YOUNGSTOWN, Ohio – Employers across the Buckeye State navigating the waters in the wake of Ohio’s passage of Issue 2 – the recreational use of marijuana – may find there would be few, if any, changes to their workplace policies as the law rolls out.
That’s because, unlike other states, the law in Ohio is written in a way that allows plenty of flexibility for employers to either test for the substance or opt not to test, says Michael Karst, a labor attorney who represents management at Kastner, Westman & Wilkins, a law firm in Akron.
“It’s much more employer-friendly than other states,” Karst says.
Karst says companies that have enacted a zero-tolerance policy toward substance use are still able to enforce rules such as drug testing in the workplace, regardless of Issue 2. On the other hand, it’s the employer’s decision as to whether these tests could exclude marijuana. “If they have a drug-free workplace policy, they are not required to change that because of Issue 2,” he says.
Still, the matter has attracted a significant amount of interest, Karst says. A recent presentation for clients drew record attendance.“There’s tremendous interest,” he says. “But what I’m hearing is that there’s not a lot of interest in changing existing policies.”
Other states such as California, New York and Minnesota, for example, have put in place language in their laws that protects an employee from being fired or denied employment should they test positive for marijuana, as long as the use was outside the workplace.
“An employer in Ohio – if they know you use marijuana – they can fire you, or not hire you,” Karst says. “That’s not the case in other states.”
Karst says workplace and drug-testing policies are still wholly at the discretion of the employer. However, a trend over the last several years shows that many employers have ditched substance testing for marijuana altogether.
In 2016, Ohio passed House Bill 523, which legalized medical marijuana across the state. While this law may have factored into a business’ decision to opt out of testing for cannabis, a more likely explanation is that stringent testing would alienate hiring otherwise experienced and productive workers, Karst says. In a tight labor market, especially in the manufacturing sector, employers risk losing out on potential employees with valuable skills, he adds.
“That was the case before Issue 2 and it will be the case after Issue 2,” Karst says. “Many clients have decided not to test for marijuana in entry-level positions because it was excluding so many people. The labor market is so tight that marijuana use wasn’t going to be the deciding factor on an employee.”
Business organizations such as the Ohio Association of Manufacturers and the Youngstown/Warren Regional Chamber publicly opposed Issue 2 before its passage.
The new law also isn’t likely going to add costs to most employers, Karst says. “There might be some additional investment in training and management, but it would be cost-neutral if anything,” he says.
Rolling Out the New Law
Voters approved the ballot issue 57% to 43% in the Nov. 7 election. Ohio’s law, which takes effect Dec. 7, will make it the 24th state to legalize recreational marijuana use. It allows for the sale of marijuana to persons who are at least 21 years old.
Just three states – Kansas, Nebraska and Idaho – have resisted legalizing any form of cannabis use.
The rules of the Ohio program are still being fine-tuned. On Dec. 7, certain provisions of the law will take effect, including legalizing possession of up to 2.5 ounces of marijuana and the private cultivation of up to six plants, or 12 if two or more adults live in the same household.
But public purchase of recreational cannabis would not be immediately allowed under the law. That would require regulators to issue additional recreational licenses for dispensaries that currently operate a medical operation within a nine-month period.
Under the law, each current medical marijuana cultivator, processor and testing laboratory will receive a nonmedical cannabis cultivation, processing and testing license, respectively. Additionally, each current medical marijuana level I cultivator would receive three dispensary licenses, while current medical marijuana level II cultivators will receive one dispensary license.
Each current medical marijuana dispensary will receive a nonmedical cannabis dispensary license.
Parts of Law Criticized
Terrell Washington, owner and founder of Leaf Relief, a medical marijuana dispensary on Market Street in Youngstown, says the law places his business at a disadvantage. Leaf Relief also operates medical dispensaries in Columbus and New Jersey. And his group operates a processor in Youngstown.
Under the new law, Washington says his operation would be allowed just a single dispensary license, while cultivators across the state would be awarded three each.
“It will allow cultivators three free dispensaries,” he says. “I’m at a disadvantage. Why this makes sense is lost to me.” While cultivators are able to open dispensaries in various sites, Leaf Relief would be limited to operating at its site on Market Street.
Washington says he’s in favor of adult use, but the law limits his ability to expand. “My processors and dispensaries have been on the phone nonstop,” he says.
Since it is considered an initiated statute, the law may be amended by the state legislature.
“We’re asking them to make a fair bill,” Washington says. “To make this right so it’s fair and to keep money in the state of Ohio.”
Forty level III cultivator licenses and 50 dispensary licenses will be issued to applicants with a preference to participants of the Cannabis Social Equity and Jobs Program, which the statute prescribes to be established by the Department of Development.
For others in the industry, the new law presents an opportunity for expansion and job growth.
“The reality is now that Issue 2 has passed, there is this moment where it becomes law,” says Brian Kessler, chairman of Riviera Creek LLC, the sole medical marijuana cultivator and processor in Youngstown. “As it becomes law, our job is to fill in the supply.”
Next Steps
Kessler says expansion is underway at his company with the addition of an eighth grow room. Should the law roll out as planned, he says Riviera Creek could expand to 11 grow rooms by 2025.
The company’s building, he adds, has the capacity for 13 such rooms before an addition would have to be built.
The next step is to work with the state to determine how the law would be executed.
“That’s going to be the challenge over the next weeks and months,” Kessler says. “We can’t act yet until we know clearly what we’re allowed and not allowed to do. The sooner the state has gotten that clarified, the better.”
Discussions are underway among state officials as to how to implement new policy under the law. This has included raising the 10% surcharge tax on marijuana revenues, to capping the amount of THC – the active ingredient in cannabis – in products.
Kessler says additional taxes on the product could force buyers to either purchase marijuana on the street – which could be dangerous – or to patronize nearby states such as Michigan, which has a standard 10% tax rate on the product. “I want to be very competitive,” he says.
Adult use could potentially bring between $1 billion and $2 billion of business to Ohio, Kessler says. That’s in addition to the $300 million to $400 million in revenue collected from medical cannabis, he says. According to a cost-benefit analysis compiled in October by Columbus-based Scioto Analysis, the state of Ohio could generate an additional $190 million in tax revenue from legal adult use marijuana.
These taxes would go to fund programs such as the Substance Abuse Addiction Fund and the Cannabis Social Equity Jobs Fund.
The most significant cost, the study found, was lost productivity from workers in specific industries.
States that have legalized recreational marijuana use on average experienced a 1% decline in productivity per worker, the analysis said. In Ohio, this could translate to approximately $760 million worth of lost productivity in the short run, the study estimated.
As for Kessler, the new measure means future expansion and job growth at his Youngstown operations. Riviera Creek employs about 100.
The company recently rolled out a limited edition tin container package for its Stambaugh brand medicinal cannabis.
“We already know how to serve the medical market,” he says. “It makes it easier to transition to adult use. Hopefully, once the regulations are clearly defined, it will move pretty quickly.”
Pictured at top: Terrell Washington says the new cannabis law places his medical marijuana business at a disadvantage.