What’s Up With Ohio’s $500,000 Application Fee? More Than You Think

Published on March 2, 2016 · Last updated July 28, 2020

Out of the ashes of Issue 3, the legalization measure rejected by Ohio voters last year, a new medical marijuana initiative is rising in the Buckeye State. Earlier this year the state’s cannabis advocates, divided by the debacle of Issue 3, came together and joined with Marijuana Policy Project to create a more comprehensive and practical approach to legalization. The full text of that proposed MMJ initiative was released earlier today—and it’s already setting off alarm bells.

First off: What’s up with that application fee?

The proposed initiative contains a $500,000 application fee for organizations interested in one of 15 large-scale marijuana cultivation licenses. That sounds prohibitively high (and the $500k is only the application fee, there’s no guarantee of a license). For many who had reservations about ResponsibleOhio’s cannabis monopoly clauses, the application fee raises a number of questions. Why is the fee so high? Why are the number of licenses so limited?

Leafly caught up with Mason Tvert, Communications Director for Marijuana Policy Project, one of the authors of the new Ohio amendment, to find some answers.

“There are two types of cultivation licenses,” Tvert told us. “One of them is more expensive and limited and the other one is less expensive and unlimited, in terms of the number [of licenses] being issued, and there’s a very good reason for it.”

He’s referring to the licensing fee for a “type 2 medical marijuana cultivation facility” which is $5,000 and of which there are an unlimited supply.

“There’s two different types because there needs to be an injection of money into the system to ensure that it can get off the ground and operate,” he said.  “One of the things we constantly see with marijuana laws is that there are too many things required up front, from the state government, and no revenue to fund what needs to get done.”

In the case of Ohio, the amendment would create a new branch of the state government known as the Medical Marijuana Control Division, as well as Medical Marijuana Advisory Board. These groups would be charged with implementing rules, enforcement, licensing and regulation. Without additional revenue, the state government would be forced to use funds already spoken for.

At first glance, a $500,000 fee just to apply for a cultivation license sounds incredibly steep. However, in speaking with Tvert, it became clear that the application fee was the result of a compromise designed to keep all parties satisfied.

“People don’t want a situation in which nobody can afford licenses and there are massive barriers to entry,” Tvert said. But the cannabis advocates behind the initiative “also want to ensure there’s enough [cannabis] supply, and to ensure that the cost to patients is not too high.”

When asked about the dreaded “monopoly” question, which created such a divide during last year’s election, Tvert was quick to quash any fears.

“We very intentionally drafted it to avoid type of oligopoly or monopoly,” he said.  The 15 large-scale producer licenses are limited, Tvert explained, because unlimited production would result in an oversupply of cannabis. That could lead to unsustainable price levels or out-of-state diversion—problems that “would raise significant questions with regard to whether the law is compliant with the policy laid out by the Justice Department.”

Tvert’s group was brimming with enthusiasm for the initiative this morning, noting that the proposal did what ResponsibleOhio could not: unite cannabis supporters in a common goal. “We are trying to work with everyone, and get everyone together,” said Tvert. “We’ve got LegalizeOhio on board and now we’re all just trying to pass the best possible law.”

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Lisa Rough
Lisa Rough
Lisa is a former associate editor at Leafly, where she specialized in legislative cannabis policy and industry topics.
View Lisa Rough's articles
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