More than a year and a half into medical cannabis sales in Ohio, many cultivators are seeking some regulatory relief—on the amount of space they can use to grow, and how they can package, sell and market cannabis product.

Level II’s Maxed Out

Across Ohio, smaller growers are requesting more cultivation space. “We’re moving stuff pretty quick, as we can get it ready and out the door,” said Scott Golden, facility manager at Agri-Med Ohio, which is located in Meigs County in Southeast Ohio on the West Virginia border and markets its products with the “Meigs County” name.

Cultivators in Ohio were licensed as either “Level I” or “Level II.” Initially, Level I growers are limited to 25,000 square feet of cultivation space and Level II growers are limited to 3,000 square feet. The Ohio Department of Commerce, which regulates cultivators, processors and testing labs, can approve Level I expansions to 50,000 square feet and Level II expansions to 6,000 square feet. The department may then approve Level I and II growers for final expansions to 75,000 square feet and 9,000 square feet, respectively.

As a Level II grower, Agri-Med has maxed out its 3,000-square-foot indoor cultivation space in Langsville. It requested an expansion but was denied, Golden says. Other Level II cultivators in the same situation include Ancient Roots in Wilmington, Fire Rock in Akron, FN Group (Wellspring Fields) in Ravenna and Ohio Clean Leaf in Dayton, according to the Dayton Daily News.

Jennifer Jarrell, a spokesperson for the Ohio Department of Commerce, said the department has decided to not yet grant any expansion requests. “The director, [Sheryl Maxfield], hasn’t requested expansion plans from licensees as set forth in OAC 3796:2-1-09,” Jarrell said. “If a program need for cultivation area expansions is identified, the Department will initiate a formal submission and review process and communicate this process to all licensees.”

As of Aug. 21, Jarrell said 12 Level I growers and 12 Level II growers are operational, adding that “There are 7 Level I provisional licenses and 2 Level II provisional licenses remaining.” She also said several Level I cultivators are not using their full 25,000 square feet of growing space.

One of the concerns some Level II growers have expressed is that with space remaining limited to 3,000 square feet as demand grows, many in the state’s expanding patient base may be unable to access products or cultivars that help with their ailments.

Agri-Med rotates between growing about 12 and 16 strains for the 43 storefronts to which it sells throughout the state. “Right now, basically, as we post stuff on the menu, it goes,” Golden said.

“If you get, of course, a bigger facility, you can run your most common strains more often instead of running through cycles,” he said.

Ancient Roots, located in Wilmington between Cincinnati and Columbus, grows about 20 strains in its 3,000 square feet of cultivation space. President and CEO David Haley said the 3,000-square-foot limit includes flower and veg space.

“I think our products move pretty quickly,” he said. “We generally don't have a problem selling it, [I’ll] put it that way. If we could produce more, we could certainly sell more, and we could probably offer it at a better price point as well.”

Like with other types of business, it’s a case of supply and demand, Haley said, adding that “right now, it certainly would appear that the demand side is definitely growing at a pretty good pace, which we're happy to see.”

Ancient Roots sells to 43 storefronts, Haley said, clarifying that many retailers have multiple locations. Some of the dispensaries Ancient Roots sells product to are Strawberry Fields, Terrasana, The Botanist and Verdant Creations.

Expansions won’t be complete immediately after the Department of Commerce approves them, Haley noted, saying the department will need to think ahead to future patient demand.

“It's not going to happen for another … best case scenario, I think, for most people six months, and realistically, for most, it's probably closer to 12, depending on how much you've got to build on or whatever you have to do from a renovation standpoint,” Haley said. “That's the only thing that I really hope they’re considering is, what are the needs going to be further down the line, not right now?”

Riviera Creek, a Level I indoor grower in Youngstown, Ohio, has been granted 25,000 square feet of cultivation space. However, Chairman of the Board Brian Kessler said it’s come at a cost. Level I growers pay a $20,000 application fee, a $180,000 licensing fee and an annual $200,000 fee. Meanwhile, Level II growers pay a $2,000 application fee, an $18,000 licensing fee and an annual $20,000 fee.

The Level I growers who spend 10 times more money than the Level II growers need to ensure they have enough patient demand for their product, Kessler said. To illustrate the point, he said cannabis sales began in Ohio in January 2019, but it took time for more stores to open. (The Columbus Dispatch reported that 30 stores were open on Sept. 17, 2019).

“Our goal all along has been [to] be careful because you don't want to create a business that can get in trouble because you've spent too much money and there's no customers,” Kessler said.

Riviera Creek has not yet fully utilized the 25,000 square feet it has been allotted for cultivation, he said. “I don't know if we'll get there by the end of this year, but definitely probably throughout next year we should be meeting that,” Kessler said. “We will be exceeding our market share that we were supposed to satisfy—we’re exceeding it now, and we hope to continue to exceed it all the way into ’21.”

Public Comment on the Program

The state of Ohio is in the midst of implementing rule changes to its program, said Ali Simon, a spokesperson from the Ohio Board of Pharmacy, which regulates dispensaries and registers patients and caregivers. Industry stakeholders and patients have submitted and continue to submit public comment to the Board suggesting changes to current and proposed rules.

One draft rule change is to eliminate the “Tier I” and “Tier II” classifications, which referred to plant material with THC content with 23% or less, and higher amounts not exceeding 35% THC, respectively. Current proposed rules include the classification of “total target THC,” taking into account THC and THCA levels.

In public comment, a representative from Columbus-based Green Investment Partners, which the state lists as having a processing license and Jarrell said has a provisional Level I cultivation license, submitted a comment claiming a present 5% THC variance is difficult to comply with because analytical methods also have variance. In response, the Board said it will increase the variance to 10%.

Representatives from the Ohio Medical Cannabis Cultivators Association (OMCIA) and Huron-based grower and processor Firelands Scientific wrote that they do not support a proposed plan to reduce the amount of what it considers a daily dose of cannabis for patients from 2.83 (the “Ohio tenth”) to 2.52 grams. OMCIA and Firelands cited packaging costs as a concern; in response, the Board said processors can package two units together. And while the current rules require flower to be sold in “2-day units,” changes will allow processors to sell “single day units.”

OMCIA and Firelands Scientific also commented that they would like the state to increase the patient purchase limit for a 90-day period from 8 ounces to 9 ounces; in response, the Board wrote it “has consulted with experts who reject the contention that an increase of the 90-day supply from 8 to 9 ounce[s] would be safe and appropriate for patients.”

Other Ohio Qualms

Cannabis business owners told Cannabis Business Times and Cannabis Dispensary that Ohio’s program can be improved in multiple other ways.

Haley said patients should be more simply able to track how much cannabis they can purchase. There was a change in April 2020, but the program is still causing some confusion for patients.

The state has also placed numerous restrictions on cannabis advertising. These include a requirement for cultivators, processors and testing labs to submit an advertisement; a $100 "advertising fee"; and additional information, such as a description of the ad and proof that a patent isn’t being used, to the Department of Commerce for consideration.

In late 2019, Cleveland-based hip-hop group Bone Thugs-N-Harmony reached out to Ancient Roots, Haley said. “They wanted to do a collaboration with us and have us grow a couple strains for [them]. And the state didn't kind of see eye to eye with us on that. So, we weren't able to do it.”

Kessler echoed a similar sentiment about communication with patients. “As far as how … you get the message out there, that's an issue that I hope, over time, we're able to work with the state and things get a little better,” he said. “Marketing is very, very restrictive right now in the state, and part of it was because we were just getting the industry started. I hope, as we're getting a little more established, that it'll be a little looser so that people can start telling their stories.”

These concerns aren’t just coming from businesses, either. In public comment, a patient wrote, “Please allow medical marijuana companies to advertise, and respond to people on social media[.]” (The Board of Pharmacy responded, “The advertising rule is not presently under consideration.”)

Haley, though he doesn’t agree with all of the regulations, said he commends the work that the Department of Commerce is doing to support the medical program. “They were given the set of rules that we’re all bound to,” he said. “I think over time, they'll make the necessary changes to make this a little bit of an easier program for patients to navigate."

Tom Schultz, CEO and co-founder of Connecticut-based medical cannabis producer CTPharma and long-time Cannabis Business Times columnist and speaker at Cannabis Conference, tragically passed away on Aug. 22 from injuries sustained in a bicycle accident. He was 70 years old.

Schultz was on his weekly bicycle ride, traveling south on High Ridge Road in Pound Ridge, New York, when a 2014 Ford Econoline van traveling in the same direction struck him. He was pronounced dead after life-saving maneuvers were attempted, according to a report from Patch.com.

"We are heartbroken that Tom has been taken from us tragically and far too soon. He was a friend to all and will be greatly missed,” said Rino Ferrarese, CTPharma COO. "Tom was an inspirational leader who believed that the study of the medical benefits of marijuana and its compounds was truly in its infancy and that the potential to address a multitude of health issues was unlimited."

"Tom Schultz helped make CTPharma a leader in the bio-science component of our industry and as we will discover the full medical potential of marijuana, we will remember that Tom Schultz was on the leading edge of that discovery," said Michael Fedele, chairman of the CTPharma board. "Tom was a leader who served as an example to all of us. His work and knowledge of the cannabis industry will be remembered and missed."

In a statement, CTPharma said, "Tom Schultz was a co-founder and visionary of CTPharma. In addition to being a great leader and mentor, he was also a friend to all. He will forever be with us in spirit and we look forward to continuing to honor his legacy through his foundations and CTPharma."

Tom Schultz (left) and Rino Ferrarese (right) speaking with a journalist about CTPharma's FDA-approved clinical study, conducted in collaboration with Yale School of Medicine, during the company's official announcement on Nov. 8, 2019. 

Noelle Skodzinski, editorial director for GIE Media’s cannabis group, said, "Tom has been contributing, along with his friend and business partner, Rino Ferrarese, to Cannabis Business Times since April 2017, and his vision has helped guide the industry toward higher standards in professionalism, patient care and product quality and consistency.

"Tom was a brilliant thinker and businessperson, with a true and persevering passion for the medical potential of cannabis, as well as for the patients CTPharma has served over the years. He was also a dear friend to me and many of those on our team. We are all mourning his loss and thinking of his family and his extended family at CTPharma at this time."

Tom Schultz (right) was a long-time CBT contributor and spoke at the 2019 Cannabis Conference. Here, he is pictured with Rino Ferrarese (middle) and John Billings (left), the former head of cultivation at The Farm in Boulder, Colo.

In his CBT column, "Technically Speaking," which he co-authored with Ferrarese, Schultz explored regulatory and standards issues in the cannabis industry, often taking a forward-looking approach in answering complex problems and offering guidance from his experience in the pharmaceutical and over-the-counter (OTC) markets.

In addition to being CEO of CTPharma, which he had successfully guided to conduct FDA-approved cannabis studies, Schultz also was president of Connecticut’s medical cannabis producers’ association and was involved in many charities, including the one he founded, the Canaan Foundation, which works on technology transfer initiatives for schools in Kenya and Cameroon.

Prior to CTPharma, Schultz was a Wall Street lawyer and investment banker turned pharmaceutical executive. He started as a lawyer with Mudge Rose Guthrie Alexander & Ferdon and, later, joined a boutique Wall Street investment banking firm that was acquired by National Westminster Bank.

In 1996, Tom completed a merger of the major producers of witch hazel and assumed the leadership of Dickinson Brands, Inc., the resulting firm. Dickinson markets OTC pharmaceutical products and consumer packaged goods to major retailers across the United States.

A whip-smart man with a sharp wit, Schultz was a graduate of Yale University, the NYU School of Law, and the Woodrow Wilson School at Princeton.

He is survived by his three children, seven grandchildren, "and a community that will forever miss his guidance," Ferrarese added.