Jim Ickes contends that the harsh truth about cannabis entrepreneurship can be found in a popular industry Q and A meme.
Q: What do you need to make $1 million in cannabis?
A: $10 million.
Ickes, a Cleveland attorney who’s been working in the marijuana sector’s regulatory space since Ohio legalized medical marijuana use in 2016, said it’s no joke. It’s a painful reality for Ohioans seeking a dispensary license in the brave new world of legalized recreational marijuana use.
People of color and other groups historically blocked from retail ownership are now looking to a critical pillar of Issue 2 that aims to uplift underrepresented operators by making it easier for them to get licenses. Issue 2’s social equity and jobs program gives license preferences to socially or economically disadvantaged applicants – a gamut that comprises race and gender, financial hardship and prior convictions of some marijuana-related offenses.
A strong equity component seeks to eliminate long-standing barriers to entry for communities disproportionately harmed by the war on drugs, Ickes said. Despite similar usage across races, Black people are almost four times more likely than whites to be arrested for cannabis possession, according to the American Civil Liberties Union.
“I don’t care what social group you’re part of, the statistics indicate that all humans use the plant in some form or fashion,” said Ickes. “When you open up (ownership) to everybody, it rights some of those historical wrongs, and brings everyone under the tent to make a living with this new industry that will only keep growing.”
Ohio currently grants medical licenses for growers and retail storefronts, as well as processors who manufacture products such as edibles and oils. Issue 2 expands licensing to recreational retail, with 50 adult-use dispensary permits set aside for social equity applicants.
Lenny Berry said he will be among that contingent in June, when adult-use licensing opens up. Berry, who is Black, already has a storefront picked out. As summer approaches, he is excited about a program that, ideally, will reinvest in communities he said have been most harmed by discriminatory cannabis enforcement.
“When you look at it from the big picture, (Issue 2) is creating market access for everyone,” Berry said. “You’re creating a generational wealth pipeline.”
Questions, questions
How Ohio’s dispensary licenses will be distributed remains a question – possibilities comprise a lottery or a scoring system similar to New Jersey’s. Berry hopes the program is available for any minority who wants to apply, not just people with past marijuana arrests.
“It’s going to be a bigger market, so you’re going to have a lot of competition,” said Berry, co-owner and chief visionary officer of hemp producer Organic Plus Brands. He is also founder of the Ohio Cannabis Health & Business Summit, an event at the I-X Center that links vendors and industry professionals to the public. “Will they limit the amount of applications you can turn in? When talking about the lottery, the loophole will be a bigger company that could buy more applications, so their odds go up.”
Capital spending for a new dispensary can run into the millions, including build-out, inventory, staffing and marketing, Ickes said. If Ohio’s adult use market grows to the extent that he expects, social equity license holders will need access to grant money and low-interest loans, Ickes said.
“I’ve seen multi-state operators use a state’s social equity program as a pretext to obtain a license,” Ickes said. “The social equity applicant had to give up their business because of the cost of opening a cannabis business, a dispensary in particular.”
Ickes, an attorney for Columbus firm Zuber Lawler, represents cannabis clients navigating the application phase all the way to operations. Although applying for a dispensary license is straightforward, certain regulations around zoning are confusing, he said.
Berry, the Cleveland entrepreneur, said he encountered this issue first-hand when vying for a previous license in Lakewood. While he knew that no retail marijuana establishment could operate within 1,000 feet of a school, Berry was nearly tripped up by a simple street corner park bench that, by law, constituted a park. The rules also say dispensaries can’t be near public parks.
“I called the city and said, ‘Hey, do you consider this piece of property a park?’” said Berry. “It took a couple days to get an answer, and they said they considered it a park. Had I bought this piece of property, I would have been disqualified by this little park bench on the corner of the street. So don’t assume anything – you have to do your due diligence.”
Choice of a new generation
Industry observers, including Berry, are concerned about potential changes to Issue 2’s social equity programming. Late last year, the Ohio Senate approved House Bill 86, which would eliminate the program. Ohio Gov. Mike DeWine has defended the bill, saying it still contains social equity measures like expunging criminal records of marijuana crimes.
Still, there is no movement on HB 86 in the Ohio House, where it must pass before it becomes law. Most of the changes state officials are seeking — like prohibiting sales to minors — will be put into effect via administrative rule instead, lawmakers predict. Legislators are also considering another measure that includes funding for social equity.
Tom Mikulski is keeping an eye on statehouse news as he prepares his own license bid. Although not a minority himself, Mikulski is eager to collaborate with a social equity partner on a new adult-use dispensary.
“I’m looking to be part of a team, not just a controlling interest in a company,” said Mikulski, a Portage County landlord whose past entrepreneurial ventures include car washes and mini-storage facilities. “I want a partner who’s just as motivated as me, but needs financial assistance and help with the application process.”
Mikulski has been touring area dispensaries and cultivation facilities as he readies his license. Cannabis diversification can be a gamechanger for both the industry and the state economy, he said.
“There isn’t enough social equity in this business, so instead of us being divided, we can come together and work together,” Mikulski said. “I’m 100% in on this.”
Berry hopes legislators respect the will of the people regarding the benefits of social equity – a list that includes supporting a new generation of young entrepreneurs.
“Let’s start changing the guard and opening it up to people with more creativity,” said Berry. “It takes it to a whole other level when we can cross-generate ideas in a way that makes this industry better.”
