By Mike Boyer
There’s a lot of excitement around Ohio’s new medical marijuana industry even before it really gets off the ground.
“What’s exciting is I don’t know if we’ll ever see another opportunity in our lifetime to have a new industry created out of nowhere,” says Brian Wright, executive director of the Ohio Cannabis Association, a trade group representing businesses, medical providers and patients.
The medical marijuana law took effect Sept. 8, but it will be at least a year before the state’s Medical Marijuana Control Program is put together by the state Department of Commerce, the state Board of Pharmacy and the Ohio Medical Board, laying out licensing requirements for cannabis cultivation, processing and delivery in approved forms to patients.
All that uncertainty hasn’t stopped educated guesses on what the state’s budding marijuana industry will look like.
Marijuana Business Daily has estimated it could generate between $200 million and $400 million in annual sales via dispensaries once the market develops, contributing about $23 million in state sales taxes.
Wright thinks that estimate may be low.
“When the program is fully running we’re looking at 350,000 to 400,000 Ohio patients accessing medical cannabis,” he says. “I think it will be much larger but right now these are the best numbers we have.”
He thinks the total economic impact will be closer to $800 million when you include ancillary businesses that support the marijuana supply chain.
“You need trucks to ship it, you need people to make sure it’s secure and to make sure you have security systems in place.” For example, he says. “I’ve had conversations with people starting new businesses here to produce software tailored for the dispensaries.”
One big question mark is just how many cannabis cultivators, processors and dispensaries state regulators will license.
Although Pennsylvania’s new medical marijuana law isn’t identical to Ohio, it’s closer to full implementation, says Carrie Roberts, senior consultant with Medicine Man Technologies, a Denver-based consulting firm for marijuana investors.
Pennsylvania’s population is slightly larger than Ohio’s (about 13 million vs. 11.6 million, based on 2014 census data).
“They’re allowing 25 cultivator-processing licenses and 50 dispensary licenses where each licensee could operate up to three dispensaries. So you’re looking at 25 cultivation-processing centers and up to 150 dispensaries,” she says.
Given what’s expected to be a limited number of licenses and the cost of getting up and running, Ohio’s new medical marijuana industry probably won’t include many small businesses. In most cases, Roberts says teams of investors are pooling efforts to win licenses.
In Pennsylvania, she says, investors are looking at spending $5 million to $7 million on large-scale cultivation operations. Dispensaries in Pennsylvania will require investments of up to $1 million each, she says.
While competition will be intense for cultivation, processing and dispensary licenses, Wright says there will be opportunities for small entrepreneurs.
“I think you have to think creatively about what the industry needs and about filling that need,” he says. “Like the software developer for dispensary inventory control, you don’t need to worry about [medical marijuana] licensing. You just need a business plan and a great product to help dispensaries thrive.”