going to go out of business,” he said.

But under the initiated statute proposed by the coalition – if it’s adopted by lawmakers or Ohio voters – protections exist for current medical marijuana license holders in the state, according to Jana Hrdinova, administrative director of the Drug Enforcement and Policy Center at Ohio State University’s Moritz College of Law.

Medical licensees who are already up and running are eligible for preferential licenses under the proposed statute, “allowing them a first mover advantage in many ways,” Hrdinova said in an email. Giving medical marijuana retailers the leg up is only fair, Close said, as many of them took years to get their facilities – some costing upwards of $1 million – up and running.

“These guys and ladies have created a roadmap for the state in terms of how to cultivate, how to process medical marijuana, cannabis in general, so they've created the roadmap, and I think it would only make sense,” Close said.

But at the same time, the coalition’s proposed ballot initiative does not cap the number of licenses that can be awarded, which “could result in the lowering of cannabis prices as the market matures,” Hrdinova said.

The proposed initiative would also levy a 10% tax on the sale of adult-use marijuana – another provision that could entice Ohioans to stick with the medical program, Hrdinova said, though that cost could be offset by fees required to obtain a medical card.

What legal marijuana could mean for those with medical needs

For 24-year-old Cole Wallis, the decision to get a medical card in 2020 was largely a no-brainer, he said. It helps him cope with depression and post-traumatic stress disorder, and he feels safer consuming doctor-recommended cannabis as opposed to cannabis sold on the street.

Wallis, of Columbus, is also the marketing coordinator at Buckeye Relief, a Cleveland-based marijuana cultivator and processor. He said he’ll still continue to pay the $50 annual fee for his medical card even if adult-use becomes legal in Ohio.

“When I looked at these (medical) menus that had all types of info about how much THC, sometimes terpenes … I finally have access to information, and seeing strains I’m familiar with but knowing it's a high quality – that was the biggest motivator,” he said.

Owning a physical card to document to prove he's allowed to possess and use the drug, Wallis said, is another reason he's drawn to the medical marijuana route. But, if adult-use is ultimately legalized, he said he hopes the state can employ a balance between both markets to tailor to Ohioans' unique needs.

“My hope for us and our brand would be that we still can offer medical products to medical patients at medical prices, and we can offer recreational cannabis for recreational users at recreational prices,” Wallis said.