Last week, Ohio voters passed statewide Issue 2, the initiated statute to legalize adult use recreational cannabis, by 57% according to the unofficial count. Set to go into effect starting December 7, 2023, Issue 2 authorizes the sale of recreational cannabis, possession and use by individuals aged 21 and over, and creates a safe harbor for state-charted financial institutions to serve these new cannabis businesses as they begin operating in Ohio.
Although Issue 2 passed by a wide margin, this measure was on the ballot as an initiated statute so the Ohio General Assembly has the ability to modify the new law legislatively much like any other statute on the books. According to comments made by both Speaker of the House Rep. Jason Stephens (R-Kitts Hill) and Senate President Sen. Matt Huffman (R-Lima), Ohioans can expect the General Assembly to consider amending the statute to clarify some of the language on the limits as well as modifying the tax rates included in the statute.
The passage of Issue 2 exacerbates the problems that the banking industry already faces in dealing with the cannabis industry by widening the potential customers and clients that touch the industry. In most states where it has passed, recreational cannabis significantly expands the cannabis industry and can lead to current or future customers having some tie or relationship to the cannabis industry. Though the initiated statute contains some level of protections for banks, the same federal problems that have existed with medical marijuana persist and, until there is a change at the federal level, banks will continue to face challenges in serving the cannabis industry. This means now more than ever, it is imperative that Congress passes the SAFER Banking Act (formerly known as SAFE Banking) to ensure that all banks are able to serve cannabis or related businesses.
OBL remains actively engaged with our Congressional Delegation to advocate for the passage of SAFER, and earlier this year SAFER passed out of the Senate Banking Committee. OBL continues to work closely with state legislative leaders and the Administration as Issue 2 is altered and implemented as well. The Ohio Department of Commerce has put together an FAQ for Non-Medical Cannabis, which can be found HERE. With this having just passed, and changes likely, there will be a significant implementation process for the program to become operational with promulgation of rules and a build out and licensing necessary. Bankers will need to be examining this both from a baking perspective as well as from a human resources perspective to ensure all policies are updated, if necessary. If you have any questions, please reach out to OBL General Counsel Don Boyd for additional information.