New medical marijuana fees in Ohio may actually exceed program costs

COLUMBUS, Ohio — State regulators in Ohio acknowledge that proposed licensing fees for medical marijuana businesses could initially exceed the state’s costs of operating the program.

Missy Craddock, of the Ohio Medical Marijuana Control Program, told an advisory panel Friday the program is requested roughly $2.5 million a year for operational costs in each of the next two years. That doesn’t include a number of unknown costs, including setting up the program’s licensing, product tracking and payment systems and establishing a required toll-free hotline.

If the state issues all the licenses it’s making available — 24 to cultivators, 40 to product processors and 60 to dispensaries — fees as proposed would generate $10.8 million. The state has also made application fees for the licenses non-refundable.

Several advisers pushed back against the idea that fees might be too high.

“I’m all for the state being properly funded,” said committee member Ted Bibart. “I’m just not for the patient bearing that weight.”

Ohio’s medical marijuana law went into effect in June, with a target date to be operational of September 2018. It allows people with 21 medical conditions, including cancer, Alzheimer’s disease, AIDS and epilepsy, to purchase and use marijuana after getting a doctor’s recommendation. The law doesn’t allow smoking.

Ohio has set some of the highest fees of any medical marijuana state: a $20,000 application fee and $180,000 license fee for larger growers, and a $2,000 application fee and $18,000 license fee for smaller growers.

Craddock said that some guesswork is involved in setting up a new program, but that having surplus revenue is better than being underfunded.

“It’s much easier to reduce fees down the line in the future than it is to increase them,” she told the Medical Marijuana Advisory Committee. She said the program looked to the example of the Ohio Casino Control Commission in setting initial licensing fees.

She added that high fees will weed out those businesses that might not be positioned to survive.

“It is important for us to make sure that we’re attracting industry that is capitalized enough to get through those cold winters,” she said. “And that is part of the reason for wanting to set some of these fees, to make sure that we have people who are serious enough.”

Anticipated expenses for the medical marijuana program include:

— About $845,000 for 10 positions at the Ohio State Board of Pharmacy;

— About $690,000 for 7 positions at the Department of Commerce;

— $611,500 for Pharmacy and $428,000 for Commerce for office overhead, training and travel;

— $175,000 for operation of the patient registry.

“It’s not cheap,” Braddock said. “I would be remiss if I didn’t note that.”

Chris Lindsey, senior legislative counsel for the Marijuana Policy Project, medical marijuana programs in the East and Midwest have placed more emphasis on fees than those in the West. Most argue that the fees are “reasonably related” to offsetting the costs of operating the program.

“The fees for these types of program shouldn’t be money-makers for the programs, and I don’t think states generally look at them like that,” he said.

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