To date, the MMCP has issued certificates of operation to 16 cultivators, 1 processor and 10 dispensaries. There are over 20,000 patients in the program, the majority of which claimed intractable pain as their approved condition. Overall, those patients have purchased over 250 pounds of cannabis, at the cost of about $500 per oz. Not surprisingly, given the low supply available as the program comes online that makes Ohio's legal marijuana the most expensive in the country. At this point, patients are limited to purchasing flower or "bud." With just one processor operating as of March 8, the other approved forms of cannabis such as vape, tinctures and capsules, are not yet available.
Meanwhile, the U.S. federal government continues to edge closer to legalization. Most notably, the FDA approved Epidiolex for the treatment of seizures, its first drug containing Cannabidiol (CBD) - the medicinal element of cannabis. Marijuana itself remains a Schedule 1 drug according to the DEA, which means it has no medicinal benefits and a high risk of addiction.
Forty-seven states permit the sale of CBD not derived from marijuana. Thirty-three states have medical marijuana programs and ten have full recreational, or adult use, marijuana programs. New Hampshire may go fully recreational later this year and South Carolina is also developing a medical marijuana program.
Congress also passed the Farm Bill in December 2018, legalizing the farming of hemp, a variety of cannabis that does not have the psychoactive component, THC. It remains unclear however whether the sale of hemp derived CBD is legal, as the Farm Bill did not extend to the byproducts of hemp.
It remains unclear whether the Rohrbacher-Blumenaur amendment to the Federal Budget, which prohibits the Department of Justice from spending resources on prosecuting states with legal medical cannabis programs, will make it into the budget for 2019 - 2020.
There are a couple of bills working their way through the House and Senate to address this uncomfortable conflict between state and federal laws, including the tongue-in-cheek named S.420. S.420 calla for the immediate de-scheduling of cannabis and certain tax code changes. Cannabis companies, while they are considered illegal operations, are still expected to file income tax returns. The IRS will take their money, but not permit ordinary business deductions.
With so many Americans, including Ohio patients, now able to legally purchase marijuana, how does that impact the general public?
Employers have concerns about their risks in dealing with employees participating in the program. The law continues to protect employers, allowing them to enforce drug-free work policies, refuse to hire participants and terminate employment on the basis of use of the drug while on the job. That said, the practice is arguably at odds with Ohio's anti-discrimination laws. Some state courts, including Connecticut and Massachusetts, have found that adverse employment activity against a patient violated their state's anti-discrimination laws.
Banks, insurance companies, and landlords face the challenges of hosting these otherwise ordinary businesses and their complexities in operating in a federally illegal market. Banks risk violating the Anti-Money Laundering Act and Bank Secrecy Act which expose them to RICO actions. Insurance companies also have largely stayed away from cannabis for some of the same reasons. Even landlords risk bank account closures and cancelled insurance policies simply because they have a tenant operating a cannabis business.
Cannabis is a complicated space in which to operate. There are certainly opportunities for investors, both in the U.S. and internationally. However, along with the general risks associated with business investment, those involved also risk violating federal law.