Cannabis business is state’s most regulated, industry insiders say

Workers trim marijuana plants at Grow Ohio, a marijuana cultivation company with a facility near Zanesville. Among the many regulations of the Ohio cannabis industry, plants must be grown inside to control access. [Dispatch file photo] © Dispatch file photo/Dispatch/The Columbus Dispatch/TNS Workers trim marijuana plants at Grow Ohio, a marijuana cultivation company with a facility near Zanesville. Among the many regulations of the Ohio cannabis industry, plants must be grown inside to control access. [Dispatch file photo]

Before the Ohio Provisions medical marijuana dispensary in Carroll could open its doors, it needed cameras that captured the entire property.

“We have 53 cameras total in our store,” General Manager Chris Mastrilli said. “The cameras have to be able to pick up and record basically every square inch of the dispensary inside and out, except the bathrooms.”

Additionally, Ohio Provisions must keep marijuana products in locked cabinets on its sales floor until a sale is made, all transactions must be reported to Ohio’s prescription drug tracking system within five minutes, and any errors must be reported immediately. And those are just a few of the rules the business must follow.

The stringent regulations for medical marijuana dispensaries, cultivators and processors make the cannabis business the most regulated industry in the state.

“This is something we’ve never tried before,” said Erin Reed, senior legal counsel with the State of Ohio Board of Pharmacy. “There has to be a lot of security mechanisms in place.”

The myriad requirements have contributed to the slow pace of dispensary openings. Medical marijuana was approved in Ohio in 2016, but only 18 of the 56 dispensaries that were granted provisional licenses have been approved to open. The lack of competition among dispensaries is often cited as a reason for sky-high costs that have priced some patients out of the medical marijuana market.

But the rules are necessary for a number of reasons, state officials and industry insiders say. Marijuana can be sold only as a medication, and Ohio’s regulators want to avoid even the appearance of cannabis being sold for recreational purposes.

State officials also want to prevent cannabis from falling into the wrong hands, something known in the industry as “diversion.”

“We have a locking gate” for deliveries, Mastrilli said. “When deliveries are made, security first must check in the vehicle. (Drivers) are given vehicle access to a space where we have cameras recording the approach and delivery before they even enter our building.”

But the requirements begin even before the products reach the dispensary. Marijuana cultivators, for example, must grow their crops indoors.

That makes it easier to restrict access, said Thomas Rosenberger, associate director of the Ohio Medical Cannabis Cultivators Association.

“It’s harder to control the inflow and outflow” when marijuana is grown outside, he said. “It all goes back to preventing diversion.”

From there, the cannabis must be tested before it’s sold.

“Every product, whether it’s a flower or processed product, a portion of that product has to be sent to a testing lab,” Rosenberger said.

Inspectors in those labs measure the levels of key cannabis components such as THC and cannabidiol (CBD), look for forbidden pesticides, and ensure the products are safe for human consumption.

“We’re dealing with a sick population,” said Ali Simon, public and policy affairs liaison for the state pharmacy board. “It’s crucial that they’re getting something that’s packaged correctly and hasn’t been adulterated.”

The regulations extend to marketing. While cannabis businesses can use words long associated with pot smoking, such as “green,” and “herbal,” in their titles, terms such as “weed,” “pot,” and even “cannabis” and “marijuana” are forbidden.

That’s resulted in a steep learning curve for cannabis marketers, said Nicholas Francis, owner of Skysprout, a Columbus company that offers marketing services for cannabis businesses.

“Everyone wants these cool brands, they want to do podcasts, they want to do all of these things,” Francis said. “But you’re essentially selling medicine, there’s only so much you can do. There’s huge limitations” on social media engagement. “If somebody asks a medical question, you can’t just reply and give medical advice.”

Most industry insiders favor strict rules, saying the requirements build trust in an industry selling a drug that was illegal in Ohio until three years ago and remains illegal at the federal level.

“We see it as a good thing,” Mastrilli said.

Regulators have relaxed some rules at the industry’s behest. Under initial rules, medical marijuana products need a minimum level of THC, but the pharmacy board decided this month to allow low-THC products that contain higher amounts of CBD, which has no intoxicating effects.

pcooley@dispatch.com

@PatrickACooley

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