First Crop of Medical Marijuana Dealers See Green, but Face Hurdles

On Friday, the state will stop accepting applications for its first crop of medical marijuana dispensary licenses. Industry insiders expect hundreds to apply, but the Ohio Board of Pharmacy will only issue 60 licenses.

"It's a very hot market," said Thomas Rosenberger, executive director of the National Cannabis Industry Association's recently formed Ohio chapter. Up to 18 dispensaries in Northeast Ohio—will get in on the ground floor of what is expected to be a $300-400 million per year industry.

But before they can rake in the green, would-be weed-dispensers must clear some major hurdles including bureaucratic and financial requirements, logistical challenges, and legal risks.

"The application process is pretty thorough," Rosenberger said. On top of a $5,000 fee, applicants must submit a detailed business plan, floor layouts, and security protocols. Key employees must undergo a background check. And applicants must have access to at least $250,000 in liquid capital so that if they are selected, they have the funds to get their operation up and running.

Finding the perfect location, or rather, any location, is another a challenge for applicants, said Kevin Murphy, an attorney at Walter Haverfield, who advises clients on the legal aspects of the medical marijuana business. Unlike a marijuana growhouse, which can be located in remote industrial areas, "[a dispensary] is a retail outlet and you need patients and customers to have access,” he said.

But that’s harder than it sounds, said Murphy, because the state prohibits dispensaries from locating within 500 feet of a school, church, public library, playground, park or addiction treatment center. In Cleveland, those restrictions narrow the amount of usable retail space to about 5 percent of the city’s total, said Murphy.

"The best locations in densely populated areas with a lot of traffic are hard to find," he said. And when they're found, "you have multiple parties bidding on the same site."

Applicants also need to show that they have gotten the greenlight from the municipalities where they hope to locate.

Of course, even with the increasing acceptance of medical marijuana nationwide, there is the consumption, cultivation, and sale of marijuana remains illegal under federal law. "So, there is some risk your business could be shut down if there's a federal crackdown," Murphy said.

Under the Obama administration, the U.S. Justice Department took a hands-off approach to marijuana. And while President Trump's attorney general, Jeff Sessions, has previously railed against marijuana legalization, the Obama-era policy has largely continued. Ohio was the 26th state to legalize medical marijuana. It is currently legal in 29 states, the District of Columbia, Guam and Puerto Rico, according to the National Conference of State Legislatures.

It’s just a matter of time, Murphy said, before medical marijuana is legalized nationwide. “I think we’ve reached a tipping point.”