Administrative Control Lessens as New Amendments Take Shape

On July 23, 2019 at 1:00 p.m. in the West B & C Room, 31st Floor, Riffe Building, 77 South High Street, Columbus, Ohio 43215, there will be a public hearing concerning the Ohio Department of Commerce’s (“DOC”) proposed updates to the regulations of the Ohio Medical Marijuana Control Program. The updates consist of six proposed amendments to existing rules and one proposal for a new rule. With these amendments and new rule, State regulators appear to be lessening administrative controls over some aspects concerning the operations of medical marijuana facilities.

The first amendment is to the cultivator certificate of operation rule. The proposed amendment provides that the cultivation of marijuana is not “agriculture” for the purposes of R.C. 3781.061, which provides exemptions for agricultural buildings from certain buildings standards. The intent of the amendment is to establish a more uniform safety standard under the relevant building code. Although this is a codification of the existing practice, it may result in increased costs for cultivators in order to become compliant with applicable building and fire codes.

The next three proposed amendments remove the option of disposal by surrender that resulted in the DOC taking possession of and destroying medical marijuana waste material. The DOC does not have the appropriate means to dispose of the waste and this amendment would give sole authority to the licensees to dispose their waste. Additionally, the amendments to the cultivator, processor, and testing laboratory waste disposal rules would expand the types of employees who can supervise the disposal of waste from only Type 1 Key Employees, to any Type 1 Employee. The DOC expects these amendments to decrease the costs of disposal by relaxing the requirements for waste disposal and granting more autonomy to the facilities. 

The next proposed amendment revises the rule for employee identification cards. Specifically, the amendment removes the following requirements for submission: a copy of the applicant’s social security card, documentation verifying the applicant’s principal place of residence, a sworn statement that the applicant has not been convicted of a disqualifying offense, verification that the background check has been conducted, and verification that the applicant had not been convicted of a qualifying offense. The mandated initial background check already provides much of this information, so these requirements were burdensome and duplicative. The DOC believes that the amendment will decrease the costs associated with application, although the $100 application fee, costs of the background check, and administrative costs are still required.

The last proposed removes the requirement that information obtained by the DOC is only disclosed to its employees, law enforcement, or any person deemed necessary, and language regarding the potential discipline to DOC employees if they violated this requirement. The intent of this is to harmonize the management of information from applicants and licensees with Ohio’s public records laws by narrowing the scope of confidentiality. The only costs that could result from this change would be the costs of investigation, enforcement, and legal action against a licensee for noncompliance.

The proposed new rule grants the DOC the authority to grant variances from the rules of the Medical Marijuana Control Program. The rule is limited to instances in which the variance is in the interest of the public, the provision is not statutorily mandated, and the rule from which variance would be granted is not unreasonable or unnecessarily burdensome. The proposal appears to be in response to issues that the DOC has encountered with provisional licensees and entities who have received certificates of operation. Given that this is a new industry, the DOC found this rule to be necessary in order to address unforeseen issues that are contrary to the intent of the Program.

This new rule on granting variances may result in a need for further clarification to determine what is in the “interest of the public” regarding the medical marijuana industry, and what constitutes unreasonable or unnecessarily burdensome regulations. The language may give the Department of Commerce the leeway that it wants in justifying the granting or denial of potential variances from the regulations.

A package with these rules had been sent to the Common Sense Initiative Office (“CSIO”) on March 8, 2019, when the comment period began. After the comment period closed, the CSIO concluded that it did not have any changes to the proposed rules. Now, the DOC has filed the notice of public hearing with amended rules and new rule with the Joint Committee on Agency Rule Review (“JCARR”). Before these amendments and new rule are adopted, they, along with the public notice, must be in front of JCARR for at least 65 days. JCARR may not invalidate rules, but may report to the General Assembly that the rules do not meet certain criteria. If JCARR approves, then the DOC must file the rules in the Electronic Rule Filing System (“ERF”). The rules’ effective date must be at least 10 days from the final filing date in the ERF.  Even if everything moves along, these amendments and new rule would not become effective until September 3, 2019.

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