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Why are Ohio’s medical marijuana prices so high?

Ohio’s seed to sale process for producing medical marijuana. Cincinnati Enquirer

Moments after CY+ Dispensary sold some of the first legal medical marijuana in Ohio, the crowd of patients waiting outside for their turn to make state history wanted to know one thing: How much?

They weren’t happy with the answer: $50 cash for a small plastic container holding 2.83 grams of dried marijuana bud, or just under $500 an ounce.

“I’ll buy one today to say I did it, but I can get it a lot cheaper than that elsewhere,” said one man who declined to be named.

How cheap? Michigan dispensaries charge between $150 and $300 an ounce, depending on the variety, or strain. Patients say that’s similar to prices for illicit marijuana in Ohio.

Dispensaries sold 8.7 pounds of marijuana on Ohio’s first day at an average price of$538 per ounce, according to sales figures released Thursday.

Why so much? There are a few reasons.

Regulated and tested

Medical marijuana markets have a hard time competing with product sold on the black market for several reasons.

Legal marijuana businesses have to comply with regulations for pesticides, tracking every plant with sophisticated software, security and more. They also pay taxes, and because marijuana remains an illegal substance on the federal level, they can’t deduct expenses the way other businesses can.

Ohio law requires every medical marijuana product to be tested by an independent state-licensed lab. There are only two in operation. The labs test for pesticides, mold and other contaminants. They also test for amounts of various marijuana compounds including THC, which generates a high, and cannabidiol, or CBD, which doesn’t.

Ohio’s program allows individuals with one of 21 medical conditions to buy and use marijuana if recommended to them by a physician. Eligible conditions include AIDS, cancer and others where consumers’ immune systems could suffer from tainted marijuana.

Limited supply

Ohio dispensaries reported lines and a steady flow of customers on opening day. (Photo: Daniel Carson/The News-Messenger)

The state has licensed 29 businesses to grow marijuana, but only 14 have finished building their facilities and been approved to start growing. None of the state-licensed processors are operating, so oils, lotions, patches, edibles and other products are not yet available.

The four dispensaries that opened Wednesday sold only dried marijuana flower, or bud, from a handful of medical marijuana cultivators.

“If I wanted to open today, I had to buy it from them,” said Mike Petrella, who owns Ohio Valley Natural Relief dispensary in Wintersville.

Dispensaries are private businesses and can set prices as they see fit; state regulators have no authority to limit or change prices. Many of the varieties sold Wednesday were priced the same. Officials from the first four open dispensaries say prices should go down as more cultivators harvest and compete.

Some dispensary owners plan to offer discounts to veterans, senior citizens and others. The Forest Sandusky offers a 20 percent discount to veterans.

More regulations

In other states, flower can be packaged in the dispensary. Not in Ohio. (Michigan allowed it before new packaging rules were established in 2018.)

Growers and product manufacturers are the only ones who can package products, and dispensaries have to sell products in the original, sealed packaging.

Ohio has some of the highest marijuana business licensing fees in the country – $200,000 a year for large-scale growers and $70,000 every two years for dispensary owners. Businesses pay additional fees to the state to register employees and pay a $100 fee for each strain or dosage of a product.

“There’s a higher cost of production to adhere to all the regulatory requirements and to deliver that product to the consumer,” said Jason Erkes, spokesman for Cresco Labs, which operates CY+ Dispensary. Cresco also has an Ohio cultivation license and operates medical marijuana businesses in Illinois and Pennsylvania.

Prices in Illinois averaged $450 an ounce during the first week of sales in 2015. Current prices there range from $240 to $420 an ounce, according to dispensary websites.

Pennsylvania started selling flower in August 2018, and prices are now hovering around $300 to $480 an ounce, according to dispensary websites.

The ‘Ohio tenth’

One specific regulation sets Ohio apart from the 33 states that allow cannabis for medicinal use.

Rules set by the Ohio State Pharmacy Board, which oversees dispensaries, require marijuana flower and infused products to be packaged in certain amounts, called “whole day units.”

A unit of dried flower is 2.83 grams, or 1/10th of an ounce. Where did that number come from? State law limits patients to buying and possessing no more than a “90-day supply,” but didn’t define it in law.

The pharmacy board decided to set that number at 8 ounces of dried flower or an equivalent amount of THC in marijuana products. The limits came from a panel of pharmacists who reviewed clinical research about the marijuana compound.

No other state has calculated limits this way.

The only product sold Wednesday were little containers with one “Ohio tenth” of buds inside.

On Tuesday, pharmacy board spokeswoman Ali Simon said flower had to be packaged in 2.83 gram amounts. On Thursday, Simon clarified it can be packaged in greater amounts, as long as the total is made up of whole daily units.

Buckeye Relief, a large-scale cultivator in Northeast Ohio, planned to start packaging in larger quantities after the first day of sales.

“I’m sure we’re all trying to drive costs down for patients over the long haul,” Buckeye Relief CEO Andy Rayburn said.

Many Ohio medical marijuana patients suffered from sticker shock on the first day of legal marijuana sales in the state.

Ohio medical marijuana prices are still high but going down as market grows

Ohio’s seed to sale process for producing medical marijuana. Cincinnati Enquirer

Editor’s note: This story was updated June 18 with the correct per-ounce average for marijuana sales during the first week of June. The initial version of this story included inaccurate information provided by the Ohio Department of Commerce.

COLUMBUS – As sales of medical marijuana in Ohio approach $10 million, the average price for bud is going down.

Ohio dispensaries sold $9.68 million of medical marijuana between Jan. 16, when sales began at four dispensaries, and June 8, when 18 dispensaries had opened. That includes 1,181 pounds of dried flower and 12,152 units of tinctures, vaping oils and edibles.

Prices have been steep as the program gets up and running. For the first two months of sales, prices averaged $471.86 per ounce, according to an Enquirer analysis of Department of Commerce data.

Last week, the average sale price was down to $442.16 an ounce. That’s less than the average price reported in March for Pennsylvania, where sales started last year, but more than in Illinois and Michigan, which averaged $207.63 per ounce during a six-month period ending in March.

But don’t expect prices to drop to Michigan levels any time soon.

Brian Wingfield, owner of Ohio Cannabis Company dispensary in Coshocton, said some growers have recently set lower prices on introductory products or lower-THC strains they plan to discontinue growing.

Wingfield expects flower prices to go down a little bit more but not too much because growers will need to start selling more plant material for marijuana-infused products as more processors come online. Meanwhile, Wingfield said, Standard Wellness plans to roll out its infused gummy candy at $15 less than its competitor.

The average price in Michigan was $207.63 per ounce during the time between October and March.

Ohio requires dried marijuana flower be sold in one-tenth ounce amounts. Prices range between $30 and $52 per one-tenth, according to an Enquirer review of menus from four dispensaries around the state.

Prices are coming down in Ohio's new medical marijuana market but they're still too high for many patients.