What a Merit-Based Lottery Means for Ohio Dispensary Applicants

Q and A with Maxime Kot, President at CB Advisors

This year, Ohio is set to grant 73 new marijuana dispensary licenses. Since the medical marijuana program began in 2019, demand has been so great that additional retail operations are necessary to serve all the patients in the state.

The new dispensary licenses are being issued to bring at least one dispensary to every dispensary district in the state and ensure there are enough marijuana retail locations for the population of each district.

Maxime Kot, President at CB Advisors explains the cannabis business license processes in Ohio and how the state compares to other U.S. marijuana markets. 

Q: What are the different types of marijuana license processes?

A: Different states use different types of processes to award cannabis licenses. The three types of processes include;

• Competitive, merit-based process. The license application is reviewed and the state awards licences based on the strength of things like capitalization, operational plans, security plans, local support and past criminal background. Each application is judged against set criteria and scored. Applications with the highest score are awarded the license.
• All interested parties complete an application and pay a fee. All applications that meet the criteria established by the state are put into a lottery and application winners are chosen randomly.
• Merit-based & lottery combined. This system works like a general lottery, but there are stricter criteria to qualify for the lottery.

Q: Does one marijuana license process work better than another?

A: Having been in the industry for almost seven years, and part of over 20 different state application processes, I strongly believe in a merit-based application process. This system ensures the applicant selected has been vetted by the state and deemed the best candidate to successfully carry out the operations. With that being said, a merit-based process can lead to assumptions of “politicking” and more often than not, leads to lawsuits against the state.  A merit-based and lottery combined process appears to be the latest wave in the industry and I think it’s a fair process.

Q: What states are using a merit-based lottery system and what are the benefits?

A: Illinois used this system and now Ohio will for its Phase 2 dispensary applications. With a merit based process, the state is at least vetting the applicants to ensure they are viable candidates before leaving it up to luck. The lottery component  helps the state avoid lawsuits from unsuccessful candidates, which in turn allows the state to focus on supporting the selected operators on implementing the program.

Q: What merit components are included in the Ohio marijuana license process?

A: The Ohio licenses will be judged on their business plan, operations plan and patient care plan, with the operations plan carrying the most weight.

Q: How should Ohio marijuana license applicants prepare for a merit lottery application?

A: The Board of Pharmacy has indicated that these new applications won’t differ much from its previous application. This allows applicants some insight into the needs for the application. The state is awarding 73 additional dispensary licenses total, distributed across 30 districts. Depending on the population, more dispensary licences will be awarded in one district than another. For example in Northwest District 1, which comprises Williams, Defiance and Fulton Counties, only one additional license will be issued, whereas Northeast District 1, which comprises Lorain, Medina, Wayne and Holmes counties will be issued up to three additional licenses.  Because of the complexity of any application, I always suggest hiring a consultant to help guide you through the process, especially to assist with strategic consulting on real estate selection.

Q: What is the Ohio marijuana license application timeline?

A: The Board of Pharmacy has indicated the application will be released Spring/Summer of 2021.

We have successfully secured licenses for clients in over 20 markets across the United States. If you are interested in applying for a dispensary license, contact us by phone at (602)-290-9424‬ or email (info@thecannabisbusinessadvisors.com) for more information.