Week in Review: Ohio’s MMJ plan may shortchange growers, a California win & a legal brouhaha

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By Omar Sacirbey, John Schroyer and Bart Schaneman

Ohio issues draft rules for medical marijuana growers, a federal judge tosses a lawsuit against a Bay Area dispensary, and a raid by law enforcement in Northern California triggers a legal spat.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Ohio growers: ‘Too few, too small’

Cultivation professionals mulling whether to apply for a license in Ohio have some information to work with now that that state has released draft regulations for medical marijuana growers. But the proposed rules may cause some growers to rethink their plans.

Not only would the fees for cultivation licenses be some of the most expensive in the country if the regulations are adopted, there’s some question over whether there would be enough licenses to serve a state with nearly 12 million people.

The draft rules call for up to 18 grower licenses. There would be 12 for grow sites up to 15,000 square feet and six for grows up to 1,600 square feet. Combined, that’s less than 190,000 square feet of grow space.

“I would certainly hope we would see an expansion,” said Tom Haren, an attorney with Seeley, Savidge, Ebert & Gourash Co. in Westlake, Ohio.

The data would seem to back Haren’s call for some revisions.

Ohio’s draft MMJ rules include pain among the qualifying medical conditions, which could give a significant boost to the state’s patient pool. In other medical marijuana states that have chronic pain as a qualifying condition, 1% to 2% of the population typically signs up under that condition for the program.

With Ohio’s population, that would translate to 116,000 to 232,000 patients.

If there are, say, eventually 200,000 patients in Ohio, a dozen 15,000-square-foot growers and six 1,600-square-foot growers would be hard-pressed to service that patient count.

“I think we would see enormous bottlenecks in supply for the market,” Haren said. “They’re too few, they’re too small, and they’re too expensive.”

The good news for cannabis entrepreneurs is the draft is open for public review and the provisions could change. Plus, one provision allows the program director, starting Sept. 9, 2018, to issue additional provisional licenses for cultivators in designated territories if the population and patient demands warrant additional dispensaries.

A new chapter for cannabis?

The marijuana industry and movement have been making baby steps for nearly two decades, ever since California voters first legalized medical cannabis in a historic 1996 vote.

The industry took another step this week thanks to a California dispensary and its attorney.

Berkeley Patients Group and its lawyer, Henry Wykowski, scored a big win after a U.S. judge in San Francisco dismissed an asset-forfeiture action brought by the U.S. Department of Justice.

The ruling may wind up being lost amid the noise generated by the coming election and, perhaps, in the eventual writing of the annals of the marijuana industry’s battle for legitimacy and recognition by the federal government.

But the dispensary’s court victory will likely prove to be another brick in the wall, so to speak, that cannabis entrepreneurs have had to construct in their quest to establish their legal right to exist.

The dismissal, with prejudice, means the government’s forfeiture tactic probably won’t be used again, attorneys say, and that should come as a relief to any plant-touching cannabis company.

With Berkeley Patients Group, Harborside Health Center and Shambhala Healing Center having cast aside the threat of asset-forfeiture actions, companies worldwide are poised to spark a major marijuana boom. The foundation was built by the Ogden and Cole memos, the Rohrabacher-Farr Amendment, a decision from the 9th Circuit Court of Appeals and, of course, an unquantifiable amount of sheer grit.

These baby steps are what’s needed to keep the cannabis industry moving forward beyond Tuesday’s election, which could change the national marijuana landscape.

Legal spat in Calaveras County

A marijuana-related legal brouhaha is simmering in Calaveras County, in Northern California.

This past week the county’s sheriff department seized and destroyed at least $10 million worth of marijuana from a county-licensed marijuana cultivator that supplies cannabis to G FarmaBrands.

The raid, at an abandoned county airport, has prompted the founder of G FarmaBrands to contemplate filing a lawsuit against the county.

Ata Gonzalez, the company’s founder, said Sheriff Rick DiBasilio was wrong when he asserted a county ordinance allows only marijuana growing – but not anything else like processing. Gonzalez labeled it a misunderstanding of the law and a politically motivated act.

“What do we do after it’s grown? Let it rot?” Gonzalez asked.

On Tuesday, Calaveras County residents will vote on Measure D, which would create a framework to regulate cannabis production. DiBasilio has been a public opponent of the measure.

“The sheriff found the perfect scenario,” Gonzalez charged. “‘The Calaveras Airport has been taken over by growers.’ And he made this big show about it.”

The sheriff’s department dispatched trucks to haul away 2 1/2 tons of legal cannabis to a dump. Gonzalez anticipates more marijuana will go to waste if the sheriff’s department continues to prevent growers from harvesting their product.

“Harvesting is part of cultivation – drying, trimming, transporting – that’s all part of it,” Gonzalez said.

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com