Adult Use Cannabis in Ohio: How to Expand With a Plan

Medical dispensaries are now permitted to sell adult-use cannabis in Ohio, as mandated by the DCC. Applications for this dual license begins on June 7, 2024. Ohio’s medical cannabis industry produced $484 million dollars in 2023. This is a large number for any program, especially considering an arguably restrictive list of patient conditions.

Ohio’s path to the legalization of cannabis has seen a number of lawsuits at each step, yet the state can be considered a leader in legalized cannabis in the Midwest. Since license applications began in 2017, Ohio has launched several successful MSOs and regional businesses. What can be expected next, now that adult-use cannabis in Ohio is legal?

The passage of Issue 2 in November 2023 means that current operators in Ohio can now expand their presence by doing the following:

Level I cultivators can open 3 dispensaries and expand cultivation to 100k sq/ft.
Level II cultivators can open 1 dispensary and expand cultivation to 15k sq/ft.
Each dispensary can open another 1 dispensary.
The Level III cultivation tier is created and permits up to 5k sq/ft.

Lawmakers hope to amend Issue 2 in the future to better address the complexity of this subject as a whole. However, these expansion rights create a great opportunity for current operators to engage new communities and markets before the licensing process begins for new entrants. In this article, we examine the past challenges and potential roadblocks to expansion that could hurt the current Ohio cannabis operators in their quest to open new dispensaries.

Cannabis in Ohio: The Division of Cannabis Control

Adult-use cannabis in Ohio will be overseen by the Division of Cannabis Control (DCC) – the same regulatory body that currently oversees the medical cannabis sector. As evident in the medical cannabis division, it can be expected that the DCC will strictly enforce their regulations. Items include the following:

Video surveillance retention for a minimum of 45 calendar days.
- In contrast, the average retention is 30 days.
- Height strip cameras may no longer be required.
The entirety of the facility is to be captured under video surveillance.
- In our experience, regulators will implement games of “hide-and-seek” to ensure the regulations are abided by and that they are visible on cameras at all times.
- Most states prefer to focus on cannabis movement. Janitor and non-cannabis storage rooms are often not required to be covered under video surveillance in other states.
Security repairs or replacements are required to be solved within 24 hours.
- In contrast, many states permit 48-72 hours for repairs. This can be more demanding of your security installer, which can lead to higher customer costs.

But wait, there’s more (regulations)!

Documentation of all ingress/egress into and out of secure, limited access areas
- Previously, vaults had to adhere to CFR standards, which meant Class 1 and GSA V vaults and vault doors. Currently, that requirement is expected to be rescinded, meaning lower-cost solutions are likely to be implemented.
  - However, this is still subject to change, and depending on the value of inventory in the vault, a weak vault wall may be a poor idea.
- Previously, mantraps and biometrics were recommended strongly by regulators. It remains to be seen whether these recommendations continue.
Each POS station is required to have its own surveillance camera
- While it is recommended to oversee POS stations, it is not typically a requirement to have a designated camera for each POS.
- On average, this will add 4-6 additional cameras onto your network.

The future of cannabis security in Ohio will be interesting, as the DCC has more businesses to regulate and has revised their standards for security. Since there will be a race to expand quickly, your team should excel at communication internally and with regulators to avoid change orders and construction delays.

The Future of Adult-Use Cannabis in Ohio

It is fair to question why time is crucial for adult-use cannabis in Ohio. For current operators, the urgency falls under the expected flood of new licensees that will start competing for the same customers and market opportunities. As more dispensaries enter the market, one can expect the average price of cannabis to decrease over time, meaning that profits could make or break future viability.

The DCC will issue 40 level III adult-use cultivator licenses and 50 adult use dispensary licenses, with a preference to social equity applicants. While existing operators will continue medical sales, other states like Oregon, California, and Michigan have seen medical sales decrease after adult-use sales begin.

One of the larger expenses for cannabis business expansion is security. While there may be savings for secure storage locations, the extensive camera systems and access control requirements can produce a hefty price tag if not planned or managed well. While communicating with inspectors can sometimes be difficult, getting ahead of change orders and potential violations (or straight-up inspection failures) is in the interest of any cannabis business in Ohio.

Why Partner with Sapphire Risk for Your Ohio Cannabis Business?

Sapphire Risk is excited to help our Ohio clients with their expansion plans, primarily their build-outs. We would be more than happy to discuss your expansion plans and situation, having worked on many cannabis projects in Ohio over the last seven years. Reach out to our Senior Security Consultant, Haley Glover (hglover@sapphirerisk.com), to schedule a chat about your security costs and operational vision today!

How Can Sapphire Risk Help?

Tony Gallo and the team of experts and consultants at Sapphire Risk Advisory Group have worked to secure medical marijuana and recreational cannabis businesses in 37 states. Follow us on social media to stay up to date with more security best practices and cannabis industry updates!