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‘No One’s Making Money’: Ohio’s Medical Marijuana Industry Slow To Grow

You notice Galenas right away if you’re driving down Main Street on Akron’s east side. It’s a modern, pyramid-shaped building with a wood-paneled façade, half a mile down the street from Bridgestone’s Akron tire center, nestled among car repair shops and surrounded by houses.

You can even catch a whiff of the roughly 750 marijuana plants growing inside.

“We’re not hidden anywhere, and we did that somewhat intentionally,” said CEO Geoff Korff. “This is an industry where we don’t feel like we need to hide or apologize for anything. This is the thing that’s coming, that’s going to be good for everybody.”

One year into Ohio’s medical marijuana program, cultivators, processors and dispensaries are still learning how to navigate this complex new industry.

Akron cultivator Galenas just completed its third harvest, and while yields haven’t been what they anticipated, Korff believes it will be worth the wait.

A lawyer and a longtime marijuana advocate, Korff was among about a dozen applicants to be awarded a smaller, Level 2 cultivator’s license to grow medical marijuana in Ohio. Galenas is one of two such cultivators in Akron.

From The ‘Mother Room’

Wearing a ballcap and scrubs to prevent contamination, Korff navigates through several so-called clean transition rooms with a keycard to enter the heart of his operations — rows on top of rows of 3-to-4-foot-tall plants.

Just outside the door, buds are hanging from what look like metal coat hangers.

“We’re doing what we call de-boning, which is chopping up a whole plant and turning it into these smaller pieces that you see,” Koff says. “They go into our drying room. They’ll be in there (for) about 10-14 days, and then we’ll pull them out and put them through the rest of the process, which includes trimming, testing and then packaging and sale.”

Galenas CEO Geoff Korff says these plants are going through a “deboning” process before they are dried and ready to package.Credit Amanda Rabinowitz / WKSUEdit | Remove

And that’s just the backend of cultivation. In the “mother room,” they maintain about 45 plants that are used to create clones. That’s where cuttings are taken from the mature plants and placed into a potting mix.

After about 10 days, the cuttings develop roots and eventually are placed in the main room. The whole process is a three-month cycle.

“We all have our favorite strains, and right now we’ve got something going through called Lilac Diesel in this room that we really like a lot. It’s kind of flowery and gassy at the same time,” Koff says. “This is something called Tangy that’s got a really citrusy, lemony, aroma to it.”

In the main grow room, Christine DeJesus walks the aisles, checking leaves and soil properties for each plant. DeJesus once ran a small farm that supplied pumpkins and other vegetables for Great Lakes Brewing Company, before becoming a cannabis advocate in 2013.

“It’s a very high-dollar crop, obviously,” DeJesus says. “So when I was growing heirloom tomatoes, the best price I got was $3.25 a pound, wholesale. If you lost 100 tomato plants, it wasn’t really a crisis. But if you were to lose 100 cannabis plants, you’re in a very different situation. It’s kind of a pressure that’s a little different than any other type of agriculture I’ve done.”

DeJesus decided to join Korff when she learned that Galenas completed the Certified KIND organic program. Plants are growing in organic soil without pesticides, and they use LED lights instead of traditional grow lamps, which also cuts down on their cooling costs.

Needless to say, it’s an expensive operation—one that also requires several levels of security. Korff says Galenas basically runs like a vault.

And regulators are keeping a close eye.

“The state has 24/7 access to our camera footage,” Korff says. “Every one of our plants in our facility has to be tagged and uploaded to a software system that the state has access to. So they see in very real time what’s moving through the facility at any given time, and there are kind of hand-off points.”

Korff acknowledges none of this has been easy. The $56 million in sales statewide in 2019 was lower than most analysts were projecting for the first year.

Galenas also reported a recall around Christmas on a small batch of product that wasn’t handled properly. He says it hasn’t been as glamorous as some may think.

“No one’s making money,” Korff says. “Everyone built these facilities with the expectation that the market in Ohio was going to start slow and grow over time. But it doesn’t happen overnight, and there’s a lot of misconceptions that everyone’s making millions, and we’re just printing money, and it’s not the case.”

Worth The Wait

But for the people who have invested in this budding industry, the wait is just as thrilling. Liz Falkenstein is Galenas’ quality assurance director. She used to work in the marijuana industry in Colorado.

“The excitement is still here, you can feel the jitters amongst all our teammates,” Falkenstein says. “It’s become like a family and everyone is really passionate about what they’re doing. Whereas in Colorado, it’s become kind of an autopilot feeling. It was becoming more a commodity rather than something to benefit people, I felt like.”

Above all, Korff and his team say it’s about the good their product can do.

“When patients come back to us and say, ‘Wow, that really helped stimulate my appetite when I was going through chemo,’ then I know that that’s something I know I want to keep in the rotation because of that unique characteristic that that plant has,” DeJesus says. “And those are things that as an industry I think we’re still learning.”

Korff is looking to grow his business. Galenas is expanding into Michigan this spring and has applied for licenses in New Jersey.

Meanwhile, in Ohio, he’s among those supporting a possible November ballot issue to legalize recreational marijuana in the state.

You notice Galenas right away if you're driving down Main Street on Akron's east side. It's a modern, pyramid-shaped building with a wood-paneled façade,

Want to grow medical marijuana in Ohio? Here’s how to apply

marijuana file baby plants medicine man.jpg

The Ohio Department of Commerce on Friday released applications and instructions for medical marijuana cultivator licenses. This file photo was taken at Medicine Man in Denver, Colorado in September 2016.

(Jackie Borchardt, cleveland.com)

COLUMBUS, Ohio — Entrepreneurs seeking to grow medical marijuana in Ohio can now start completing the lengthy, in-depth application to obtain one of 24 licenses available statewide.

The Ohio Department of Commerce on Friday released the application and instructions for cultivators and will begin accepting applications in June. The department plans to issue up to 12 level I licenses for up to 25,000 square feet of growing space and 12 level II licenses for up to 3,000 square feet of space.

Applicants are asked to drop off a paper and electronic copy of their applications with the application fee in person at the department’s Columbus office. The nonrefundable application fee — $20,000 for level I applications and $2,000 for level II applications — must be paid with a money order or certified check.

If awarded a license, level I cultivators would have to pay a $200,000 annual fee — one of the highest of the 29 states with medical marijuana programs. Level II cultivators would pay $20,000 a year.

Department officials plan to go over the application in a webinar posted online May 1. Applicants will have two week-long periods to ask questions and get clarification about the application process before the submission window opens.

Applications for level II licenses will be accepted June 5-16, and applications for level I licenses will be accepted June 19-30. The application doesn’t indicate when licenses will be awarded. But the department faces a December deadline to do so because growers have nine months to meet the requirements of the license and state law requires the program be operational by September 2018.

Applications will be reviewed in two rounds. First, applicants will be screened to see whether they meet requirements for available capital and have secured local zoning approval for the proposed grow site.

Applicants who meet the qualifications will then be judged based on “unidentifiable information” about how they plan to grow and package marijuana, secure the grow facility and pay for operating expenses.

Ohio’s medical marijuana law, passed in June 2016, allows people with one of 21 medical conditions to buy and use marijuana if recommended by a physician. Most of the details about the program, such as who will grow and sell marijuana and how much patients can buy, were left to the commerce department, Ohio State Board of Pharmacy and Ohio State Medical Board.

Rules and regulations for retail dispensaries, product processors and testing labs are still being revised, but must be in place by Sept. 8.

Want to grow medical marijuana in Ohio? Here’s how to apply marijuana file baby plants medicine man.jpg The Ohio Department of Commerce on Friday released applications and instructions for