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‘Flaw’ Discovered in Ohio’s Marijuana Licensing Process

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By Chris Roberts

Some of the fiercest competition for a piece of the marijuana market in the entire country has been in Ohio, and with good reason.
There’s more potentially at stake in Ohio than many other states. Why? It’s a question of mathematics, a market inefficiency, created by design: Ohio has a population of 11.6 million people. To service that sizable potential market, state regulators are issuing no more than 24 licenses to cultivate marijuana.

That’s a few degrees more permissive than Florida, where initial plans to license no more than five cultivators (later expanded to seven) sparked an international bidding war for licenses valued at as much as $200 million thanks to the scarcity. Even though Ohio has a few more licenses than Florida, the scarcity has still invited cutthroat businesses practices — as well as intrigue.

In January, Ohio saw a lawsuit filed by 63 of the 143 applicants who were denied licenses for a medical marijuana cultivation operation.

And now, a state audit of the licensing process has revealed a “control weakness,” a “critical flaw” that allowed just two state employees to “change scores or manipulate data” from applicants, according to Cleveland.com.

These workers, and not applicant reviewers, had lone control over applicants’ passwords, which could not be changed by the applicant. They also limited applicant-scorers’ access to certain parts of the applications, according to the review.

“Because of this critical flaw in the procedure’s design, neither this office, nor the public, can rely upon the cultivator application results,” wrote state auditor Dave Yost, as per the website, which received Yost’s memo through a public records request.

In his memo, Yost is recommended immediate changes — specifically, the adoption of basic policies such as keeping usernames and passwords secure — and warning that “failure to implement these recommendations could compromise the medical marijuana evaluation and selection process.”

Despite the potential for a breach, there’s no sign yet of any trickery. Jacqueline Williams, the state’s commerce director, rejected the implication of “improper contact.”

Potential problems with Ohio’s licensing process arose after several other problems with applicant reviewers were revealed. One consultant had a previously unknown felony drug conviction on his record, and another pair of consultants had their objectivity called in question after links to an applicant — and potential license-holder — was revealed.

Full reviews are ongoing, according to Cleveland.com, whose efforts to interview Commerce Department officials were rebuffed.

In the meantime, winning applicants are breaking ground on their new cannabis palaces and making plans and promises to investors of fantastic profits. The first cultivation facility in the state is in the small, rural community of Yellow Springs, Ohio. There, a Chicago-based company is building a $7 million, 50,000-square foot complex that includes office space and manufacturing space as well as 25,000 square feet of cultivation.

This is a process being closely watched by some of the rejected applicants, at least one of whom— Cincinnati’s Jimmy Gould, who called the applicant process a “travesty” — has vowed to file a lawsuit to upend the entire process, according to multiple reports.

Gould, it so happens, was one of the investors behind a 2015 ballot initiative that would have legalized recreational marijuana in Ohio outright, skipping the medical cannabis step entirely.

Original Publication in CannabisNow.