A new batch of coveted and rare vertically integrated cannabis business licenses could become available in Ohio’s $1 billion adult-use marijuana market.
Under House Bill 611, so-called “orphaned” cannabis processors would be granted both cultivation and retail permits, allowing them to operate as fully vertically integrated businesses.
Ohio has 46 standalone cannabis processors, a license category introduced in the medical cannabis era.
But since 2016, state law now allows a cannabis product to be sold without going through an independent processor, leaving 14 processor permits without a corresponding cultivator, according to Republican state Rep. Jamie Callender.
What are Ohio’s ‘orphaned’ cannabis processors?
These “orphaned” cannabis processors have been in the state’s industry since the beginning – and they are primarily small businesses, according to advocates.
As in other states, cannabis processors extract oil from biomass and create finished products such as edibles and vaporizer cartridges.
HB 611 would allow them to:
- Cultivate up to 5,000 square feet
- Open a retail location
“By supporting the orphan processors, we will keep good paying jobs across the state while increasing the supply into the market, driving down costs for consumers and undermining illicit sellers,” Callender said in a statement.
Coauthored by Callender and Republican state Rep. Brian Stewart, HB 611 is awaiting a hearing in the House Judiciary Committee.
How many business licenses are available in Ohio?
Recent changes to Ohio state cannabis law caps the number of retail permits available in the state at 400. There are currently 205 with a certificate of operation, according to state data.
Cultivation permits are capped at 37, and all have been issued.
Ohio elected officials appear keen to support small businesses owned by state residents.
Last month, state Attorney General Dave Yost sued major marijuana multistate operators, accusing them of running a “price-fixing cartel” that’s squeezing out small businesses in the state and leading to poorer product quality sold at higher prices for consumers.
Allowing processors to sell their own product would be a workaround.
Ohio cannabis MSOs accused of ‘price-fixing’ cartel
Small businesses see HB 611 as a way to compete with major national players.
Such “crucial vertical integration is the only path to achieving sustainability and independence while ensuring a consistent, diverse variety of products for patients and consumers,” Emilie Kelleher, the vice president of business and government affairs at Beneleaves, a Columbus, Ohio-based processor, said in a statement.
“This self-sufficiency will allow small, local, Ohio-owned businesses like us to manage the entire supply chain and lower operating costs, leading to more affordable products and greatly improved patient access across Ohio.”
