Ohio Legalized Adult-Use Cannabis: Now What?

Congratulations to the voters of Ohio for legalizing adult-use marijuana! In celebration of this milestone I want to share three things about the existing medical program that bankers and compliance folks might not know about (but should):

The state is one of the very few that has its own version of the SAFE Banking Act in their marijuana statutes:

“A financial institution that provides financial services to any cultivator, processor, retail dispensary, or laboratory licensed under this chapter shall be exempt from any criminal law of this state an element of which may be proven by substantiating that a person provides financial services to a person who possesses, delivers, or manufactures marijuana or marijuana derived products” (Section 3796.27 Financial Institutions)

Financial institutions can directly request information (potentially for a fee) about their Direct MRB customers from the state regulators, potentially including sales information:

“[Upon] the request of a financial institution, the department of commerce or state board of pharmacy shall provide to the financial institution all of the following information:

• Whether a person with whom the financial institution is seeking to do business is a cultivator, processor, retail dispensary, or laboratory licensed under this chapter;
• The name of any other business or individual affiliated with the person;
• An unredacted copy of the application for a license under this chapter, and any supporting documentation, that was submitted by the person;
• If applicable, information relating to sales and volume of product sold by the person;
• Whether the person is in compliance with this chapter;
• Any past or pending violation by the person of this chapter, and any penalty imposed on the person for such a violation.” (Section 3796.27)

While no one has picked up the issue, there is a provision for the development of a state-backed closed-loop payment system for the industry: 

“(A) The director of commerce may […] adopt rules that establish a closed-loop payment processing system under which the state creates accounts to be used only by registered patients and caregivers at licensed dispensaries as well as by all license holders under this chapter. The system may include record-keeping and accounting functions that identify all parties involved in those transactions.” (Section 3796.031)

Ohio is remarkably friendly to financial institutions that want – and will – bank cannabis. Hopefully, these move over into the adult-use regulations as well.