Licensing Blog

Issue 2: Ohio’s Recreational Marijuana Legalization Ballot Initiative

Issue 2: Ohio’s Recreational Marijuana Legalization Ballot Initiative

On August 16th, 2023, the Ohio Secretary of State, Frank LaRose, announced that Issue 2 – “An Act to Control and Regulate Adult Use Cannabis” – received enough signatures from all eighty-eight (88) counties to be placed on the November 2023 ballot. If the majority of the voters vote “yes” in November, Ohio will become the 24th state to legalize adult-use of marijuana. Let’s  delve into what Issue 2 would do for the “Buckeye State”:

What would Issue 2 do?

Issue 2 would legalize recreational marijuana for adults twenty-one (21) years and older in addition to their current medical marijuana program, as well as regulate the cultivation, processing, sale, purchase, possession, and home growth for the new adult-use market. If approved, adults will be able to possess up to 2.5 ounces of marijuana and up to fifteen (15) grams of marijuana concentrates. Further, individuals will also be able to cultivate up to six (6) marijuana plants at home, while households will be able to cultivate up to twelve (12) plants collectively.

Under Issue 2, regular state and local sales tax will still apply, as well as a 10% cannabis tax rate on adult-use sales that will be used for various programs and department costs. 36% of the cannabis tax revenue will be provided to social equity and jobs programs, which has the potential to generate an estimated $150 million or more annually for such programs. An additional 36% of the cannabis tax revenue will be utilized for funding dispensary host communities, making this one of the largest contributions to communities in Ohio’s history as it has the potential to generate $150+ million annually. Further, 25% of the cannabis tax revenue will be provided to research and treat substance abuse in Ohio, one of the leading causes of death in Ohio, as it has the potential of generating $104+ million for addiction treatment and education. Lastly, the remaining 3% of the cannabis tax revenue will be used to fund administrative and regulatory costs for the overseeing agency.

Unlike Ohio’s Medical Marijuana Control Program (“MMCP”), Issue 2 creates one (1) overseeing agency within the Ohio Department of Commerce that will be responsible for the regulating and licensing of marijuana operators and facilities – the Division of Cannabis Control. This will help standardize the regulatory framework for all marijuana businesses and production in Ohio’s new adult-use market in contrast to the MMCP, which is overseen by three (3) state agencies.

Who is leading the campaign surrounding Issue 2?

The Coalition to Regulate Marijuana Like Alcohol (“CRMLA”) is the lead sponsor of Issue 2 as their purpose is to “[fix] a broken system while ensuring local control, keeping marijuana out of the hands of children, and benefitting everyone,” just like the state does for alcohol. CRMLA’s top donor is Marijuana Policy Project, who has contributed over $2.52 million of the reported $4.62 million in contributions.

What would the new adult-use market in Ohio look like?

If Issue 2 passes and Chapter 3780 is enacted, there will be numerous licenses interested individuals and groups can apply for such as: (i) Cultivator (Level I, II, & III); (ii) Processor; (iii) Dispensary; and (iv) Testing Laboratory. Upon Chapter 3780’s enactment, the Division of Cannabis Control will have nine (9) months to issue the above licenses.

An applicant for a Level I Cultivator license will receive one (1) license for the current location of their cultivation facility, as well as three (3) Dispensary licenses at locations designated on their application; whereas, a Level II Cultivator applicant will only receive one (1) Dispensary license. Further, applicants who have been certified as cannabis social equity and jobs programs participants under the Cannabis Social Equity and Jobs Program will be given preference to the forty (40) permitted Level III Cultivator licenses. In addition, fifty (50) additional Dispensary licenses will be available to applicants who have been certified as cannabis social equity and jobs programs participants under the Cannabis Social Equity and Jobs Program.

Pursuant to Chapter 3780, initial applications for adult-use cannabis business licenses will be made available within six (6) months of the law’s enactment. Generally, applicants will have to have their owners, managers, and employees pass criminal background checks, demonstrate that they do not share common ownership, officers/employees, or compensation arrangements with adult-use testing laboratory applicants, not be located within 500 ft. of a “prohibited facility,” and meet all additional eligibility requirements established by the Division of Cannabis Control.

Is there any opposition to Issue 2?

Since Issue 2 proposes a law, rather than a constitutional amendment, the General Assembly could obstruct legalization even if the majority of Ohio voters vote in favor of it. Mainly, Ohio Republican lawmakers are divided on the effort to legalize marijuana for recreational use as some side with Governor Mike DeWine’s anti-marijuana position that legalization will only tell children that the use of drugs are okay, as well as not prevent the illegal sales of marijuana in the Buckeye State. Many supporters in the state legislature, like Representative Jamie Callender, are concerned that even if Issue 2 passes, Ohioans will still be prevented from accessing recreational marijuana as “[t]here are a number of legislators who have publicly commented that they will block marijuana in any way they can and that could possibly mean overturning the will of the voters.”

Time will only tell what Ohio’s next steps at legalization are; however, for those who are in support of the adult-use of marijuana in Ohio, now is the time to set your calendar for November 7th, 2023, to vote “Yes” on Issue 2.

If you are interested in entering Ohio’s $1.3 Billion dollar marijuana market, contact us today to discuss your options!