Ohio medical marijuana dispensaries build businesses while preparing for full legalization
Andrew Rayburn truly began believing in medical cannabis in 2015, when an attorney friend was in hospice following a long fight with multiple myeloma. The cancer had erased much of the friend’s appetite, and led to many sleepless nights. That all changed when he tried marijuana for the first time in his life.
“He called me at the office and said he slept, woke up with an appetite, and wasn’t feeling lousy for the first time in two years,” said Rayburn. “The story brought tears to my eyes. That’s when I really dug in (to the business).”
Two years later, Rayburn launched Ohio’s first large-scale marijuana cultivator - Buckeye Relief in Eastlake. The newly minted cannabis CEO followed up the facility’s success with Amplify, a medical marijuana dispensary he opened in March 2022 on Coventry Road in Cleveland Heights.
The years involved in the preparation and licensing of two cannabis businesses has Rayburn ready for the legalization of recreational marijuana in Ohio which for now means a potential 55,000-square-foot expansion of his Eastlake cultivation and processing space.
While this next phase of legalization may not be realized until the next election cycle at the earliest, Rayburn and his fellow marijuana entrepreneurs should start planning for the eventuality now, noted Verde Compliance Partners executive director Harry Bernstein, whose Cleveland-based firm works with growers and processors on the registration of their businesses.
Bernstein’s team is composed of senior-level specialists with decades of experience navigating the complex bureaucracy around cannabis, alcohol and tobacco. The firm’s founder himself is a former general consul in the beer and wine sector, and now provides consultation, pre-qualification analysis and ongoing support for clients readying their foray into what they hope and believe will soon be legitimate recreational marketplace.
Congressional leaders on both sides of the aisle have introduced legislation to prepare the country for legalization, with proposals like the Preparing Regulators Effectively for a Post-Prohibition Adult Use Regulated Environment (PREPARE) Act modeled after existing state laws for alcohol. Ultimately, each state will likely be allowed to run their own programs, a framework that would include social equity provisions for marginalized communities disproportionately impacted by previous cannabis prohibition.
Entities marketing marijuana as a drug would also have to undergo FDA approval, just one facet of a complicated process that Bernstein said proprietors must start planning for now.
“You’ll have 20,000 state license owners (after legalization), and there will be a lot more in the next year or two that are going to need federal permits,” Bernstein said. “You don’t want to be caught in the middle of that mess. You want to be prepared and ready.”
Aware of the obstacles
Ohio has 130 licensed medical cannabis dispensaries today. The Ohio Board of Pharmacy, the government organization in charge of marijuana licensure, originally limited the number of cannabis sellers in the state to 57. That changed in April 2021 when licensing was made available for an additional 73 dispensaries, among them Rayburn’s Amplify shop in Cleveland Heights.
Amplify attracts patients diagnosed with conditions including cancer, chronic pain, fibromyalgia and Parkinson’s disease. The completely refurbished 6,000-square-foot space sells the usual array of flower, oils, gummies, distillates and vape pens. It turned four times the profit in December 2022 as it did during its first official month in operation the previous spring.
Yet, Amplify faces obstacles in the current limbo period before nationwide legal regulation. For instance, there are only a handful of banks that fund the industry. In 2023, Congress will likely reintroduce a bill that would eliminate penalties for providing financial services to legitimate cannabis sellers, said Harry Bernstein of Verde Compliance Partners.
Pending legalization, Rayburn has nascent plans to double the size of his Eastlake facility, in the meantime opening a new Amplify location in Columbus in February. Even upon legalization, Rayburn is not concerned about the Buckeye State becoming oversaturated with dispensaries in a way that would depress the overall market.
“From the Ohio projections I’ve looked at, there is plenty of capability here to launch adult use,” said Rayburn. “To grow the market would require some of these companies to expand their facilities, like what we’re doing.”
The road ahead
At the start of 2023, cannabis supporters are keeping watch on both the national and local regulation landscape. Ohio lawmakers have until May 3 to approve a grassroots recreational legalization proposal from the citizen-led Coalition to Regulate Marijuana Like Alcohol.
The referendum, taken off the November 2022 due to a technicality around the timeliness of signatures, was reintroduced on January 3 by Ohio Secretary of State Frank LaRose. If the Republican Statehouse supermajority does not adopt the measure in four months, the question could then come before Ohio voters this November.
As the coalition’s proposal has little chance of passing, it would be up to voters to bring legal cannabis to the state, said Bernstein of Verde. However, the Cleveland attorney is not convinced residents are ready to give adult-use weed free reign. In 2015, voters soundly rejected an attempt to legalize marijuana by constitutional amendment. Although in that case, Bernstein believes Ohioans had more concern about monopoly control by investor groups than enactment of looser laws.
Smartly regulated legalization that would cap who and where cannabis can be sold is likely Ohio’s clearest path to success, he added.
“Nobody wants to turn on all the faucets and sell it everywhere,” said Bernstein. “But I think you can have something done in Ohio. If Ohio doesn’t have something in place and the federal government does it first, then the state will be left at the door.”
All local medical cannabis businesses can do in the interim is wait and prepare. Cleveland-based Ariane Kirkpatrick owns three marijuana dispensaries in southern Ohio – Columbus, Athens and Beavercreek. Kirkpatrick is also proud to be the state’s first Black, female majority owner of a vertically integrated cannabis company, meaning she runs all stages of the supply chain from seed to retail sale.
Kirkpatrick’s distinctive business model encompasses a diverse workforce where half of her 100 employees are women or people of color. She is also heartened by the Biden administration’s October 2022 announcement that it would grant pardons for simple federal marijuana possession convictions. When adult-use regulation does arrive with legalization, Kirkpatrick expects cannabis to be treated like alcohol, where individual states are given power over sale and distribution.
“Just because something becomes legal, it doesn’t mean you strip away all regulations,” said Kirkpatrick. “Regulation isn’t always a bad thing – it’s important for the safety of the product. That’s the message we’re trying to get out.”
Education is the watchword in the run-up to recreational legalization, Kirkpatrick added. Team members already studying the medical attributes of marijuana are looking to a day when people can imbibe the drug as a legal replacement for dangerous opiates.
Additionally, any legislation would likely grandfather in existing state-licensed operators like Harvest of Ohio, ideally ensuring patient access while incentivizing participation in the legal market. Although Kirkpatrick is not overly concerned about a flooded dispensary environment, she does not want a shop on every corner.
“Once we’ve regulated, let’s look at examples of what we don’t want in our area, like when you see check cashing places or beverage stores everywhere,” Kirkpatrick said. “When you oversaturate with too much of anything, you have a problem.”
Most Ohio medical marijuana patients live within 30 minutes or less of a dispensary, noted Bernstein. A tricky balance that Bernstein hopes keeps the industry and consumers healthy while weeding out “bad actors.”
“Expand the number of licenses, make more reasonable taxes, and you’ll wear down that black market,” Bernstein said. “In two to five years, you will see a reasonable amount of dispensaries, where people are able to buy what they need and use it in the privacy of their own home.”