How to Open a Dispensary in Ohio 2024

The path toward cannabis legalization in Ohio began in 2016 with the passage of House Bill 523, legislation which allowed for the use of medical marijuana by patients meeting specific qualifying conditions. To oversee this new market, the Ohio Medical Marijuana Control Program (OMMCP) was established. Administered by the Ohio Department of Commerce’s Division of Cannabis Control (DCC), the OMMCP’s primary function was to ensure the safety and efficacy of medical marijuana for patients. As of 2024, Ohio has taken a significant step further by legalizing adult-use (recreational) marijuana, marking a substantial expansion of the state’s cannabis industry.

In Ohio, the State Board of Pharmacy (BOP) is responsible for two main tasks related to medical marijuana: first, it oversees the licensing and regulation of marijuana retail dispensaries; second, it registers patients who qualify for medical marijuana and the caregivers who assist them. These qualified patients can then purchase medical cannabis products from licensed dispensaries.

It’s important to note the BOP’s role is limited to overseeing dispensaries. The Ohio Department of Commerce licenses and regulates the facilities that cultivate, process, test, and lab-test medical marijuana. The first licenses for these activities, including cultivation, processing, testing, and retail sales, were issued in Ohio in 2017 and 2018.

Cannabis Market in Ohio

The cannabis market in Ohio has shown substantial growth since the legalization of medical marijuana. In 2023, the market generated approximately $403 million in sales, and with the introduction of recreational marijuana, it is projected to reach $1.65 billion by 2027. This rapid growth is driven by the increasing acceptance and demand for cannabis products. Ohio’s unique regulatory environment, which prohibits the smoking of cannabis flower, has influenced the market dynamics, making flower and vape products the most popular category​.

Ohio Cannabis Dispensary Laws

Ohio’s cannabis laws are designed to ensure a well-regulated and safe market. The Division of Cannabis Control within the Ohio Department of Commerce is responsible for licensing and regulating all cannabis-related activities, including cultivation, processing, and dispensing. Dispensaries must comply with strict security measures, inventory control, and reporting requirements to maintain the integrity and safety of the market.

Key regulations include:

• Location Restrictions: Dispensaries must be located at least 500 feet away from schools, churches, public libraries, public playgrounds, and public parks.
• Security Requirements: Dispensaries are required to have an approved vault for storing cannabis, a “mantrap” at ingress/egress points, and comprehensive security policies and procedures to prevent theft and ensure the safe handling of cannabis products.
• Operational Hours: Dispensaries can only operate between  7 a.m. and 9 p.m. They must be open for at least 35 hours per week and have at least two employees present during operating hours.
• Inventory and Reporting: Dispensaries must maintain accurate records of all transactions and inventory. This includes reporting any discrepancies or losses and adhering to state reporting requirements.​ IndicaOnline’s RFID scanner provides instant visibility into your dispensary’s inventory. With a single scan, you can gain a complete overview of the quantity of each product on your shelves or in your warehouse.
• Certificate of Operation: Provisional licensees must pass a final inspection within six months to receive a Certificate of Operation.
• Reporting to OARRS: Dispensaries must report dispensing information to the Ohio Automated Rx Reporting System (OARRS) in real time.
• Dispensary Clinical Director: Each dispensary must have a clinical director who is a licensed pharmacist or prescriber.
• Employee ID Cards: All dispensary employees and owners must be licensed by the BOP and wear state-issued ID cards on the premises.
• Patient Education: Dispensaries must have policies to educate patients and caregivers and provide relevant educational materials.

How to Apply for and Obtain a Dispensary License

The application process for a dispensary license in Ohio involves several steps, which are outlined below:

1. Prepare Your Application: Gather all necessary documentation. This includes:

• Proof of Capital: Evidence you have sufficient funds to cover the costs of opening and operating a dispensary. This includes rent or mortgage payments, renovation costs, security systems, and equipment like point-of-sale systems and storage facilities.
• Business Plan: A comprehensive plan detailing your business operations, staffing, security measures, and financial projections. It should explain how you will manage your finances, including revenue and expenses, and outline a timeline for reaching profitability. The plan should also investigate the current market landscape, identifying your target customer base. Compliance with all relevant laws and regulations needs to be a central focus, along with detailed security measures to ensure the safety of your business.
• Security Plan: Detailed measures to ensure the security of the dispensary, including surveillance and alarm systems and protocols for handling cannabis products. Employ a reliable alarm system that detects unauthorized entry during off-hours. This could involve motion sensors, door and window alarms, and panic buttons accessible to staff.

1. Submit Your Application: Applications must be submitted through the DCC’s online portal. To avoid delays, ensure all sections of the application are complete and accurate. Visit the Ohio Department of Commerce’s Application Portal for more information on the submission process.
2. Application Review: The DCC reviews applications to ensure compliance with state laws and regulations, which includes a thorough background check and verification of all provided information. The review process can take several months, depending on the volume of applications and the complexity of each case.
3. License Issuance: Approved applicants receive a provisional license, which allows the applicant to begin setting up their operations but does not permit sales until all operational requirements are met. The provisional license is valid for a specified period, typically 6-12 months, during which the applicant must complete all necessary preparations. Once all conditions are satisfied, the DCC issues a final license, allowing the dispensary to commence operations.

Important Note: Currently, the Ohio Department of Commerce is not accepting applications for new medical marijuana licenses. For updates, visit the Ohio Department of Commerce.

​Costs to Open a Dispensary in Ohio

Opening a dispensary in Ohio involves several significant expenses. Here are the typical costs based on official information:

• Application Fees: The initial application fee for a dispensary license is $5,000, which is non-refundable and must be submitted with each application.
• Licensing Fees: The Certificate of Operation fee is $70,000, and the biennial renewal fee is also $70,000. These charges are necessary for maintaining the dispensary’s operational status.
• Real Estate and Build-out Costs: Securing a suitable location and outfitting it to meet regulatory standards can cost between $200,000 and $500,000. This includes expenses for property acquisition or lease, renovations, and installation of the required security systems.
• Operating Capital: At least $500,000 in operating capital is recommended to cover initial inventory, staffing, and operational expenses.

Current Status of Recreational Marijuana Legalization in Ohio

Ohio legalized adult-use marijuana in November 2023. Adults over 21 can now possess up to 2.5 ounces of marijuana and grow up to six plants. This legislation also created the Division of Cannabis Control to regulate the new market, ensuring existing medical marijuana operators have priority in entering the recreational market. This law aims to balance market growth with social equity considerations.

Pursuant to the initiated statute, non-medical consumers can possess, transfer, or transport up to 15 grams of extract and 2.5 ounces of other forms of cannabis. For more details, visit the Ohio Department of Commerce FAQ.

Understanding the Ohio Adult-Use Cannabis Opportunity

The legalization of adult-use cannabis in Ohio presents a substantial opportunity for entrepreneurs. This emerging market is expected to grow rapidly, driven by robust consumer demand and favorable regulatory conditions. Here’s a detailed look at what this opening entails.

Entrepreneurial Opportunities

Entrepreneurs entering the Ohio cannabis market can capitalize on various prospects:

• Retail and Dispensaries: The issuance of new adult-use dispensary licenses has the potential to substantially grow businesses. The DCC will issue up to 50 additional dispensary licenses, prioritizing applicants who qualify under the Social Equity and Jobs Program. The Division issued initial non-medical cannabis licensure applications on June 7, 2024. According to the initiated statute approved by Ohio voters, the initial applications are only open to current medical marijuana license holders. 
• Cultivation and Processing: Ohio will also issue new cultivation and processing licenses, including up to 40 level III adult-use cultivator licenses. This opens up opportunities for businesses to cultivate and produce cannabis products.

Social Equity and Jobs Program

A key aspect of Ohio’s cannabis legalization is the Cannabis Social Equity and Jobs Program, which aims to ensure the benefits of legalization are shared broadly across communities, particularly those disproportionately affected by past marijuana laws. The program provides financial assistance and support to individuals from these communities, helping them enter and succeed in the cannabis industry​.

It includes:

• Financial Assistance: Funding to help cover startup costs and other business expenses.
• License Application Support: Assistance with navigating the application process to improve the chances of obtaining a license.
• Job Creation: Encouraging the hiring of individuals from affected communities, promoting diversity and inclusion within the industry.

Ohio Cannabis Tracking System

In Ohio, obtaining a dispensary Certificate of Operation requires the use of a Point-of-Sale (POS) system integrated with two key Ohio Medical Marijuana Control Program (MMCP) systems:

• Marijuana Enforcement Tracking Reporting Compliance (Metrc): Tracks all marijuana products from seed to sale, ensuring compliance with state regulations.
• Prescription Monitoring Program (PMP) Clearinghouse: Monitors and reports dispensing information to prevent misuse.

Additionally, IndicaOnline offers a comprehensive POS system specifically designed for cannabis dispensaries, which integrates seamlessly with Metrc to ensure compliance and efficient operation.

For more detailed information on POS system requirements, visit the Dispensary Point-of-Sale System Interface Requirements.

Financial Aspects and Tax Implications of Opening a Recreational Dispensary in Ohio

Opening a recreational dispensary in Ohio offers significant financial opportunities. The state’s cannabis market is expected to grow substantially, driven by strong consumer demand. A key aspect of financial viability is the 10% excise tax on marijuana sales, which supports several state initiatives, including the Cannabis Social Equity and Jobs Program, and aims to promote economic inclusion and social responsibility. Additionally, the tax revenue helps fund local municipalities, mental health and addiction services, and administrative costs.

Required Insurance Policies for Dispensaries in Ohio

Opening a dispensary in Ohio requires several specific insurance policies to ensure compliance and protection:

• General Liability Insurance: This covers third-party claims for bodily injury, property damage, and personal injury that occur on the dispensary’s premises. It protects the business from lawsuits and claims that could arise from accidents involving customers or visitors.
• Product Liability Insurance: This policy provides coverage against claims related to the cannabis products sold by the dispensary. It includes protection against lawsuits for product defects, contamination, or adverse effects experienced by consumers. This is crucial in an industry where product safety is paramount.
• Property Insurance: This covers the dispensary’s physical assets, including the building, equipment, and inventory. It protects against risks such as fire, theft, vandalism, and natural disasters, ensuring the business can recover financially in the event of damage to its property.
• Workers’ Compensation Insurance: Required by state law, this covers medical expenses and lost wages for employees who are injured on the job. It provides financial protection for both the dispensary and its employees by ensuring workers receive the necessary medical care and compensation for work-related injuries.

These requirements are aimed at ensuring dispensaries operate safely and responsibly while protecting their assets and stakeholders. For more detailed information on insurance requirements, refer to the Ohio Administrative Code Rule 3796:6-2-09 and visit the Ohio Department of Commerce’s Cannabis Control Division.

Medical Cannabis Dispensary in Ohio

On June 9, 2016, Governor John Kasich signed House Bill 523 into law, establishing Ohio’s Medical Marijuana Control Program (OMMCP). The program is overseen by the Ohio Department of Commerce, the State Board of Pharmacy, and the State Medical Board of Ohio. Here is an overview of the key aspects of the program:

• Licensing and Regulations

The Ohio Department of Commerce and the State Board of Pharmacy began accepting applications in 2017 for various medical marijuana licenses, including cultivators, processors, and dispensaries. The first provisional licenses were issued as follows:

1. Cultivator Licenses: November 2017
2. Dispensary Licenses: June 2018
3. Processor Licenses: August 2018

• Types of Licenses

The available licenses under the medical marijuana program include:

1. Cultivator Licenses: For the cultivation and growth of medical marijuana plants.
2. Processor Licenses: For the extraction and manufacturing of medical marijuana products.
3. Dispensary Licenses: For the sale and dispensing of medical marijuana to registered patients.

• Application Process

The application process varies depending on whether you are an existing operator or a new applicant. Existing operators seeking to enter the adult-use market must apply for conversion through the Division of Cannabis Control. For instance, a Level 1 Cultivator may apply for conversion and could be awarded up to three dispensary licenses. 

• Employee Requirements

Dispensary employees must be licensed by the State Board of Pharmacy, pass a criminal background check, and comply with state regulations regarding the handling of medical marijuana. The Ohio Administrative Code provides specific rules on employee licensing and responsibilities.

Packaging and Labeling Requirements for Medical Marijuana in Ohio

Ohio has stringent regulations for the packaging and labeling of medical marijuana to ensure product safety, adequate consumer information, and compliance with state laws. These regulations are overseen by the Ohio Medical Marijuana Control Program (OMMCP) and detailed in the Ohio Administrative Code.

Packaging Requirements

1. Child-Proof and Tamper-Evident: All medical marijuana products must be packaged in child-proof, tamper-evident, and light-resistant containers to maintain their integrity and stability. This prevents unauthorized access and ensures the product remains safe for consumption.
2. Approval by the Department: Packaging must be approved by the Department of Commerce before distribution to ensure compliance with state standards.

Labeling Requirements

1. Essential Information: Each package must have a label in legible English that includes:

• The name and license number of the cultivator or processor.
• The product identifier and registered name of the medical marijuana strain.
• A unique batch or lot number for traceability in case of recalls.
• Dates of harvest, final testing, and packaging.
• Total weight in grams and cannabinoid profile, including THC and CBD content.
• The name and license number of the testing laboratory.
• An expiration date not exceeding one year from the date of manufacture.

Warnings:

• “This product is for medical use and not for resale or transfer to another person.”
• “This product may cause impairment and may be habit-forming.”
• “This product may be unlawful outside the State of Ohio.”
• When eaten or swallowed, the effects and impairment caused by this drug may be delayed.”

For edible medical marijuana products, additional labeling must include a list of all ingredients and any major food allergens. Caution: “When eaten or swallowed, the effects and impairment caused by this drug may be delayed.”

Increase Efficiency with IndicaOnline

Are you launching a marijuana business in Ohio? A comprehensive business plan is the first crucial step. It will educate your team and prepare you for the marijuana business license application process. Ready to apply for a license? This guide will help you navigate the complexities of the procedure. With IndicaOnline, your medical marijuana or adult-use retail store will be user-friendly for your staff, as the system is easy to learn and understand. When you see the efficiency and time-saving benefits, you’ll be eager to implement it in your workplace. Contact us today to schedule a consultation and start optimizing your workflow immediately.

Note: Marijuana laws in Ohio, like those in many other states, are often updated. The information in this document is intended for general knowledge only and should not be taken as legal advice. To ensure you have the most recent details, please consult official resources provided by the state.