The same Licking County village that was quick to roll out the welcome mat for the medical marijuana industry is now close to turning those businesses away.
But it's not for the reasons that many other Ohio communities have blocked medical cannabis activity.
The application window for growers in Ohio seeking to cultivate marijuana hasn’t closed yet, but just about all of Johnstown’s available space for pot-related businesses is spoken for.
“The last two months, it’s just been phone call after email after phone call,” Village Manager/Planner Jim Lenner said. “That’s what we wanted. (But) I didn’t expect to be this inundated.”
The village decided to embrace medical marijuana last year, passing a resolution last summer stating it would not keep related businesses out of town. Many Ohio communities have done the opposite.
Since then, village leaders have been busy.
Village officials recently approved the necessary zoning change for the area encompassing its industrial park to allow cannabis cultivation. Prospective pot growers have contracts for four lots in the industrial park, with a fifth close behind, Lenner said.
Under those contracts, the cultivators have agreed to buy the property if they get a license from the state. Each would then build cultivation facilities, ranging from $10 million to $15 million, Lenner said.
“We are technically, by default, turning people away,” Lenner said. “I don’t know of any other communities having that problem.”
The state began accepting applications in May for permits, which will be limited to 24 growers statewide. The law allows Level 1 growers to grow up to 25,000 square feet of plants and Level 2 growers to cultivate up to 3,000 square feet. Applications for small permits must be submitted by June 16, while large-permit applications are due by June 30. The state plans to approve 12 applications in each size.
Four of the five cultivators looking to launch in Johnston are seeking Level 1 permits, while the fifth is seeking a Level 2 permit.
Even though interest has been great, there’s no guarantee Johnstown will have any medical marijuana businesses if the interested cultivators don’t win any of the state’s permits.
“If they don’t (get approval), they back out of their contract and go off into the wind, I guess,” Lenner said.
Most recently, Johnstown leaders decided to tax marijuana businesses at the same rate as other business in the village: 1 percent on the earned income of employees and 1 percent on the business’ net profit. It’s a decision leaders hope will give Johnstown a competitive edge in attracting those in the industry.
The village originally discussed much higher tax rates — as high as 6 percent.
“Since it is a federally illegal substance, we wanted to make sure we were compensated for the risks we were taking in terms of allowing this into the community,” Lenner said.
“The perception that a lot of people will have is this is an opportunity to create a sin tax,” said Andy Joseph, CEO and president of Apeks Supercritical, a Johnstown-based company that manufactures equipment used to extract oils from marijuana. The company also has applied for a cultivator license in Ohio. “It’s just not true. This is medicine that’s being treated for patients.”
Joseph urged the village: “Don’t make patients pay for potholes.”
Village leaders listened.
Following comment periods and much discussion, the village changed course and decided not to increase taxes on medical marijuana-related businesses.
“If we treat them different than any other business, it’s not a welcoming situation,” Lenner said. “In their opinion, you’re unfairly taxing a legitimate, state-allowed business.”
Determining the potential revenue that the village could take in has been difficult, said Finance Director Dana Steffan, simply because the industry is new to the state.
“Everything’s kind of a shot in the dark,” she said.
Still, the village roughly estimates that it might bring in about $15,000 in net profit tax and employee withholdings early on, with revenue potentially growing to nearly $550,000 by 2022, depending on how many cultivators and processors are operating in Johnstown.
Proposed rules for physicians, marijuana processors, testing facilities, patients and caregivers are still under review. Medical marijuana is expected to be available to patients by September 2018.
Johnstown was early to explore the economic development possibilities that could come with medical marijuana, even before Ohio passed its law, Lenner said. Joseph helped educate the village and its residents about the economic potential of embracing the industry if it was legalized.
Village residents have had some concerns, Lenner said, such as not wanting their village to become the central Ohio hub for pot. But positive feedback has outweighed the negative, he said, and village leaders have been thoughtful and deliberate throughout the process.
“We want to do it right,” he said. “This is going to have a lasting impact on the community for a very long time. The last thing (the village) wants to do is mess something up somewhere down the line.”