Ohio voters have spoken. In a statewide referendum, 57% of Ohio voters approved the legalization of adult-use cannabis production and sales, making Ohio the 24th state to greenlight an adult-use market. As the nation nears the tipping point for state legalization of adult-use cannabis, Ohio will now embark on the sometimes painstaking process of developing a regulatory framework for the nascent industry. To comply with the requirements of the state’s new adult-use cannabis law – which takes effect on December 7, 2023 – the newly-established Division of Cannabis Control (“DCC”) must promulgate rules addressing subjects such as product labeling, product tracking, product testing, advertising, facility security, inventory control and standards for delivery and online ordering. 

Pursuant to the state’s new cannabis law, Ohio’s adult-use program will:

• Allow for multiple forms of adult-use cannabis including plant material and seeds, live plants, clones, extracts, drops, lozenges, oils, tinctures, edibles, patches, smoking or combustible product, vaporization of product, beverages, pills, capsules, suppositories, oral pouches, oral strips, oral and topical sprays, salves, lotions or similar cosmetic products, and inhalers.
• Allow municipalities to, with some exceptions, adopt an ordinance to prohibit, or limit the number of adult-use cannabis operators within the municipality.
• Establish THC content limits for adult-use cannabis, but also grant discretion to the DCC to increase or eliminate such limits.

A critical aspect of the work that lies ahead of the DCC is developing a license application and evaluation process for operators interested in participating in the state’s adult-use market. By law, the DCC must develop and publish those application materials by within six months of the effective date of the new adult-use cannabis law (i.e., June 7, 2024) and must begin issuing licenses within nine months of the effective date of the law (i.e., September 7, 2024). The DCC will accept applications for, and, ultimately, issue, four types of adult-use operator licenses: adult-use cultivator, adult-use processor, adult-use dispensary, and adult-use testing laboratories. License application standards will require that:

• All applicants pass a criminal background check;
• Applicants do not have ownership of or a compensation arrangement with other license holders or applicants and do not share corporate offices with other license holders or applicants;
• Proposed facilities are not located within 500 feet of prohibited facilities (church, public library, public playground, public park, or school);
• Applicants demonstrate compliance with tax laws; and
• Applicants meet any additional eligibility conditions established by the DCC.

Licensees holding a certificate of operation under the state’s medical marijuana program on or before December 7, 2023 will receive, as of right, one or more adult-use licenses as follows:

• Each medical marijuana cultivator, processor, and testing laboratory will receive an adult-use cannabis cultivation, processing, and testing license, respectively.  
• Each medical marijuana level I cultivator will receive three adult-use dispensary licenses, while current medical marijuana level II cultivators will receive one adult-use dispensary license. 
• Each medical marijuana dispensary will receive an adult-use cannabis dispensary license, and each medical marijuana dispensary that is not commonly owned or controlled by a cultivator or processor will receive an additional adult-use cannabis dispensary license. Moreover, medical marijuana dispensaries that are provisionally licensed as of December 7, 2023 will have until December 7, 2025 to obtain a certificate of operation and, with it, the attendant right to an adult-use cannabis dispensary license.

In addition to issuing adult-use licenses to existing medical licensees as set forth above, the DCC will also issue:

• Up to 40 level III adult-use cultivator licenses; and 
• Up to 50 adult-use dispensary licenses.

However, note that in issuing such dispensary and level III cultivator licenses, the DCC is required to give “licensing preference” to applicants certified under the Cannabis Social Equity and Jobs Program, which is a program designed to provide financial assistance and license application support to certified individuals. Applicants can demonstrate eligibility for the program based on several factors including social disadvantages based on membership in a racial or ethnic minority group, disability status, gender, and/or long-term residence in an area of high unemployment. The new adult-use marijuana law does not specifically prescribe how the DCC must administer this preference. We would expect that the rules to be promulgated by the DCC will provide additional clarity on how the social equity licensing preference will work in practice.

Finally, beginning two years following the issuance of these initial adult-use licenses, the DCC will have discretion to authorize additional cultivator, processor and dispensary licenses based on consideration of certain market factors. The DCC may authorize additional adult-use testing laboratory licenses at any time. 

We will continue to monitor the DCC’s progress in drafting and promulgating adult-use cannabis regulations and will be sure to update this blog with additional information on license application timelines and requirements as they become available.