CINCINNATI - A year from now, Cincinnati investor James Gould hopes to be meandering through lush green rows of what he’s betting will be Ohio’s next cash crop: medical marijuana.
Gould is among dozens of budding entrepreneurs hustling to be among the few that will win the right to make a legit business out of growing medical cannabis -- a drug made legal in Ohio last year.
“We are literally building a new industry here and it’s creating some very interesting opportunities for people,” said Gould, chairman of Green Light Acquisitions, a holding firm for marijuana-related ventures.
If all goes as planned, Gould and his partners want to create a nearly 20-acre medical marijuana campus in Wilmington, Ohio that will house indoor growing space, a manufacturing facility and a research center.
“We’ve been across the entire U.S., doing our homework,” said Gould, who led the failed Issue 3 effort to legalize recreational and medical marijuana in 2015. “We’ve come up with a plan that I think will really capture the integrity of what this industry can represent.”
By June, Ohio expects to finalize the rules for those hoping to apply for one of 24 cultivation licenses expected to be issued across the state. Once the applications are released, investors will get 45 to 60 days to meet submission deadlines.
Hundreds of millions of dollars of hang in the balance as investors wait for the green light to apply.
Groups like Gould’s have amassed commitments in excess of $40 million to launch their Wilmington campus. In other parts of the state, small business owners are considering tapping into their life savings for a chance to be a pot farmer.
“In a way, we’re like prospectors out there drilling for oil,” Gould said. “But what we’re looking for is a way to take this plant and use it to alleviate a lot of pain and suffering.”
For those who land a license, the possible payoff is winning a slice of what’s expected to be one of the largest medical marijuana markets in the U.S.
“Ohio has the potential to be a serious heavy weight in this industry,” said Chris Walsh of Marijuana Business Daily, a Colorado-based news and research firm. “In terms of patient counts and retail revenues, Ohio could become a behemoth, but there are a lot of caveats to that.”
Big risks, lots of unknowns
For those considering jumping into Ohio’s legal pot market, where the rules are still being written, the business risks are substantial.
“There are so many unknowns, and the financial requirements for someone to get up and running are just astronomical,” said Kelley Mottola, who along with her husband owns an indoor planting supply shop in Hilliard, Ohio.
Ohio has set some of the highest fees of any state that has legalized medical marijuana. The funds will go to cover the costs associated with ensuring the new industry complies with Ohio’s rules – a job that will be led by newly created Ohio Medical Marijuana Control Program.
For large growers with operations up to at least 25,000 square feet, the initial application fee is $20,000, with a $180,000 annual licensing fee. Smaller growers -- those with operations 3,000 square feet and under -- must pay a $2,000 application fee and an $18,000 license fee annually. Those who apply and don’t make the cut lose their application fee.
Also part of the application process, growers must to present documentation detailing their financial ability to launch the new venture. Large growers must show they have at least $500,000 in liquid assets, and small growers must have at least $50,000 in assets.
“That doesn’t even come close to what you will have to spend to buy your equipment and actually grow enough product to sell,” said Mottola, who has been traveling to grow facilities in Colorado to study processes and explore business practices.
The mother of two and wife estimates she’ll need at least a half million to launch a small family-owned growing operation.
“We have some other family members who are interested in investing, which is where we’ll likely secure most of the funds,” she said. “The big challenge right now is weeding through all of the regulations and the application. We’ve been doing our research, but it’s a ton of work.”
Community support key for pot farmers
Even those with the financial fortitude can face other big hurdles.
Growers must find communities willing to welcome the still federally illegal operations. Applicants must show local communities support their plans and confirm that no bans or moratoriums are on the books.
In Cincinnati, Gould said he his team had several communities approach him about pursuing operations.
“We actually approached Wilmington, because it’s a community I’ve always loved and I knew it has been through a lot of job loss in recent years,” Gould said of the town of fewer than 13,000 residents. All told, Gould thinks the cultivation campus – operating as CannAscend Ohio -- will create up to 300 new jobs.
“The community there was very supportive, and we feel like they’re going to be a strong partner,” Gould said.
Wilmington Mayor John Stanforth declined to speak with WCPO, but he issued this statement in a March press release:
“The growth of plant-based pharmaceuticals represents an important new trend in medical science," Stanforth said. "The resulting jobs and potential for greater research opportunities offers important prospects for partnerships with area colleges that have a focus on agriculture science, chemistry and biology. We're pleased to take this critical step to bring much-needed relief to pain sufferers who can benefit from these new legal remedies.”
Others haven’t had as much success.
In Northeast Ohio, Bret Adams said he’s been meeting with community leaders in several Cleveland-area towns in hopes of winning support for his plans for a growing facility.
Owner of Cleveland-area Chef Art Pour Restaurant Group, Adams said his new venture, Harvest & Bloom, will be a “community-driven and sustainable facility committed to providing affordable, high-quality medical cannabis to qualified patients.”
But he has yet to find a community ready to sign on. The payoff for Adams, he said, is personal. He and his wife Michelle are hoping to pass Harvest & Bloom along to their five children.
“This is isn’t about a golden ticket,” Adams said. “We know we could invest a lot of money and end up with nothing. That’s a business risk we’re willing to take.”