You don’t need to be a marijuana doctor writing cannabis recommendations in Ohio to know that the state’s regulations regarding its medical marijuana program are pretty strict.
But one medical cannabis company, Greenleaf Apothecaries, found out the hard way. It’s been fined $300,000 for failing to get approval of a change in ownership.
Under Ohio medical marijuana guidelines, dispensaries are prohibited from changing hands until they’ve been in business for at least 1 year.
The company has also been ordered to pay back $12.5 million in loans issued by international cannabis company Acreage Holdings and abide by additional restrictions in order to transfer ownership to Acreage in the future.
The Letter of the Law
“The Ohio State Board of Pharmacy claimed Greenleaf Apothecaries was really under the control of Acreage Holdings, one of the industry’s largest multi-state operators. Greenleaf Apothecaries opened one dispensary in Canton and one in Wickliffe, both under Acreage brand name The Botanist.
“In July 2018, Acreage entered into a ‘management services contract’ with Greenleaf Apothecaries, and agreed to loan the company up to $10.5 million, according to investor filings with the U.S. Securities Exchange Commission. It had similar agreements with related companies Greenleaf Gardens, a cultivator, and Greenleaf Therapeutics, a marijuana product manufacturer.”
Greenleaf Apothecaries claimed in its settlement agreement it had a “good faith basis to believe it was in compliance” with state rules but it acknowledged its agreements with Acreage are “contrary” to the pharmacy board’s interpretation of the rules. The company is banned from applying to transfer ownership of its five locations until 18 months after the last dispensary becomes operational.
On the bright side, the settlement agreement could pave the way to the opening of more medical marijuana dispensaries in Ohio. As of October 2019, about a quarter of the state’s 56 licensed dispensaries were still seeking approval to open.
More Medical Marijuana Dispensaries Expected to Open
The ownership dispute has delayed the opening of dispensaries in Cleveland, Columbus and Akron. A dispensary in Cleveland had originally expected to open in March.
The error seems to be a simple overlooked mistake. It was first investigated by the pharmacy board in January, after Acreage issued a press release announcing the opening of the Canton dispensary.
A Technical Oversight of Ohio’s Medical Marijuana Regulations
Acreage claimed it was providing “expertise, branding and design aesthetics, vendor relationships, and technical know-how” while Greenleaf maintains “operational control,” the company reported in an annual report filed last April.
“We are very happy to announce that we have resolved our dispute with the Ohio Board of Pharmacy in a way that allows us to open our remaining three dispensaries in Cleveland, Columbus, and Akron, while maintaining our relationship with Acreage Holdings,″ Kate Nelson, Greenleaf’s chief operating officer, said in a statement.