Members of economically disadvantaged groups worry that a pair of court rulings will erode diversity in Ohio’s medical marijuana industry. Those rulings eliminate the practice of ensuring that 15% of licenses go to those groups, which include racial minorities.
When Ohio’s application process for medical marijuana businesses was written, the state agreed to set aside 15% of licenses for owners from economically disadvantaged groups, including racial minorities.
Those carve-outs have now been struck down in court, and minorities in Ohio’s cannabis businesses worry that the rulings will further erode diversity in a largely white industry.
When Pure Ohio Wellness was narrowly denied a license for a Madison County dispensary northeast of London, it sued the State of Ohio Board of Pharmacy, which regulates dispensaries. The company argued that it was the highest-scoring applicant in its district but lost to a lower-scoring, minority-owned company because of the set-aside, which Pure Ohio called an unconstitutional system of racial quotas.
The pharmacy board countered that the set-aside is based on a minority business enterprise program that was upheld by the courts.
A Madison County Common Pleas Court judge sided with Pure Ohio in a Nov. 4 ruling, ordering the board to grant the company a license.
The set-aside for cultivators and processors — overseen by the Ohio Department of Commerce and subject to a different set of rules — was struck down in Franklin County Common Pleas Court last year.
“New licenses were issued because of that ruling,” said Thomas Rosenberger, associate director of the Ohio Medical Cannabis Cultivators Association.
If the pharmacy board declines to appeal the ruling, it could grant new licenses. Dispensary applicants denied by slim margins otherwise could take the board to court, Rosenberger said.
“At this time, the board is still reviewing the judge’s ruling and determining next steps,” Ali Simon, the pharmacy board’s public and policy affairs liaison, said in an email.
All available licenses have been awarded, but the state reserves the right to issue more.
Economically disadvantaged people are listed as at least 51% owners of only nine of the 56 dispensaries, two of the 29 cultivators and none of the 39 processors.
A more diverse industry benefits patients from non-white communities, said Rany Tan, patient coordinator for the Lakewood Medical Clinic in northeastern Ohio. As a black woman, Tan said, she better understands the concerns of people in the black community and can anticipate their needs.
“When they come in and see (the clinic) is minority-owned, they trust us,” she said.
The carve-outs were intended to help those harmed the most by marijuana prohibition. Research has repeatedly shown that minorities — and black people in particular — are far more frequently arrested on drug charges even as they use drugs at roughly the same rate as white people. Minorities also are more likely to receive harsh sentences for minor drug crimes.
“We should play a role in something we’ve faced so much hardship over,“ said Lakewood Medical Clinic owner Lenny Berry, who is black.
Minority owners also are less likely to come from affluence, something that Joel Simmons, a black doctor who runs the Ohio Herbal Clinic on the Near East Side, attributed to racial discrimination dating to slavery.
Cannabis companies often are denied traditional loans and need millions of dollars in cash to get started. And the problem goes beyond wealth, Berry said. The cannabis industry also is overwhelmingly white in other states, costing minorities marketing and family connections, he said.
The cannabis industry “is a great opportunity for people to obtain wealth, but there are initial financial barriers and lack of support,” Simmons said. The set-aside was intended to correct those imbalances.
Tim Johnson, co-founder of the Ohio Cannabis Chamber of Commerce, an advocacy group, said the set-aside was well-intentioned but subject to abuse.
At least one dispensary is accused of exploiting the set-aside. The pharmacy board is investigating the Harvest of Ohio dispensary, which is on North High Street in Clintonville and has yet to open. Harvest lists Ariane Kirkpatrick, who is black, as a 51% owner, but the pharmacy board decided in June that the company does not meet the criteria for minority ownership.
The nature of the board’s finding is unclear. Harvest filed for a restraining order preventing the board from releasing information on the case.
Kirkpatrick called the issue a misunderstanding and said she looks forward to clearing up any misconception.