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Will legal marijuana flourish or fold in 2018?

Posted at 6:00 AM, Jan 03, 2018

CINCINNATI -- In the rapidly evolving world of legal marijuana, 2018 is poised to be one for the history books in Ohio.

In less than 10 months, some of Ohio's sickest residents should be able to use state-issued identification cards to shop at a local dispensary for a medical marijuana product grown and made right here in the Buckeye state. 

Already, hundreds of new regulations have been crafted and dozens of entrepreneurs have invested millions for their chance to break into the budding industry.

But hundreds more decisions are still pending -- including who will win the right to process, dispense and recommend the newly legal drug. Meanwhile, a new effort is afoot to make the drug legal for recreational use -- a reality in eight other states.

RELATED: Do you support Ohio's latest pot push?

"It's hard to predict how this will all play out" said Chris Walsh, of Marijuana Business Daily, a news and analytics firm. "From what we've seen, Ohio is following through with its plan, but there's always the possibility for delays."

With a Sept. 8 deadline to have the  Medical Marijuana Control Program fully up and running, state regulators and countless business owners face a make-or-break time crunch. Businesses that aren't up in running in time could lose their right to operate in Ohio.

As the New Year kicks off, here's a look at the big hurdles ahead as Ohio enters the sticky world of legal marijuana. 

Patient registry, physician certifications

At some point this year, eligible patients are supposed to be able register online for a medical marijuana card, which will come with a $50 fee. Patients who are approved for medical marijuana must have one of 26 qualifying conditions and have doctor's recommendation. A final date hasn't been set for when the registry will be open.

Ohio is expected to have one of the largest medical marijuana markets in the U.S. -- with an estimated 230,000 residents expected to be eligible for the program.

Doctors who want to be certified to recommend the drug to their patients must complete two hours of training.

Industry observers say physician certification is a critical component to a medical cannabis market's sustainability. If too few doctors get certified, patients could face a bottleneck in getting the needed recommendation. 

Also key: How much will patients pay for medical marijuana? 

Ohio has some of the priciest fees in the country for businesses vying to get into the medical cannabis market. Application fees for growing, processing, testing and selling the drug range from $3,000 to $20,000. Those who win the right to launch a business face annual renewal fees of $18,000 to as much at $180,000.

"The question is, how costly will this make it for patients," said Chris Lindsey, a senior policy analyst with the Marijuana Policy Project in D.C. "There's going to be a lot of pressure to make sure it's not absurdly expensive."

 Tracking and paying for legal marijuana

Ohio is spending more than $6 million on a sophisticated system that regulators say will track every medical marijuana plant grown by state-licensed cultivators from seed to sale. 

Florida-based Metrc is crafting the tracking system. It's the same firm that created Colorado's tracking program, which the state unveiled in late 2013. Ohio regulators have said fees paid by medical marijuana-related businesses operating in the state will cover the $6 million price tag for the system.

Medical marijuana plants inside the grow site for Altitude Wellness Center in Garden City, Colorado. Emily Maxwell | WCPO

Meanwhile, regulators are still mapping out details for what they call a "closed loop payment system" that they hope will eliminate big risks many legal marijuana businesses face.

Because the drug is still illegal federally, most banks and financial firms refuse to service the new industry. That forces most businesses to operate on an all-cash basis, making the operations a target for criminals. 

Ohio's proposed payment system would work similarly to a prepaid debit card, officials have said. Businesses could use it as they exchange services with each other and patients would use it buy their medical cannabis products. The system would also help regulators better track financial transactions.

Big decisions on dispensaries and more still loom

Among the biggest items still to be decided: Who will be able to process, test and sell medical marijuana across Ohio.

Late last year, the state announced which firms won the right to grow medical cannabis. Just 24 cultivators will operate in  the state -- with more than 100 businesses having submitted applications for a license.

Regulators received more than 350 applications for dispensary licenses. Just 60 will be awarded across the state under rules that dissect Ohio into districts – with a designated number of dispensaries per district.

Hamilton County will make up a newly created Southwest Ohio District 1, where up to three dispensaries can operate. Warren, Clinton and Clermont counties make up Southwest District 5. Across all three counties just one dispensary will be allowed to open. 

Marijuana plants inside the grow site for Nature's Herbs & Wellness Center in Garden City, Colorado. Emily Maxwell | WCPO

Decisions are expected as early as this month on who will be awarded licenses for dispensaries. 

But before medical marijuana can hit the shelves in Ohio, the plant has to be processed into an allowable form of medical pot.

Under the law, which Ohio’s legislature passed last September, patients with qualifying conditions will be able to buy a 90-day supply of medical pot in the form of oils, patches, edibles and plant materials for vaporizing. Smoking the drug will still be illegal.

Ohio is expected to award at least 40 processing licenses. More than 100 firms applied for the job in December, each paying a $10,000 application fee.  Those who land a license face $100,000 annual renewal fee. 

The last link in Ohio's legal cannabis supply chain is testing the final products. Testing facilities must check the drugs for hazards including fungus and verify the level of THC, which is the part of marijuana that makes users feel high. Ohio’s law originally required that a state-based university or college handle the testing. Those rules changed after just two schools showed interest: Hocking College and Central State.

Just last week, regulators announced the nine applicants vying for just one testing license. 

Businesses that win the right to operate in Ohio will be vying for a piece of what "could be one of biggest medical marijuana markets in country," said Walsh of Marijuana Business Daily. "We'll just have to see how it all plays out though, this industry is full of surprises."