James Canepa was named the first superintendent of the Division of Cannabis Control, which falls under the Ohio Department of Commerce. The division will be over both medical and adult-use regulation.Courtesy Ohio Department of Commerce
COLUMBUS, Ohio – Applications for medical marijuana dispensaries to begin serving both medical and recreational customers must open by Friday, but don’t expect dispensaries to begin serving adults aged 21 and older as soon as Saturday.
That’s because the state needs to verify that the businesses have updated security, have working point-of-sale systems that can distinguish between medical and recreational customers, have new employees correctly permitted, among other items, before they can sign off on the new dual-use license, said James Canepa, the superintendent of the Ohio Division of Cannabis Control.
While Ohioans wait for the chance to buy recreational weed for the first time, Canepa’s newly formed state agency is working behind the scenes to do the regulatory gymnastics necessary under Ohio’s new law to make it happen.
During an extended interview with Cleveland.com/The Plain Dealer, Canepa discussed the program for adult-use, which Ohioans approved in last November’s election, what could bog it down and how he’s trying to ensure product will be available for medical patients in the initial days of the green rush.
READ MORE: Long lines, high prices: What to expect when recreational marijuana dispensary sales finally begin – cleveland.com
Envision the opening of dispensaries for recreational customers like a bell curve, he said.
In the beginning, a handful of dispensaries will open fast to recreational customers. That’s followed by a period of several months when the majority of dispensaries will open. Then there will be stragglers, he said.
“That’s the trickle in the beginning. Then most, not that they’re not ready but that they’re a little more thoughtful about the scale for a new customer base,” he said, explaining they may get the OK from the state but will delay opening until they’re more sure about having enough product, employees or will wait for other dispensaries to open, hoping the customer experience will not be dampened by long lines.
While cultivators and processors that are currently licensed under the medical program are growing and processing marijuana right now that they expect will be sold to recreational customers in coming weeks, they too need to have adult-use licenses before they can sell to dispensaries. Those applications also must be online by Friday.
Canepa, who previously was the supervisor of the Ohio Division of Liquor Control for six years, hesitated to share specific dates of when the first dispensaries will open. Will marijuana be sold to recreational customers by mid-June, as a state lawmaker has said? July 4? Dec. 31?
Canepa just said he was focused on his division’s deadlines in the initiated statute, which requires applications to be published online by June 7 and for the division to approve or deny applications by Sept. 7.
“Everybody keeps trying to get me to circle a day, and it’s impossible because like with liquor, you have to process the applicants as they are,” he said. “You have to take them as they come to you. And there’s a whole checklist that they have to meet.”
Among items that Canepa described as necessary for medical dispensaries to receive dual-use licenses:
-Security: Many dispensaries are expanding their floors to accommodate the influx of customers, which will require more cameras and other surveillance measures. State rules require security to prevent theft of product, including tracking all the transactions at the register.
-Point-of-sale systems: Dispensaries will need to have new checkout systems that can distinguish between recreational customers, who are charged a special 10% excise tax on marijuana purchases, and medical customers, who will not be subject to the tax but have limits that can be sold to them that are expected to last for 90 days, similar to daily dosages from a traditional pharmacy. The Division of Cannabis Control wants to beta test these systems to ensure Ohio gets the tax receipts. In many cases, beta testing can occur virtually, but in some instances division employees may have to travel to the dispensary. Each dispensary will have its own third-party vendor, so the systems will not all be the same, Canepa said. These systems need to be connected to a state inventory flow database for Ohio regulators to ensure sales are rung up correctly.
-Badging: Many Ohio dispensaries are part of “vertically integrated” businesses in which one company has licenses for a cultivation space, a processing area to extract oil from plants to make edibles and other products, as well as the retail space. Yet to prevent theft or “diversion” of product, most employees’ badges only allow them into the areas where they directly work. Managers have access to more areas. The state needs to make sure that, with new employees being hired to accommodate the increase demand that will come with recreational, all these employees are properly badged. Current staff badges in many cases need to be renewed.
As the Division of Cannabis Control is trying to stand up the recreational program, Canepa said employees are trying to work through numerous issues that have come up, including delta-8 THC questions.
Delta-8 THC technically comes from hemp, and is being sold in gas stations, head shops and online in the form of candy and vapes. It’s legal through a loophole that a new Ohio Senate bill, as well as the latest Farm Bill in Congress, are trying to close. Meantime, Canepa gets calls from across the state, since in many cases, Ohioans under 21 are buying delta-8 products.
(Ohio currently has 33 hemp processors licensed by the Ohio Department of Agriculture. They say they follow the law, place their product in reputable stores and believe their industry will be harmed by the proposed legislation.)
Canepa also gets calls from mayors and law enforcement across the state, as the summertime festival season has arrived, questioning whether they’re allowed to permit outdoor smoking. Although the backers of the recreational marijuana initiated statute believe the law is clear that state cigarette smoking prohibitions also apply to marijuana and that many private establishments can choose to permit smoking, Canepa believes the initiated statute is not clear enough.
Canpea said he wants the delta-8 and public consumption laws to be more explicit.
“Those two issues are bogging me down,” he said.
Furthermore, Ohio Division of Cannabis Control employees are currently renewing medical marijuana business licenses. This time of the year, the cycle ends for existing licensees, and businesses must renew their license if they want to continue to operate in the future. If licenses are not current, businesses will not get adult-use approvals, Canepa said.
The division is also processing business ownership change paperwork, Canepa said.
The initiated statute gives current growers and dispensaries additional dispensary licenses – such as large-scale growers that get three adult-use dispensaries. But the law also contains ownership caps – specifically eight adult-use dispensary licenses, not more than one cultivator license and not more than one processor license. At this time, there’s a flurry of divestment in businesses so that people can be allowed to own businesses once new adult-use dispensary licenses are awarded, Canepa said.
On the dispensary dual-use license application, the owners will have to sign a promise that they will have product available for medical patients and caregivers. Stores can’t sell out all their inventory to recreational customers and have nothing left for medical patients, who have conditions such as cancer, Huntington’s disease and multiple sclerosis.
Canepa said he doesn’t have any requirements of a percentage of inventory that must be set aside for medical customers. However, if his division gets complaints, it’ll check them out, he said.
He hopes that the dual-use dispensaries, which got their start in medical marijuana, won’t forget the patients.
“It’s good customer service,” he said. “We’ve said our priority is to make sure the medical patients are taken care of. Your responsibility is to be a good retailer.”
Laura Hancock covers state government and politics for The Plain Dealer and cleveland.com.
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Recreational marijuana dispensary apps are coming by Friday, but don’t expect next-day sales, Ohio’s cannabis – cleveland.com
