Cannabis Business in Ohio

The Status of the Cannabis Industry in Ohio

On November 7, 2023, Ohio became the 24th state to legalize adult-use cannabis, with sales officially launching on August 6, 2024. The first dispensaries opened their doors, serving both recreational users and medical patients. By the third quarter of 2024, the state’s cannabis industry had already reached $129.8 million in sales. Additionally, Ohio has set aside 50 dispensary licenses and 40 cultivation licenses specifically for social equity applicants, promoting diversity within the industry.

Cannabis Licensing in Ohio

In Ohio, medical cannabis establishments were initially prioritized for dual-use licenses, allowing them to expand into recreational sales alongside their medical operations. While there is no set limit on the number of cannabis licenses, the Division of Cannabis Control monitors the market and can modify the issuance of licenses or introduce caps to maintain a balance between supply and demand.

Medical Dispensaries: As of August 2024, 126 medical dispensaries were operational, with 15 provisional licenses awaiting approval. Medical dispensaries are eligible to receive dual-use licenses, and if they do not own cultivator or processor licenses, they may apply for a separate adult-use dispensary license for a different location.

Level I Cultivators: By August 2024, there were 22 active Level I medical cultivators, plus one provisional license. These larger cultivators are allocated three adult-use dispensary licenses and one adult-use cultivation license.

Level II Cultivators: By 2024, Ohio had 14 operational Level II cultivators. Each Level II cultivator may receive one adult-use dispensary license and one adult-use cultivation license.

Processors: Ohio had licensed 46 medical processors, 45 of which were operational by August 2024. Each processor is eligible to receive an adult-use processing license.

Testing Labs: There were 10 medical testing labs in Ohio by 2024, with 8 of them operational. Each testing lab can receive an adult-use laboratory license.

Ancillary Cannabis Businesses in Ohio

As Ohio’s cannabis industry expands, ancillary businesses play a critical role in supporting its growth. From accounting and legal services to banking and insurance, these sectors ensure that cannabis businesses remain compliant and financially stable.

Accounting: Ohio cannabis businesses face strict financial regulations, particularly with IRS Section 280E, which limits the deductions cannabis companies can claim. Specialized accounting firms help these businesses manage complex tax requirements, track finances, and ensure compliance with state and federal regulations.

Legal Compliance: Navigating the regulatory landscape is essential for any cannabis business in Ohio. Legal professionals specializing in cannabis law assist with securing licenses, adhering to state guidelines, and avoiding potential legal pitfalls. They also ensure businesses stay up to date with evolving laws and policies affecting the industry.

Banking: Access to banking services remains a challenge for Ohio cannabis companies due to federal banking restrictions. Although many businesses must operate on a cash basis, some specialized financial institutions offer services like checking accounts and payment processing tailored to cannabis operations, helping them manage finances securely.

Insurance: Cannabis businesses in Ohio require comprehensive insurance to protect their operations, employees, and products. Cannabis-specific insurance providers offer policies that cover areas such as product liability, property damage, and workers' compensation, ensuring businesses are safeguarded against potential risks.