Ohio Releases Proposed Rules for Medical Marijuana Processors

January 31, 2017
Legal Update

Cultivators will farm it. Dispensaries will sell it. But, how will Ohio’s medical marijuana get from soil to store? Processors.

Licensed processors will deliver cultivators’ marijuana to dispensaries in one of the plant’s legally ingestible forms: oils, tinctures, plant material, edibles and patches. Ohio’s proposed rules governing processors are open for public comment through February 10, 2017.

The Application       

Ohio proposes issuing up to 40 provisional processor licenses beginning September 8, 2018. Processors must apply for a provisional license with a non-refundable $10,000 fee. Like the proposed cultivator rules, each of the following application components will be scored to determine who is granted a provisional license. Each component calls for an array of complicated plans, policies and procedures that will ultimately determine which are selected for licensure.

  1. Business Plan. The applicant’s type of business organization and governing documents, and the proposed physical address of the processor with a map establishing it is not within 500 feet of certain prohibited facilities.
  2. Operations Plan. Processing and extraction techniques, facility plans and employment matters to ensure compliance with all of Ohio’s medical marijuana laws.
  3. Quality Assurance Plan. The intended use and sourcing of extraction equipment, best practices for packaging and labeling, and inventory control plan.
  4. Security Plan. The establishment of policies and procedures to prevent theft, loss, or diversion from a processor and protect facility personnel.
  5. Financial Plan. Record keeping policies and procedures, a security plan and transportation policies, and a plot plan drawn to reasonable scale designating the processor facility’s different areas of operation.

A Provisional License

If chosen, an applicant will be issued a provisional license and given six months to show that its facility is operational. A licensee may demonstrate this by showing that the facility complies with all of the details in its submitted application. Moreover, the licensee must also show that it is “financially responsible” by maintaining insurance coverage with limits required by the state, and either establishing an escrow account, or providing a surety bond in the amount of $750,000, payable to the state. A processor may have to forfeit this amount to the state if it fails to adhere to its security plan or fails to ensure a consistent and uninterrupted supply of medical marijuana.

Certificate of Operation

A provisional licensee that successfully demonstrates the above will then be granted a certificate of operation, enabling it to process medical marijuana.

The public may comment on these rules by emailing mmcprules@com.state.oh.us. For more information on Ohio’s medical marijuana law, contact Brian Higgins or any member of Frost Brown Todd’s Heath Care Industry Team.

*This does not constitute legal advice. Please note that marijuana is still illegal at the federal level and those participating in Ohio’s medical marijuana industry may be subject to federal prosecution.

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