Why do Ohio’s medical marijuana companies have such strict ownership rules?


Patrick Cooley - The Columbus Dispatch (TNS)



Selling a medical-marijuana cultivation, dispensary or processing license in Ohio isn’t as simple as exchanging the keys for a check. Owners must check a series of boxes before they can sell a license, and Greenleaf Apothecaries was accused earlier this summer of skirting the state’s strict rules.

Officials and industry representatives say the regulations are intended to keep the system honest, fair and consistent.

First, a dispensary license holder can’t sell that license until the dispensary has been open for at least a year.

Greenleaf, which has opened two dispensaries and has three more in the works, is accused of violating that rule. Ohio alleges that the company secretly sold its operation to the New York City-based Acreage Holdings. Greenleaf has denied doing so.

Another company, Harvest of Ohio, is accused of lying about its minority ownership. Harvest, which is in the process of opening a Clintonville dispensary, says the issue is a misunderstanding.

Both accusations are part of a wide-ranging investigation into medical marijuana ownership in Ohio, and both companies stand to lose their licenses if the state decides they acted improperly.

When other states started their medical marijuana programs, “people were submitting these great applications, and they would get their provisional licenses, and they would sell them,” said Cameron McNamee, director of policy and communications for the Ohio Board of Pharmacy, which licenses medical marijuana dispensaries.

Ohio officials wanted to prevent that from happening here, McNamee said.

Secondly, anyone seeking to buy a medical marijuana license in Ohio must go through the same criminal-background and credit checks as the original applicant.

“The state is interested in making sure licenses are owned and controlled by quality operators,” said Thomas Rosenberger, associate director of the Ohio Medical Cannabis Cultivators Association. “The regulators won’t approve a sale to just anyone. They want to make sure that the folks who are purchasing the entity are still following the rules.”

Lastly, medical marijuana businesses are entitled to sell only an operating license, which permits a company to open a dispensary, cultivator and processor. They can’t sell the provisional license, which permits them to set up shop.

An operating license is awarded after state inspectors determine that the company lived up to the promises in its application.

“When you apply for something, you need to deliver on what you say you’re going to do,” said Kelly Whitaker, public information officer for the Ohio Department of Commerce, which oversees medical marijuana cultivators and processors.

“You can’t just pass the ball to somebody else when you’re getting something up and running.”

A hearing on Greenleaf’s case is scheduled for Sept. 16. The company stands to lose all its licenses if the pharmacy board rules against it.

The company, which has opened dispensaries in Canton and Wickliffe that operate under the name The Botanist, has asked Franklin County Municipal Court to compel the pharmacy board to grant an operating license for its Cleveland dispensary, which has passed an inspection. The board declined to grant that license during its probe into Greenleaf’s ownership.

Greenleaf argued that passing the inspection entitles the dispensary to open; the pharmacy board argued that the inspection is only one part of the process. A Cleveland judge sided with Greenleaf, although the pharmacy board has appealed that ruling.

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Patrick Cooley

The Columbus Dispatch (TNS)

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