COLUMBUS, Ohio – Ohio’s entry into recreational marijuana will launch in coming weeks with long lines, high prices and limited supply for customers, industry experts said, based on their experience of working in other states that expanded from medical to adult-use sales.
After voters approved recreational marijuana for adults aged 21 and older in November, it’s just a matter of time before the state allows medical dispensaries to also sell to recreational customers.
READ MORE: Coming soon: Recreational marijuana dispensary applications go live in June after state panel OK’s rule
The state has until June 7 to post the applications that existing medical marijuana dispensaries will use to request dual-use licenses to also serve recreational customers. Then the Ohio Division of Cannabis Control will review those applications – the dispensaries have already been inspected in person by regulators when they were approved for medical sales – and determine whether they comply with the law and can get a dual-use license.
Expect Ohio adults to flood the retail businesses. Regular marijuana users will have a chance to purchase product legally. Others, people called by industry insiders as the “cana curious,” will visit dispensaries in the first weeks for the novelty of seeing the product on display, talking to a budtender, and walking out with legal weed.
Prices during this initial launch period are expected to be high, said Mikaela McLaughlin, a senior vice president of business development for SpringBig, a cannabis marketing firm with offices in the U.S., Canada and Israel.
“It’s a really common rollout that we see where production is lower than the amount of demand,” she said. “Sales in a medical market like Ohio’s in 2023 were just over $400 million. That’s showing an incredible demand from the state.”
But there will be a period of time when there may not be enough flower, vape oils and edibles for all these new customers, McLaughlin said.
“It’s agriculture, it’s a crop,” she said. “There’s growth cycles. Somebody getting a license isn’t putting products on the shelf overnight.”
That means dispensaries may cap purchases – especially if they want to reserve product for medical patients. Expect more availability of vape oils and edibles– which can be stored for a longer time period – than flower in the beginning, since much of the flower that will be in demand will still be growing in greenhouses.
This could last from three to six months, said Kepal Patel, president of Shangri-La Dispensaries, a Columbia, Missouri, company that owns four dispensaries in Ohio – including one on St. Clair Avenue in Cleveland – that he expects will all become dual-use licensees. (The initiated statute requires the Division of Cannabis Control to OK dispensary applicants for dual use as long as they conform with the requirements to run these businesses legally.)
Patel foresees prices being high in the beginning, then a significant drop when a large volume of product is delivered to dispensaries and fewer curious folks are visiting the stores for the novelty factor. Then the market will even out as it hits its stride.
“Unfortunately, there is going to be a dip (in supplies) then a high, and then it will level out,” he said.
It can take three months for marijuana to grow to the point where it can be harvested. But then cultivators cure it, said Trip McDermott, chief operating officer at Chicago-based Verano, which owns a 22,000-square-foot cultivation facility in Canton, as well as five dispensaries throughout Ohio under the Zen Leaf brand.
“When the flower comes down, it’s taken off the plant and then it’s put into curing bins. And everybody’s got a different way that they cure,” McDermott said. “But we have certain internal processes and timelines to ensure that we have the top-quality product, that the trichomes and the flower is, what I say, fermenting. It’s like the wine industry. That’s what the flower is doing. The terpene profiles are being more pronounced. You’re getting the nose, you’re getting the effects of the cannabis finalizing. If you rush it it’ll be similar to drinking a wine that hasn’t been fermented fully.”
Cultivators are trying to maximize their grow operations right now, to make sure they have more product for the coming surge. Around the same time that the dual-use dispensary license application starts will be a separate dual-use application process for growers.
Growers won’t have to keep cultivation areas to differentiate medical from recreational marijuana, but they won’t be able to sell any of their plants to recreational market until they get the dual-use license.
“You’ll be able to tag the plants the same,” said Tom Hobson, owner of Wellspring, a small-scale, 6,000-square-foot cultivation facility in Ravenna.
The initiated statute allows cultivators to expand their grow space to meet demand in the recreational market. For instance, small-scale cultivators such as Wellspring could expand to up to 15,000 square feet. But the state hasn’t created rules yet for how growers get permission to expand.
Many growers licensed under the medical program haven’t fully utilized the space they can under the medical program, due to the oversupply of marijuana in the past few years, Hobson said.
Hobson said that he probably won’t immediately seek permission to expand to 15,000 square feet. Under his medical license, he can still expand another 3,000 square feet to 9,000, which is a level of risk he’s comfortable with at this time.
Wellspring was the first business to get licensed and open under the medical program. Being first was hard, and he’s not going to “bet the farm” to aggressively expand into recreational without seeing demand, he said.
“Believe me, we learned the hard way it’s not fun to have a cultivation when you don’t have any dispensaries to sell it to,” he said.
In addition to a grow facility, Hobson has a processing license, which allows him to create oils from the flower that he uses to infuse into products.
Wellspring sells cannabis-infused peanut butter, hazelnut spread, marshmallow spread, honey cinnamon peanut butter, hot cocoa mix and infused hot sauce. Hobson said he’s developing soda products right now. He also makes resins, waxes and vape cartridges.
“We’re ramping up our beverage line,” he said. “We’re getting it all ready to go with the expectation that volume is going to far outstrip what we can produce. We’re trying to build some inventory ahead if we can.”
Under the recreational program, Hobson said he doesn’t expect the state to require growers to segregate medical plants from recreational plants.
“The way the program is going to roll out is you’re be able to tag the plants the same. The difference between the programs is going to happen at the cash register,” he said. “So in other words the plant doesn’t count toward recreational or medical until it’s actually cashed out at the dispensary.”
So Hobson can start growing already with the intention that when he gets his dual-use license, he can sell flower and infused products produced under his medical license in the recreational program.
Since marijuana flower has a shorter shelf life than oils for vaping and edibles, many processors are diverting flower to the processing equipment to create oil. That’s the safest bet when timelines aren’t guaranteed
“There are processes to continue to ensure oil is fresh and top quality,” said McDermott, the executive at Verano, the Chicago-based marijuana company with the Canton cultivation facility, which also has a processor license. “Whereas aging flower, there’s no reversal for that. So in anticipation of adult use, we are increasing our inventory and backstock of oil so that we can make as many infused products and vapes as we possibly can to meet that market demand. That’s definitely the more elastic product line.”
In Ohio’s medical program, sales are highest in flower—which can be smoked or vaped – followed by vaping oils. In March, sales THC-infused topical lotions and creams beat out sales of edibles.
READ MORE: Dispensaries sell $54 million in medical marijuana in March; total sales just under $2 billion since program’s start
McDermott said the products that are most popular in state medical programs continue to be popular in recreational sales.
“Flower is generally king,” he said. “In these instances where everybody can grow only so much flower, given the gold rush of everybody coming into dispensaries and buying whatever they can, the alternative to that is going to be vapes.”
Gummies also sell well. The lotions and topics are a medical product that don’t appeal to adult users, he said.
In both the medical law and the recreational initiated statute, the THC limit on flower is 35%. The limit for extracts in the medical program is 70% THC. The limit for extracts in the recreational program “shall be no less than 90%,” which likely means that’s the ceiling, although some state lawmakers believe the law actually means 90% is the minimum amount of THC an extract can contain.
Either way, products containing cannabis extracts will have a lower THC level when recreational sales launch, since the products initially on the shelves will mostly be those created by processors who at the time only had medical licenses.
“You’re not going to be able to see 90% concentrates until those recreational rules are promulgated,” said Hobson of Wellspring in Ravenna.
Marijuana dispensary owners said that they will enact internal policies to ensure that medical patients – some of whom have cancer, Parkinson’s and spinal cord conditions – will be served upon arrival, despite the long lines.
“Each of our locations has a different layout,” said McDermott of Verano. “But when we can, we will have a medical-only line. Also when you check in and if you are a medical card holder and if we aren’t available to have a medical-only line, we’ll push the medical patients to the front of the line.”
Verano will also reserve products that, based on historical sales, are popular with medical patients – especially in the beginning rush, he said.
Similar policies will help medical patients at Shangri-La dispensaries, Patel said.
“We usually try to reserve a certain amount of stock for the medical patients so they always have the product availability,” he said. “Something we are also looking into doing is having an expedited line for the medical card holders when they come to the stores. Recreational use, obviously we support that, but for those patients who are using it for medication and have a condition, it’ll be a faster line for them.”
Laura Hancock covers state government and politics for The Plain Dealer and cleveland.com.
Be the first to comment