Who's behind Ohio Issue 2? Marijuana businesses that will benefit from it

The effort to legalize recreational marijuana in Ohio is bankrolled by some of the state's biggest players in cannabis.

And starting next year − if Issue 2 passes − those companies could end up with the lion's share of licenses to sell products in the adult-use market.

Ohio voters will decide Nov. 7 whether to approve the proposed law, which would allow people 21 and older to buy, possess and grow marijuana. Products would be taxed 10% on top of the sales tax, with revenue going to three state funds and municipalities that have dispensaries.

Explainer: What Ohioans need to know about November ballot issue to legalize recreational marijuana

Medical marijuana businesses first proposed the measure in 2021, opting for an initiated statute instead of a constitutional amendment like the failed 2015 legalization effort. They finally secured a spot on this year's November ballot after clashing with legislative leaders who oppose recreational marijuana.

Proponents say Issue 2 would drive out the illicit market and bring in tax dollars that Ohioans are currently sending to Michigan. It would also open doors for companies that sell medical cannabis in Ohio and want to expand their customer base.

But some in the industry wonder if it benefits Issue 2's benefactors too much.

"It’s not that much of a head-scratcher. The people that are footing the bill for the initiated statute are obviously going to try to make it favorable to them," said Greg May, a cannabis attorney with the Ohio firm Mac Murray & Shuster. "I don’t think that’s a mystery or anything. Is it a little too much? Maybe."

Who will sell recreational marijuana?

If voters approve Issue 2, the Division of Cannabis Control would have nine months to dole out the first adult-use licenses to companies already in the state's medical program. And it specifies who gets what:

• Large, level I cultivators would get three adult-use dispensary licenses and an adult-use cultivation license for their current facility.

• Smaller, level II growers would get an adult-use cultivation license and one dispensary license.

• Existing medical dispensaries could get licensed to sell adult-use products at their current location.

• Processors, which convert flower into products like edibles, would get an adult-use processing license but no dispensaries.

• Dispensaries that aren't connected to a cultivator or processor could get one adult-use dispensary license at a different location.

Issue 2 would also create a social equity program that aims to help business owners who are disadvantaged based on their race, gender, ethnicity or economic status. Through that initiative, the state would issue 40 level III grow licenses and 50 adult-use dispensary licenses to qualifying participants within the first nine months.

Beyond that, the state couldn't issue any additional licenses for two years. Supporters say this setup will ensure the adult-use market gets up and running without any hiccups.

"The program will start like almost every other state, with a transition to recreational by existing license holders so the program can start smoothly with experienced operators that know how to grow, process and dispense marijuana products," Buckeye Relief CEO Andy Rayburn said.

As written, Issue 2 awards the most dispensaries to level I cultivators − some of which contributed hundreds of thousands of dollars to the campaign to pass it.

Pure Ohio Wellness and its CEO gave $375,000 to the Coalition to Regulate Marijuana Like Alcohol in the first half of this year, according to state campaign finance reports. The group also got $210,000 from the CEO of Standard Wellness, $122,500 from a partner at Riviera Creek and $50,000 from Harvest Grows.

Rayburn donated $50,000 when the campaign first launched in 2021.

Another big contributor this year − giving $295,000 − was Chicago-based Cresco Labs, which has cultivation and processing facilities and five dispensaries in Ohio. The coalition's recent fundraising and spending won't be available until late October.

More: Ohio GOP leaders don't like recreational marijuana. What happens if voters say yes to it?

'Make it as equitable as possible'

Knowing that, some see imbalances in Issue 2 that don't seem like a coincidence.

Brian Scotese owns the standalone processor Lighthouse Sciences in Eastlake and questioned why he won't be eligible for an adult-use dispensary license. He said marijuana businesses are more successful if they're vertically integrated, meaning they grow, process and sell their own cannabis products.

Scotese wants Issue 2 to pass, but he also believes it rewards verticals over independent operators. Such tensions have plagued Ohio's medical cannabis space for years. For example, growers clashed over legislation that would let level I cultivators expand their facilities more than level IIs.

"I think the state has a responsibility to make it as equitable as possible and fair as possible to avoid lawsuits and other things that can be avoided if you treat everyone in the program fairly or equally," Scotese said.

May, the cannabis attorney, agrees.

“What type of program do we want to have?" May said. "Do we want one that is top heavy with large multistate operators, or do we want one that gives people in Ohio a chance to get into this industry?”

Backers of Issue 2 point to the social equity program as proof that they don't want to monopolize the adult-use market.

Ohio tried to set aside licenses for businesses owned by racial minorities in the medical cannabis program, but a judge deemed that unconstitutional in 2018. This time around, Issue 2 tasks state officials with setting program standards to ensure they comply with the law, said Tom Haren, a spokesman for the coalition.

Haren said the two-year limit on licenses will give social equity businesses time to get off the ground.

“We want to compete with the black market," he said. "We want to compete with Michigan. This framework is set up so that our adult-use market will be much more representative of the state as a whole. I think you will see a number of new Ohio small businesses and entrepreneurs who enter the market."

Haley BeMiller is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

This article originally appeared on The Columbus Dispatch: Ohio Issue 2 could benefit marijuana companies bankrolling campaign