O-High-O? The Buckeye State May Legalize Marijuana This Year

Ohio and Legalizing MarijuanaThough all four states with all-out marijuana legalization (Colorado, Washington, Oregon, and Alaska, and even the District of Columbia) began first by legalizing medical marijuana, it is looking like Ohio may go straight for recreational legalization out of the gate. The Buckeye state may see marijuana legalization on its voter ballots this fall — or even before that should its legislature take action. Just this month, the Ohio Ballot Board certified ResponsibleOhio‘s marijuana ballot initiative, one of the first steps in the process of placing its proposed constitutional amendment before Ohio voters this November.

According to the Ohio Secretary of State, ResponsibleOhio must now collect 305,591 valid signatures by July 1, 2015 to get its marijuana legalization proposal on the ballot for the General Election. Those signatures must be gathered from at least 44 of Ohio’s 88 counties, and in each of those 44 counties, the total gathered must amount to 5 percent of the 2014 gubernatorial vote locally. Though that is a lot of signatures, ResponsibleOhio has already raised $36 million for its legalization campaign.

Ohio’s initiative is different from anything we have seen thus far. First, the initiative would legalize marijuana for both recreational and medicinal use all in one shot. Second, it would allow only ten cultivation facilities to produce all of the cannabis for the entire state, and those facilities would be run exclusively by certain investor groups in ResponsibleOhio. Some of these investor groups allegedly are already purchasing Ohio properties for their grow sites. Language in the initiative mandates that cultivation and processing licenses would issue to the ten owners of certain established, identified tax parcels in the counties of Butler, Clermont, Franklin, Hamilton, Licking, Lorain, Lucas, Delaware, Stark, and Summit. This radically contrasts with Colorado and Washington, both of which have have free-market marijuana economies, especially when it comes to cultivation.

The monopolization (or more accurately the cartel-ization) of cultivation by these ten groups is drawing heat from industry insiders and activists, as it should. Who exactly are the backers of ResponsibleOhio? The organization has so far revealed a dozen investors, former NBA basketball all-star Oscar Robertson, former Cleveland Browns player Frostee Rucker, and fashion designer Nanette Lepore, a Youngstown native. The Drug Policy Alliance (DPA), the San Francisco Gate Newspaper, and even Ethan Nadelmann of the DPA are not huge fans of the ResponsibleOhio initiative. A DPA spokesperson calls it “pure and simple greed.” SF Gate calls ResponsibleOhio the legal equivalent of a group of drug cartels. And Nadelmann was quoted as saying, “this thing sticks in my craw. Ten business interests are going to dominate this thing?”

Aside from the controversy over the ten grow sites, other important highlights of the initiative are as follows:

1. The establishment of a seven-person Ohio Marijuana Control Commission to oversee licensing and regulation of marijuana business entities.

2. The establishment of Marijuana Growth, Cultivation, and Extraction (“MGCE”) facilities and Marijuana Product Manufacturing (“MPM”) facilities. The MPMs can produce marijuana-infused and medical marijuana-infused products but only if such products are made with raw materials cultivated and/or manufactured at the ten state regulated and licensed MGCE facilities. The MPM licenses, apparently, are not required to be operated by the ten MGCEs.

3. The establishment of not-for-profit medical marijuana dispensaries (MMDs) that would serve qualifying patients and the establishment of for-profit retail marijuana stores (RMS) to sell limited amounts of cannabis to adults 21 and over. The Commission “would determine the number of RMSs that may be within any political subdivision. However, the total number of stores statewide would be limited by the ratio of one to ten thousand based on the state’s population, and the location of any such store must first be approved by the electors of the precinct where the store would be located at a special election similar to elections for the sale of alcohol at a particular location in a precinct, except for provisions unique to liquor local option elections.” The MMD and RMS licenses can be held by eligible applicants.

4. Imposition of a special flat tax of 15% on all gross revenue of each MGCE facility and MPM facility, and 5% on all gross revenue of each RMS, without any deduction for expenses or distribution of any profit. Such taxes would be collected and distributed by the state to various earmarks set forth in the initiative. MMDs shall pay the same taxes, assessments, fees and charges that other not-for-profit organizations are required to pay.

5. Making it lawful for persons 21 years of age or older to grow, cultivate, use, possess and share with another person 21 years of age or older for non-commercial use homegrown marijuana in an amount not to exceed four flowering marijuana plants and eight ounces of usable homegrown marijuana at a given time, so long as they have obtained a non-transferrable license pursuant to Commission-promulgated rules and regulations.

6. Setting up an initial license fee for MGCEs at $100,000, and setting up annual license fees of $50,000 for MGCE facilities, $25,000 for MPM facilities, and $10,000 for RMSs and marijuana testing facilities, and registration fees of $50 for home growing, with such fees annually adjusted based on inflation.

7. No marijuana establishment shall be located within 1,000 feet of the primary building structure used for any of the following: a house of worship exempt from taxation under certain provisions of Ohio law; a publicly-owned library; a public or chartered non-public elementary or secondary school; or a state licensed child day-care center, or within 1,000 feet of any public playground or playground adjacent to any of the foregoing primary building structures, so long as such house of worship, library, playground, school or day-care center was in existence within the 1,000-foot zone on or before January 1, 2015.

8. No one under 21 or anyone convicted of a felony within the past five years may have any ownership interest in any marijuana business.

9. The initiative is silent about vertical integration. Whether an MGCE can get into the MPM and the dispensary business is an open question.

This initiative smells in many ways like Florida’s (failed) Amendment 2, in that so may of its backers seem are far more interested in their own financial gains than in opening up marijuana to citizens of their state. Should this initiative make Ohio’s ballot, Ohio voters will need to decide if this is the kind of marijuana program they want in their future.

We especially welcome comments from Ohioans below.