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Future of Ohio medical pot industry uncertain after federal decision

Regulators and operators in Ohio’s nascent medical marijuana industry are keeping a watchful eye on news that the U.S. Department of Justice will end an Obama-era policy that paved the way for marijuana legalization in states.

U.S. Attorney General Jeff Sessions is expected to rescind the policy and leave it up to assistant United States attorneys general to determine how aggressively to enforce federal marijuana laws. The U.S. attorney’s office in the southern district of Ohio declined comment.

“It is definitely disappointing news. It is definitely going to impact investments. It’ll be harder to raise money for future groups,” said Thomas Rosenberger, executive director of the National Cannabis Industry Association of Ohio. “I don’t think it’ll stop the program (in Ohio.)”

Related: Springfield, Yellow Springs among sites to get large scale marijuana growers

He added: “This has been a risk in the industry since its inception…It’s possible they’ll do nothing. It’s possible they’ll do some raids as they’ve done in the past and take away the plants and arrest people.”

Rosenberger predicted the change in policy will be more problematic for states with full legalization, such as Colorado and California, where marijuana can be used by all adults, not just patients.

Opponents of marijuana applauded the decision.

“There is no more safe haven with regard to the federal government and marijuana, but it’s also the beginning of the story and not the end,” said Kevin Sabet, president and CEO of Smart Approaches to Marijuana, who was among several anti-marijuana advocates who met with Sessions last month. “This is a victory. It’s going to dry up a lot of the institutional investment that has gone toward marijuana in the last five years.”

Ohio moving ahead with current plans

The Ohio Department of Commerce, which regulates medical marijuana in the state, issued a statement saying it will continue to follow the guidelines established in the state law that took effect in September 2016. “Our responsibility is to fulfill all statutory mandates in establishing Ohio’s medical marijuana program. The department cannot speculate on any decisions made at the federal level, but our program officials will continue to monitor any developments.”

Ohio awarded two dozen cultivator licenses — 12 large-scale and 12 small-scale — late last year and is reviewing applications for dispensaries and processor licenses. The program is expected to be fully operational by September. In June 2016, Gov. John Kasich signed a bill into law that authorizes use by patients with 21 conditions, including cancer or chronic pain, in the form of edibles, oils, patches and vaporizing. Patients and their caregivers will be allowed to possess up to a 90 day supply. Smoking or home growing it is barred.

Already, license holders are breaking ground on new growing facilities. Cresco Labs is building a 50,000-square-foot greenhouse in Yellow Springs. Cresco said the company needs to see the official statement from Sessions before commenting.

Related:  Ohio announces first set of medical marijuana licenses

Sessions decision further unsettles a risky start-up industry in Ohio that faces threats of lawsuits and ballot issues and pressure to reconsider licensing decisions.

Related: Controversy, legal threats mar Ohio’s medical pot launch

Marijuana remains an illegal drug under federal law, even though 29 states have laws that legalize marijuana, including eight that allow recreational use.

The Obama administration issued a directive in 2013 known as the Cole Memo that said states could establish their own marijuana laws without federal interference as long as their regulations protect U.S. Department of Justice priorities, such as preventing distribution to minors and drugged driving.

Sessions’ decision comes the same week that California legalized recreational use by adults, establishing the largest legal weed market in the nation. California sales of legal pot are expected to generate $1 billion in tax revenue for that state within several years.

While Sessions has been carrying out a Justice Department agenda that follows Trump’s top priorities on such issues as immigration and opioids, the changes to pot policy reflect his own concerns. Trump’s personal views on marijuana remain largely unknown.

Sessions, who has assailed marijuana as comparable to heroin and has blamed it for spikes in violence, had been expected to ramp up enforcement. Pot advocates argue that legalizing the drug eliminates the need for a black market and would likely reduce violence, since criminals would no longer control the marijuana trade.

“This isn’t a surprise, as Jeff Sessions has been outspoken with his antiquated, out-of-touch views on cannabis for quite some time now. Tearing up the Cole Memo is clearly a move to rewind the clock on marijuana, which will prove extremely difficult to do,” said Chris Walsh, vice president of Marijuana Business Daily. “This industry generates about $6 billion in annual retail sales, is the lifeblood of several hundred thousand workers, consists of tens of thousands of responsible companies, filters hundreds of millions of dollars annually into state coffers, and has the support of the majority of the U.S. population. It will fight back.”

Walsh added that the move will inject more uncertainty and regional crackdowns into the industry.

Information from the Associated Press is included in this report.

Other news from our Columbus Bureau reporter Laura Bischoff: 

 

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