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Ohio’s Journey: From Medical to Recreational Cannabis Sales

26 June 2024 / Category: Blog

Ohio is moving from a medical marijuana market to one that includes recreational sales. However, the state’s approach differs from others, with uncertainties about the start date for sales and a unique priority for licensing.

Uncertainty Around the Start Date

Application Window Opened

The application window to convert medical marijuana business licenses to dual-use permits opened on June 7. Despite this, the exact date when recreational sales will begin remains unknown.

Approval Timeline

Some industry sources suggest that Ohio’s first dual licenses could be approved within the next few weeks. However, state regulators have not committed to a specific timeline.

Licensing Priorities

Focus on Supply Chain

In a notable departure from other states, Ohio is prioritizing approvals for cultivators, processors, and testing laboratories over retailers. Jamie Crawford, spokesperson for the Ohio Department of Commerce’s Division of Cannabis Control (DCC), emphasized the need to ensure an efficient supply chain.

Rolling Approval Process

Marijuana operators and consumers can expect a rolling approval process, with approvals completed in batches based on when applications are received and if licensees meet all requirements for certificates of operation. These requirements include potential inspections and point-of-sale integrations to differentiate between medical and recreational sales for state tracking purposes.

No Single Start Day

“There will be no one singular day when sales begin,” Crawford confirmed, indicating a phased approach to launching recreational sales.

Economic Potential

Projections for Market Growth

Once fully operational, Ohio’s recreational cannabis market could see sales exceed $1 billion by 2025 and reach $1.5 billion to $2 billion by the end of 2027. Ohio’s large population and strategic location are expected to attract many new consumers to its recreational cannabis market.

Demographic Advantage

With nearly 12 million residents, Ohio is the seventh-most populous state in the U.S., and about three-quarters of Ohioans are over 21. Additionally, Ohio borders five states, with only Michigan having a regulated adult-use market.

State Comparisons and Legislative Context

Midwest Holdouts

In the Midwest, Indiana and Wisconsin remain without any marijuana program, while Iowa’s limited medical marijuana market is very restrictive. Minnesota is working on rules for recreational marijuana business licenses expected next year.

Recent State Approvals

Ohio will be the 21st state to establish an adult-use program, following Maryland’s launch in July and Missouri’s debut in February 2023.

Medical Market Decline

Patient and Sales Trends

Ohio’s medical marijuana market has been losing registered patients, with a recent count of 165,746 patients, down nearly 15,000 since the November election. Comparatively, Pennsylvania, with a similar population size, has seen an increase in patients.

Cross-Border Purchases

Ohio’s proximity to Michigan, where marijuana is cheaper, has likely contributed to the decline in Ohio’s patient counts. Ohioans reportedly spent over $700 million at Michigan marijuana stores last year.

Industry Reactions and Preparations

Licensing and Market Preparations

Most operators are expected to apply for dual-use licenses. As of the latest data, Ohio has 132 dispensaries, 37 cultivators and processors, and 10 testing labs.

Operational Adjustments

Companies like Curaleaf Holdings and Acreage Holdings are expanding their operations and hiring additional staff to meet the anticipated demand. These preparations include increasing cultivation capacity and extending retail hours.

Upcoming Challenges

Regulatory Requirements

The deadline for issuing converted marijuana business licenses is September 7. Until then, recreational sales must comply with the state’s medical marijuana standards, which include restrictions on certain products and delivery services.

Enhancing Retail Experience

Businesses like Ethos Cannabis are improving their retail spaces and customer experience in preparation for the recreational market. This includes website redesigns, touch screens in stores, and loyalty programs.

Conclusion

Ohio’s transition to a recreational cannabis market is marked by unique challenges and opportunities. With significant economic potential and strategic preparations by industry players, the state is poised to become a major player in the U.S. cannabis market.

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Sources

  1. Ohio Department of Commerce: Division of Cannabis Control
  2. State Health Departments: Pennsylvania Medical Marijuana Program
  3. Curaleaf Holdings: Company Website
  4. Acreage Holdings: Company Website
  5. Ethos Cannabis: Company Website