CINCINNATI – From local startups to Denver-based consulting firms, entrepreneurs are watching Ohio as they look to grab a piece of the emerging medical marijuana market here.
New laws legalizing the drug go into effect Sept. 8 – opening the door for what some investors say could be the start of a multi-billion dollar industry.
“You can expect to see a lot of people jump into this space, and we’ve already gotten inquiries from some groups in Ohio who are looking for support,” said Brett Roper of Medicine Man Technologies, a subsidiary of the largest recreational and medical pot provider in Denver
Across Ohio, nearly 100 pot-related firms such as Cincinnati Cannabis College and Cincinnati Cannabis Collective and have registered company names with the state. And locally, startups say they’re lining up investors and lobbyists as they wait for key details of the law to be unveiled – like how many licenses will be available to grow and sell the drug.
“Interest is definitely building in Ohio,” said James Gould, a Cincinnati-based venture capitalist and co-founder of Greenlight Acquisitions, which is eyeing a license to grow – or cultivate – medical marijuana.
Gould was among the top investors behind ResponsibleOhio, which led the failed effort last year to legalize recreational and medical marijuana in the state.
“We never stopped working after we got defeated,” Gould said. “I think the sea change is happening now, and we’re getting calls from medical people and investors across the country who want to be involved in what’s going on.”
Key Decisions Still Ahead for Medical Pot
Under the law, Ohio’s medical pot program is expected to be up and running by 2018. That means lawmakers have a nearly two-year effort ahead as they work to write the rules that will govern the new industry here.
By Oct. 8, a 14-member advisory committee goes into effect; the committee will make recommendations for how to grow medical marijuana, how physicians should recommend it and how patients will obtain it.
Those recommendations will be given to three state agencies charged with oversight of the new program. They include:
- Ohio's Department of Commerce, which will be in charge of licenses and compliance of cultivators, processors and testing labs
- Ohio's Medical Board, which will certify physicians who recommend marijuana to patients
- Ohio's Pharmacy Board, which will oversee how patient registration and licensing of medical marijuana dispensaries. Under the law, epilepsy, cancer, chronic pain and Alzheimer’s Disease are among the list of more than 20 conditions that would qualify patients for medical marijuana use.
Some estimates have shown that as many as 300,000 Ohioans may be eligible for a medical pot program here, said Brad White, a board member at United Ohio, a patient advocate nonprofit.
That figure, White says, is based on the number of residents known to have one of the eligible conditions included in the rules divided by the percent of U.S. residents estimated to use marijuana (9.5 percent).
“We know Ohio is not going to be California, where you can get medical marijuana for just any condition,” said White. “But the more patients that get access here, the more stable the industry will be, and that’s important.”
But how large the state's medical pot market might become is speculative until the rest of Ohio’s rules are written, said Al Foreman of Tuatara Capital, a New York-based private equity firm focused on the growing marijuana industry.
Rules governing how patients are registered, how doctors are certified and how cultivators and dispensaries can do business are key details investors need to know, Foreman said.
“All states are not created equally,” Foreman said. “The people writing the laws have a direct influence in attractiveness of a market from an investors standpoint.”
Investors Big and Small Want In
Top of mind for investors is how many licenses will be available for cultivators and dispensaries and what the criteria will be to determine who will get them
“We’re really hoping that there will be enough licenses available – and that there will be lots of opportunities for small businesses,” said Nic Balzer, a co-founder at QC Infusions in Norwood. In May, the firm began selling its first product – Queen City Hemp – a hemp-based oil that’s touted as a dietary supplement.
Three years ago, Balzer said he began researching hemp and cannabis-based products as he worked to help family members with health problems get off potent pharmaceutical prescriptions that came with “miserable” side effects.
“Ultimately, I became an advocate for them and for patients who were asking, 'How do we get this medicine?'” Balzer said.
Now, Balzer said he and his business partner “are all in” for the new business venture – having each cashed in their retirement savings to launch their start-up.
“We’re starting small, but we’ve definitely boot-strapped this business,” he said. “We really want to see a sustainable industry here for the patients and business owners who don’t have $20 million laying around to invest.”
Under HB 523, at least 15 percent of the cultivator, processor or lab licenses to be issued must go to applicants who are African-American, American Indianan, Hispanic or Latino and Asian. Nothing in the law, however, guarantees small businesses will have a role.
Back at Greenlight Acquisitions, Gould said he believes business it will take “every bit of $20 million” to get a cultivation operation off the ground in Ohio. The company is already in the process of investing in other states with legal marijuana laws on the books, including California and Nevada.
“We’ve built a team of doctors, tech people – people from all walks of life, and we’re not afraid to put our money behind Ohio as long as it makes economic sense,” Gould said.