SB 56: Cannabis Control

Regarding Cannabis Control and Department of Commerce Reorganization

This briefing document summarizes the main themes and most important ideas and facts presented in the provided excerpts from Ohio Senate Bill 56 (As Introduced). The bill proposes significant changes to the regulation of cannabis in Ohio, primarily by consolidating authority within the Department of Commerce and establishing a new Division of Cannabis Control. It also addresses various aspects of the medical and potential adult-use cannabis markets, including licensing, regulation, and enforcement.

Main Themes:

1. Consolidation of Regulatory Authority within the Department of Commerce:

• SB 56 centralizes power over various industries within the Department of Commerce. Section (B) explicitly states that, with a specific exception, the department “shall have all powers and perform all duties vested in the deputy director of administration, the state fire marshal, the superintendent of financial institutions, the superintendent of real estate and professional licensing, the superintendent of liquor control, the superintendent of industrial compliance, the superintendent of unclaimed funds, the superintendent of marijuana cannabis control, and the commissioner of securities, and shall have all powers and perform all duties vested by law in all officers, deputies, and employees of those offices.”
• The bill further clarifies that wherever duties are currently assigned to these individual officers, those duties “shall be construed as vested in the department of commerce.”

1. Establishment of the Division of Cannabis Control:

• The bill creates a “division of marijuana cannabis control in the department of commerce” (Sec. 3796.02). This division will be under the supervision of a “superintendent of cannabis control” (Sec. 3796.02).
• The Division of Cannabis Control will assume the responsibilities previously held by the “superintendent of marijuana cannabis control” (as referenced in the list of consolidated powers).
• This division is tasked with administering the “medical marijuana control program” (Sec. 3796.02) and will also oversee the regulation of adult-use cannabis if it becomes legal.

1. Licensing and Regulation of Medical and Adult-Use Cannabis:

• The bill outlines the division’s responsibility for “the licensure of medical marijuana cultivators, processors, retail dispensaries, and laboratories that test medical marijuana” (Sec. 3796.02). It also lays the groundwork for licensing “adult use adult-use cultivator[s], a level II adult use cultivator, a level III adult use cultivator, an adult use adult-use processor, and an adult use adult-use dispensary” (Sec. 3780.01(2)(B)).
• SB 56 defines various terms related to adult-use cannabis, including “adult use cannabis,” “adult-use operator,” “adult-use testing laboratory,” “cultivate,” “cultivation area,” “minor cannabinoid,” “mother plant,” and “paraphernalia” (Sec. 3780.01).
• It establishes different levels of adult-use cultivator licenses (Level I, Level II, Level III) with varying authorized cultivation areas (Sec. 3780.01(19), (20), (21)). Level I cultivators can operate up to 25,000 sq ft initially, potentially expanding to 75,000 sq ft with division approval (Sec. 3780.12(E)(1)). Level II cultivators are initially limited to 3,000 sq ft, potentially expanding to 9,000 sq ft (Sec. 3780.12(E)(2)).
• The bill addresses criminal record checks for license applicants and employees, specifying disqualifying offenses and exceptions for certain misdemeanor cannabis-related offenses (Sec. 3780.01(17)).
• It grants the Department of Commerce or its divisions the authority to request criminal records checks from the Bureau of Criminal Identification and Investigation and coordinate with other agencies (Sec. 121.07(L)).
• The division is mandated to consider various factors when determining the number of cultivator and dispensary licenses, including population, patient numbers, and adult-use consumer numbers (Sec. 3796.05(A)). It sets a limit of “not more than three hundred fifty licensed dispensaries” statewide (Sec. 3796.05(B)(1)).
• The bill also sets limits on the number of licenses a single person can hold, initially capping it at eight adult-use dispensary licenses and one adult-use cultivator and one adult-use processor license each, unless authorized otherwise by the division through rulemaking (Sec. 3780.08(A)(3)).

1. Regulation of Cannabis Products and Usage:

• SB 56 specifies permissible forms and methods of using medical, adult-use, and homegrown marijuana, prohibiting forms attractive to children and allowing the division to approve additional methods for medical marijuana (Sec. 3796.06).
• It sets tetrahydrocannabinol (THC) content limits for adult-use marijuana products, with exceptions for vaporization products under certain conditions (Sec. 3796.06(E)(2), (F)). Edible products are limited to 10mg of THC per serving and 100mg per package (Sec. 3796.06(E)(2)).
• The bill prohibits the sale or distribution of adult-use or homegrown marijuana to individuals under 21 (Sec. 3796.06(G)) and prohibits purchase, use, or possession by those under 21 (Sec. 3796.06(H)).
• It regulates the transportation of marijuana in motor vehicles, with distinctions between adult-use, medical, and homegrown marijuana, requiring secure storage (Sec. 3796.062).

1. Enforcement and Inspection Powers:

• The Division of Cannabis Control and the Ohio Investigative Unit are granted the authority to inspect the premises and records of applicants and licensees without prior notice (Sec. 3796.11(B)).
• The division has the power to investigate illegal or prohibited practices and take action, including issuing notices, warnings, and suspending or revoking licenses (Sec. 3796.11(C), 3796.13(C)).
• The bill allows the division to place marijuana under seal if there is a danger of immediate and serious harm (Sec. 3796.13(C)).

1. Interaction with Local Governments and Specific Locations:

• Township zoning resolutions in platted subdivisions or areas with 15 or more contiguous lots can regulate land use (Sec. 121.07(B)). However, this does not grant power to regulate agriculture on lots greater than five acres (Sec. 121.07(B)).
• Townships retain the power to regulate the location of medical marijuana cultivators, processors, or retail dispensaries and to prohibit them within their unincorporated territory (Sec. 121.07(D)).
• Municipal corporations and townships can adopt ordinances or resolutions to prohibit or limit the number of licensed cultivators, processors, or dispensaries, except for those licensed before the effective date of the amendment (Sec. 3796.29(A), (B)).
• Generally, medical marijuana licensed facilities are prohibited within 500 feet of schools, churches, public libraries, public playgrounds, or public parks, with license revocation as a consequence for relocation violations (Sec. 3796.30). This proximity restriction does not automatically apply to existing facilities transitioning to adult-use licenses (Sec. 3796.33(A)(2)).

1. Database for Tracking:

• The Department of Commerce (Division of Cannabis Control) is required to establish and maintain an electronic database to monitor medical marijuana from seed to sale (Sec. 3796.07). This may be contracted out.

1. Financial Services for Cannabis Businesses:

• Financial institutions providing services to licensed cannabis businesses are granted exemption from certain state criminal laws related to marijuana if the businesses comply with state regulations and tax laws (Sec. 3796.28(B)).
• The Division of Cannabis Control can provide information to financial institutions regarding the licensed status and affiliations of cannabis businesses (Sec. 3796.28(C)(1)).

1. Taxation of Marijuana:

• The bill levies a 15% tax on marijuana other than adult-use or medical marijuana sold to consumers, with the consumer and vendor being liable (Sec. 5739.02(D)). Revenue from this tax will be deposited into the “marijuana receipts fund” (Sec. 5739.02(E)(1)).

1. Transition from Medical Marijuana Control Program:

• The bill indicates a transition from the “division of marijuana control” and “superintendent of marijuana control” to the “division of cannabis control” and “superintendent of cannabis control,” stating that any references to the former should be deemed to refer to the latter (Sec. 3796.01(B)).
• Medical marijuana is classified as a Schedule II controlled substance for the purposes of this chapter, notwithstanding conflicting provisions in Chapter 3719 (Sec. 3796.01(C)).

Important Ideas and Facts:

• The bill seeks to create a comprehensive regulatory framework for both medical and potentially adult-use cannabis under the oversight of a newly structured Department of Commerce and its Division of Cannabis Control.
• It establishes a licensing system with different tiers for cultivators based on cultivation area size.
• Strict regulations are proposed for cannabis product content, packaging, labeling, and marketing, particularly concerning appeal to minors.
• Local governments retain some authority to regulate or prohibit cannabis businesses within their jurisdictions, with certain protections for pre-existing licensed entities.
• The bill acknowledges the need for financial services for cannabis businesses and provides some legal protections for financial institutions engaging with licensed operators.
• A tracking system for medical marijuana is mandated.
• The bill outlines various penalties for violations of its provisions, referencing existing sections of the Revised Code related to drug offenses and creating new specific penalties (Sec. 3796.31). For example, knowingly giving or selling adult-use marijuana to a minor is a first-degree misdemeanor, with escalating penalties for repeat offenses (Sec. 3796.31(C)(1)). License revocation is mandated for license holders found guilty of this offense (Sec. 3796.31(C)(2)).

This briefing document provides a preliminary overview of the key aspects of Senate Bill 56 based on the provided excerpts. A thorough understanding requires a review of the complete bill and its potential impact on various stakeholders.