On November 7, 2023, a majority of Ohio voters approved Issue 2 to legalize the possession and use of adult-use marijuana by individuals aged 21 and over.

Ohio Issue 2, also known as the “Marijuana Legalization Initiative,” was on the ballot as an indirect initiated state statute. An indirect initiated state statute is a citizen-initiated ballot measure that amends state statute. The ballot measure was approved by voters, legalizing marijuana for adult use in Ohio. The Division of Cannabis Control (DCC) was created under the initiative and is now responsible for licensing and regulating marijuana operators in Ohio.

Ohio Issue 2 legalizes and provides for the regulation of adult-use marijuana for adults aged 21 years and older, including cultivation, processing, sale, purchase, possession, and home grow. Under the initiative, adults are allowed to possess up to 2.5 ounces of marijuana and up to 15 grams of marijuana concentrates. Additionally, individuals are allowed to cultivate up to six marijuana plants at home, while households can cultivate up to twelve plants collectively.

Types of Licenses and Acquisition Process

• Cultivator Licenses – These licenses are available in different levels, catering to various scales of operations. Applicants must provide detailed plans about their cultivation methods and adhere to environmental standards. The application fee varies depending on the scale, and there is a notable cap on the number of licenses to prevent market saturation.
• Processor Licenses – These allow the holder to convert raw cannabis into consumable forms like oils, edibles, etc. Applicants must meet health and safety standards, and the fees cover application, licensing, and regulatory costs.
• Dispensary Licenses – These licenses are required to sell cannabis products directly to consumers. Applicants must pay application and annual licensing fees and ensure compliance with local zoning laws that may affect where dispensaries can be located.
• Distributor and Delivery Licenses – Distributors handle the logistics of moving cannabis between facilities, while delivery services bring products directly to consumers. Both types of licenses require adherence to strict regulations concerning the transport and handling of cannabis.

Costs and Application Process:

• Opening a dispensary involves considerable financial planning. Initial costs include a $5,000 application fee, an $80,000 licensure fee, and an $80,000 renewal fee, with recommended starting capital around $250,000 to cover various operational expenses.
• The application process involves multiple steps, including the submission of detailed business and security plans and undergoing background checks. Prospective licensees must engage with local communities and secure appropriate real estate as part of the approval process.

Regulatory and Market Overview:

• The Ohio Division of Cannabis Control oversees the licensing process, which is expected to commence within nine months of the legislation’s passing, aiming to issue 50 new dispensary licenses and 40 cultivator licenses initially.
• The market for recreational cannabis in Ohio is projected to reach $2 billion, with significant public benefits anticipated from the imposition of a 10% sales tax on marijuana. This tax revenue is earmarked for social equity programs, highlighting the state’s commitment to supporting communities disproportionately impacted by previous marijuana laws.

Restrictions and Special Provisions:

• No entity can hold more than eight dispensary licenses or one of each license type per business entity, with specific provisions allowing for vertical integration under certain conditions.

• Home-growing is permitted, with individuals allowed to cultivate up to six plants, reflecting Ohio’s progressive stance on personal cannabis use.

This framework sets the stage for a comprehensive and controlled rollout of the recreational cannabis market in Ohio, offering numerous opportunities for entrepreneurs while ensuring consumer safety and community welfare.