Ohio Cannabis Startup Guide

Starting a cannabis company in Ohio? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in a Ohio cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.
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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Ohio?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in Ohio

Since HB 523 passed in 2016, Ohio adults can possess a 90-day supply of cannabis if they have a written recommendation from a doctor. Ohio doesn’t allow smoking medical marijuana--it must be in the form of an oil, pill, edible, patch, tincture, or vape cartridge. However, Ohio’s medical marijuana program is just getting started. The state hasn’t begun issuing patient ID cards, and Ohio growers missed the September 2018 deadline to start selling medical marijuana. Medical cannabis cultivators are just beginning operations in fall 2018, and dispensaries are expected to start selling products in early 2019. So far, the state has licensed 56 dispensaries, 40 processors, and 26 grow operations. Once up and running, Ohio’s medical marijuana market could be worth $400 million annually.

Cannabis business license types

Ohio issues licenses for four broad categories of cannabis businesses: dispensaries, cultivation facilities (aka grow operations), processors, and testing companies.

Dispensary: This is a retail storefront where patients can purchase marijuana. Dispensaries have to follow Ohio regulations about labeling, recordkeeping, employee ID cards, location (not within 500 feet of a school, church, or park), signage, hours, security, and more. See Ohio dispensary FAQs here.

Marijuana cultivation: These businesses, also called grow operations, grow cannabis plants that will be sold through a dispensary or sold to a processor that will create products with it, such as edibles or oils. In Ohio, grow operations also are required to follow state-mandated rules, such as seed-to-sale tracking and following Ohio’s approved pesticide list. See Ohio cultivator FAQs here.

Processor: Processors buy cannabis from licensed growers, then process and/or create infused products and sell them to dispensaries. In Ohio, you’re allowed to manufacture marijuana products that don’t require refrigeration or hot-holding. See Ohio processor FAQs here.

Testing facility: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. These labs use methods like liquid or gas chromatography to analyze products for CBD and THC content, pesticides, terpenes, bacteria, fungi, and heavy metals, to name a few. See Ohio testing FAQs here.

Ancillary business: If you don’t want to grow, process, test, or sell cannabis in Ohio, there are plenty of other ways to be part of the cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!

Ohio medical and recreational marijuana business plan facts callout.

Fees and other barriers to entry

Local governments may forbid cannabis companies or certain locations, so check city and county regulations.

Application fees: Applying for a cannabis business license in Ohio costs $2,000 for a testing lab, $5,000 for a dispensary, $10,000 for a processor, $20,000 for a Level 1 cultivator, and $2,000 for a Level 2 cultivator. Level 1 cultivator means you have up to 25,000 square feet of canopy; Level 2 is up to 3,000 square feet of canopy.

License fees: It’s $18,000 for a testing lab license in Ohio, $70,000 for a dispensary, $90,000 for a processor, $180,000 for a Level 1 cultivator, and $18,000 for a Level 2 cultivator.

Financial requirements: For a provisional processor or dispensary license, you need proof of $250,000 in liquid assets.

Do you need a cannabis business plan in Ohio?

Yes, a business plan is required to get a medical marijuana business license in Ohio. In 15 pages or less, it should include your “experience in any type of business environment, establish the business model for the proposed cultivation facility, and demonstrate the ability to operate the proposed facility, which includes steps taken with the local authorities,” according to the cultivator application. A dispensary application must include a business plan that includes a site and facility plan, business startup plan, description of roles/duties, capital requirements, and business experience (see page 9 here). And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan

Here’s what a Ohio marijuana business plan should include. If it will be part of your license application, remember that your business plan cannot contain “identifiable information” (see page 10 here).
  • Product/service description: Will you run a dispensary, grow operation, testing lab, cannabis consulting firm, processor, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a marijuana dispensary, which products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale cannabis products, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. Your application also has to include an org chart with names, addresses, and dates of birth for principal officers and board members.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Ohio-specific requirements: If not included elsewhere in your application, you should include details in your business plan about your operations: processing, safety protocols, equipment, training standards, quality assurance procedures, labeling and packaging, and anything else required by the state.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Google your city or municipality name and “cannabis regulations” or “marijuana laws” (here’s some info about Dayton). If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.

Helpful Links
Get expert help

Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:
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