KMK Law Cannabis & Craft Beer Blog

In November 2023, Ohio voters ratified Issue 2, which legalized recreational marijuana in the Buckeye State. Issue 2 took effect a month later, on December 7, 2023, but not without a move to make some changes by the Ohio state legislature. While the Ohio Senate passed proposed changes to Issue 2, the House has yet to pass those changes. Meanwhile, the Ohio Division of Cannabis Control has released its proposed rules regarding recreational marijuana in Ohio.

What Has Happened Since December 7, 2023?

As of December 7, 2023, adults 21 years of age and older are permitted to: (i) possess 2.5 ounces of cannabis plant or 15 grams of cannabis extract; and (ii) grow up to 6 cannabis plants at their primary residence, in a secure area (no more than 12 plants per household with 2 or more adults). Issue 2 also created a new state agency, the Division of Cannabis Control (the “Cannabis Division”), within the Ohio Department of Commerce.

The Cannabis Division was given the authority to license, regulate, investigate, and penalize cannabis operators, testing laboratories, and individuals required to be licensed. The Cannabis Division has been tasked with setting rules on licensing, product standards, packaging, and more by June 2024 and issuing its first round of licenses by September 2024. Ahead of schedule, on April 3, 2024, the Cannabis Division submitted proposed rules regarding cannabis sales, licensing, and more for public comment, as discussed in more detail below.

What Does the Ohio Legislature Want to Change?

The Ohio Senate passed revisions to Issue 2 on December 6, 2023, which, among other things, increased the 10% sales tax on recreational marijuana sales to 15%, altered the distribution of the tax revenue, and decreased the maximum percentage of THC allowed in cannabis extracts from 90% to 50%. As stated previously, the Ohio House has not yet passed these revisions. Meanwhile, towns and cities in Ohio have voted to ban cannabis sales within their limits, either temporarily or permanently.

What are the Cannabis Division’s Proposed Rules?

The Cannabis Division submitted its 45-page rule packet for public comment on April 3, 2024 (the “Proposed Rules”). Below are a few of the key takeaways:

• Cannabis facilities must be at least 500 feet away from schools, churches, public libraries, public playgrounds, and public parks;
• No person may own, control, or have a financial interest in more than one cultivator, one processor, one testing lab, or eight dispensaries;
• Prior approval from the Cannabis Division is required for modifications to licensee ownership involving 10% or more and modifications to a licensee’s entity name or registered trade name;
• To obtain a license, entities must provide the Cannabis Division with evidence of financial responsibility in the form of a bond or escrow (amount varies based on the type of license);
• Cannabis must, among other things, be rendered unusable and non-retrievable and recorded in the state inventory tracking system prior to disposal;
• Cannabis dispensaries must maintain and comply with written policies and procedures for daily operations and the distribution of cannabis, as well as written policies and procedures that ensure adequate security and surveillance.

According to industry and state officials, medical dispensaries that are already licensed to sell medical marijuana may be able to begin selling recreational marijuana products as early as June of 2024 under dual-use licenses given their current practices are likely compliant with the Cannabis Divisions’ Proposed Rules.

Given the Ohio legislature is continuing to push for revision to Issue 2, localities are passing their own bans, and the Cannabis Division is moving forward with its regulation of the cannabis industry in Ohio, it is important to stay up-to-date on the current legal landscape related to cannabis in Ohio.

Please feel free to contact a member of the KMK Law Cannabis & Craft Beer Services team should your business need assistance in navigating Issue 2, the Cannabis Divisions’ Proposed Rules, local bans, or any future revisions, rules, or regulations.