Despite Gov. Mike DeWine’s (R) opposition to cannabis legalization, Ohio Secretary of State Frank LaRose (R) announced in late January 2022 that an initiative proposing the legalization of cannabis had submitted enough valid signatures to be presented to the state legislature.
The initiative would enact a state law to legalize the cultivation, processing, sale, purchase, possession, home growth, and use of recreational marijuana for adults 21 years of age or older. In Ohio, the legislature has four months to adopt, reject, or take no action on the measure. If the legislature rejects the measure or takes no action, sponsors have 90 days following the legislature’s four-month deadline to collect 132,887 additional signatures.
Given DeWine's opposition, it is more likely adult-use will be on the ballot for Ohio voters to consider come November 2022.
While Ohioans wait for adult-use legalization, the state is making strides to increase access to the current medical market. Licensed cultivators can apply to double the canopy size from 25,000 sq. ft. to 50,000 sq. ft. for Level 1 and from 3,000 sq. ft. to 6,000 sq. ft. for Level 2 operators.
The state's Board of Pharmacy approved the licensing of 73 new dispensaries, bringing it to 130 statewide. Nearly 1,500 applications were filed in November 2021. Instead of using competitive scoring, the lottery put all qualified applications into a pool and randomly selected the winning bids.
In early February of 2022, Ohio announced the names of the 73 lottery winners, majority being out-of-state MSO's, but according to regulators, it could be months before licenses are actually awarded.
October 2021 | Acreage Holdings acquires Green Leaf Gardens LLC cultivation, processing and retail operations in Ohio
July 2021 | Verano acquires Mad River Remedies
July 2021 | Columbia Care acquires four dispensaries from CannAscend for $14.2MM
March 2021 | AYR Strategies acquires cultivator Parma Wellness Center LLC in a $17MM cash deal
October 2020 | GTI announces a manufacturing sale-leaseback for $32.2MM with IIPR
July 2020 | Verdant Creations sells four of its five dispensaries to Cresco Labs
The medical market expansion is underway. Regulators will allow the licensed cultivators to apply for canopy expansion from 25,000 sq. ft. to 50,000 sq. ft. for Level 1 and from 3,000 sq. ft. to 6,000 sq. ft. for Level 2 operators. The narrow canopy limits have constrained the market, and with 73 new dispensary licenses issued, expansion is imperative.
Investors have ample opportunity to invest in attractive ROI projects over the next several years as the medical market expands and ultimately transitions to adult-use.
Existing license holders should solidify their market positions and hold on for a fun ride.
*Cultivators are licensed as either Level I, limited to 25K sq.ft., and expansions up to 50K sq.ft. or Level II, limited to 3K sq.ft. with expansions up to 6K sq.ft. The department can then approve Level I and II growers for up to 75K sq.ft. and 9K sq.ft. of expansion, respectively.