Ohio to eliminate Board of Pharmacy as Medical Marijuana regulator
Ohio's medical marijuana industry is getting at least one of the regulatory reforms it's been clamouring for.
Within the state's recently passed operating budget is a provision that requires the formation of a Division of Marijuana Control within the Ohio Department of Commerce, effectively eliminating the Board of Pharmacy as a regulating entity in the area of legal cannabis.
Since former Gov. John Kasich signed the bill establishing the Ohio Medical Marijuana Control Program (OMMCP) in 2016, Ohio's commerce and pharmacy departments have shared oversight of licensed marijuana companies.
Cultivators, processors and testing labs have been primarily overseen by commerce. Dispensaries and retail operations, meanwhile, are regulated by pharmacy, which also maintains the registry of medical marijuana patients and caregivers.
This dynamic has been a source of headaches for cannabis companies required to deal with both agencies. Problems tend to be more common for larger and vertically integrated businesses with licenses across cultivating, processing and dispensing.
With this bifurcated system of regulation, "there are some times and some instances with disagreements in interpretations of the rules, and they don't always give operators the same answers on things," said Charlie Trefny, government affairs director for the Ohio Medical Cannabis Industry Association.
Operators have complained of issues with differing feedback coming out of each department on things like product labeling, for example.
Even if a cultivator and/or processor doesn't have retail operations, pharmacy sill reviews the labels attached to the packaged flower they grew or the products they manufactured. And there have been repeat instances of a grower or processor getting product labels OK'd by commerce — their primary regulator — only to be later rejected by pharmacy.
It's a relatively small issue that was more common early on in the launch of the marijuana program, but it's nonetheless cost some caught in the scenario time, money and frustration. Giving the industry one regulator to deal with makes for a more generally business-friendly environment.
Trefny said that the OMCIA has been in talks with the governor and past general assemblies about tweaking the regulatory dynamic for a couple of years, so the inclusion of this change with the budget was a welcome development.
"The big thing about this regulatory consolidation is making the supply chain more efficient," Trefny said. "And I think it's just good policy."
The language in the state budget requires oversight of dispensaries as well as the patient and caregiver registry to be transferred from pharmacy to commerce by Dec. 31.
In a note to patients, the OMMCP said it would communicate any changes that might impact them as the transition happens.
Flattening the regulatory regime for companies from two agencies to one has been one of many provisions in Senate Bill 9, a piece of legislation intended to reform several aspects of the OMMCP to the potential benefit of both companies and customers.
There are many parts of that sweeping bill current industry players don't like, however, including language that would permit the issuance of additional cultivation licenses to standalone processors and enable smaller Level 2 cultivators to expand growing space to 15,000 square feet. Under current laws, Level 2 cultivators begin with 3,000 square feet of growing space but may apply to scale up to 6,000 and 9,000 square feet.
Several existing cannabis companies have bristled at the idea of legislation bringing additional cultivation space online at a time when the market is oversupplied, 60% of already licensed grow space is not being utilized, and patient rolls are not growing.
"If you have an imbalance between supply and demand, you could reduce or increase supply, but why not go after the other side of the equation and increase the number of patients materially to make up the imbalance? We need to improve the consumer side first," said Jeremy Unruh, senior vice president of public and regulatory affairs for PharmaCann Inc., a Chicago-based multistate operator with cultivation, processing and three dispensaries in Ohio.
OMCIA has ultimately expressed opposition to SB9 because of the elements that it says don't improve the business environment for current operators.