Authored By: Chris Nani

On June 8, 2016, the Ohio General Assembly passed the medical marijuana program under § 3796. The bill originally did not have enough votes to pass in the house. Representative Dan Ramos bargained with minority members and secured enough votes to pass the bill by adding subsection (C) to § 3796.09. Subsection (C) requires in part at least 15% of cultivator, processor, or laboratory licenses go to entities that are owned or controlled by economically disadvantaged groups specifically: African Americans, American Indians, Hispanics, and Asians. The program became effective September 8, 2016 and licenses for growers, processors, and dispensaries were determined based on a scoring standard used on applicant’s applications. Scoring was based out of 200 points and factors included financial plans, location, and prior experience.

The Argument for Unconstitionality

PharmaCann filed a suit December 13, 2017 after it did not receive a license. PharmaCann alleges subsection (C) is unconstitutional because it imposes a racial quota and PharmaCann should have received a license because it scored higher than two other applicants who received licenses. Parma Wellness Center scored 153.08 and Harvest Grows scored 142.04 compared to PharmaCann’s 158.56. PharmaCann argues it didn’t receive a license because of subsection (C) and that both applicants who won are not economically disadvantaged. PharmaCann points out the application fee is $20,000, the initial operating fee is $180,000 and $750,000 is required to be held in escrow totaling for almost a million dollars for any licensee to have before they can start. Therefore, it concludes any applicant who receives the license is not economically disadvantaged.

Additionally, PharmaCann points to other states who have tried to enact race-based provisions and their constitutionality (Florida Statute §381.968(8)(a)(2)(b), Maryland Statute §13-3306(a)(9)(i), and Pennsylvania Code 28 § 11.41-32). At essence, PharmaCann argues that race-based provisions cannot be mandatory. The Supreme Court has held that race-based provisions may be used as “plus” factors in determining applicants for colleges but cannot be used as determining factors. Similar to the college application process, the Ohio license process is analogous. PharmaCann argues the race quota is unconstitutional because it is a mandatory percentage and isn’t used as a “plus factor”.

PharmaCann also mentions the legislative history when the bill was being passed. Representative Bill Sietz opposed the bill on the grounds subsection (C) was unconstitutional and unenforceable. He argued because no discrimination was identified beforehand there was no need for the race-based remedy with subsection (C) and that this was a quid-pro-quid agreement between Representative Ramos and the minority members to pass the medical marijuana program. PharmaCann also argued that if the list was meant to protect disadvantaged minorities it was under-inclusive and didn’t include groups such as Vietnam veterans, Appalachian whites, or Hasidic Jews.

The Argument for Constitutionality

In response to PharmaCann, the Ohio Department of Commerce (ODC) has responded by stating § 3796.09(C) is constitutional because it is meant to help with the racial disparity in entrepreneurship. Historically, minority communities have been targeted by law enforcement during cannabis prohibition and as a result a disproportionate amount of incarcerated cannabis offenders are minorities. The provision it argues is narrowly made and is the least disruptive method for helping minorities achieve representation in the Ohio medical marijuana program. ODC further argues PharmaCann waited over a year to challenge the statute and only did so because it did not win a license. Furthermore, ODC argues there is no constitutional violation because the provision does not discriminate based on race. If there aren’t enough economically disadvantaged applicants, the remaining licenses would go to the normal pool of applicants. The provision only requires 15% go to economically disadvantaged groups when there are enough applicants and doesn’t preclude 85% of the licenses from going to the remaining applicants.

What Are the Possible Outcomes?

PharmaCann has a valid claim that §3796.09(C) is unconstitutional. The Supreme Court has ruled that mandatory racial quotas are unconstitutional. Here, the mandatory 15% racial quota is exactly what the Supreme Court ruled against. However, just because the provision is unconstitutional doesn’t mean the medical marijuana program has to be scrapped. The Ohio legislature can modify the bill in two ways. It can either (1) sever subsection (C) from the bill and remove it entirely or; (2) replace the provision with language that doesn’t make it mandatory. For example, the Ohio legislature could waive certain financial requirements for any applicant who scores high enough to receive a license instead of subsection (C). If the provision is meant to serve economically disadvantaged groups, waiving the financial requirement would be race-neutral and help economically disadvantaged groups receive licenses while being constitutional.