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Ohio medical marijuana program budget grows to $11 million

By Jackie Borchardt • Jul 25, 2017 at 3:00 PM

COLUMBUS — Ohio regulators say they'll need another $5.6 million this year for a medical marijuana tracking database, a toll-free help line and anticipated legal costs responding to lawsuits and complaints challenging the state's licensing process.

The Ohio Department of Commerce and State Board of Pharmacy received approval Monday to spend an additional $6 million over the next two years for the Ohio Medical Marijuana Control Program. That's in addition to the $5 million included in the state budget passed last month.

The appropriation request is the first time state officials have recognized that the program may face legal challenges from unsuccessful cultivator or dispensary license applicants.

Other states that award a limited number of marijuana business licenses have been sued over their decisions, which can cost the state hundreds of thousands of dollars and delay the program's start date.

Ohio's medical marijuana law allows people with 21 medical conditions to buy and use marijuana if recommended by a physician. State officials are still setting up the program with the goal of opening dispensaries by a September 2018 deadline.

Next year, both agencies say they'll be able to repay the state and operate with annual license fees.

if the state awards all the initial licenses available, it would collect $10.8 million a year from license fees for cultivators, processors and dispensaries. Additional fees, including employee licenses and nonrefundable application fees, could generate a couple million more.

The 185 cultivator applications collected in June netted more than $2.3 million in application fee revenue. The state plans to issue only 12 licenses to applicants with larger grow spaces and 12 for smaller spaces; licensees will pay $200,000 and $20,000 a year, respectively, to renew their license.

Here's how each state agency plans to spend the money.

Department of Commerce: $6,84,423

The department already planned to spend $1.4 million on payroll, $518,757 on supplies and $305,000 on other services over the next two years.

The additional funding request includes:

• $3.9 million to set up a seed-to-sale database system and add licenses to the state's e-licensing program this year.

• $180,000 to maintain both systems next year.

• $306,444 for legal expenses from the state's administrative hearing process.

• The seed-to-sale database will track each marijuana plant through each stage of life, from cultivation to sale at the dispensary.

• The commerce department issued a request for proposals for the technology in March, but a department spokeswoman said a vendor has not been chosen.

Board of Pharmacy: $4,403,400

Of its original $2.8 million appropriation, the board planned to spend $1.8 million on payroll and $766,500 on updates to include medical marijuana in the state's prescription drug database.

Most of the additional $1.6 million requested Monday is for a consultant to develop a scoring system for dispensary applications and score applications. Atlanta-based North Highland Company was recently selected through a competitive bid process and will be paid $729,000 for the work — more if applications exceed 250. The board has budgeted $1.3 million for the work.

The board plans to spend $250,000 setting up a toll-free hotline required by law and set aside $62,500 for legal fees.

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