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Lawmakers Propose Statute to Block ResponsibleOhio Oligopoly

Lawmakers Propose Statute to Block ResponsibleOhio Oligopoly

Ohio’s Secretary of State announced Wednesday that ResponsibleOhio’s ballot measure to legalize recreational and medical cannabis will have a spot on the November general election ballot. A second ballot measure designed to undermine the group’s effort will be on the November ballot as well, setting up a possible legal showdown between ResponsibleOhio and lawmakers who say the group is trying to enshrine a cannabis oligopoly in the state constitution.

To be certain, opponents of ResponsibleOhio are correct to cry foul over the group’s tactics and motives. ResponsibleOhio is indisputably a group of private investors who stand to make loads of money if their amendment to Ohio’s constitution is passed. That is because the law, as the group drafted it, would require all commercial and medical cannabis in Ohio to be grown on just 10 plots of land—all of them owned or optioned by ResponsibleOhio investors. The group’s stakeholders include a former boy-band member, current and ex-professional athletes, a fashion designer and two descendants of a former U.S. president.

By spending $2.5 million, ResponsibleOhio managed to gather 320,267 signatures, more than enough to land a spot on the November ballot. The group plans to follow up the roughly $8 per signature it has already spent with an additional $20 million capital investment to make sure its cannabis plan becomes the law of the land for Ohio’s 11.6 million residents.

ResponsibleOhio cites the many benefits to legalization, including saving money on law enforcement efforts against cannabis while crippling the black market and preventing the imprisonment of cannabis users. Only hardline anti-cannabis advocates would dispute such benefits are likely to happen if the law is passed. Opponents of the plan, however, who include cannabis advocates as well as lawmakers, are alarmed that the new cannabis economy would be under the thumb of the owners of the 10 designated grow sites. They say the legalization effort being pushed by ResponsibleOhio is simply a ploy to establish an oligopoly with a constitutional right to control cannabis in Ohio.

To prevent that from happening, lawmakers have added their own measure to the November ballot. The proposed statute would prohibit language in the state constitution that grants “monopoly, oligopoly or cartel” powers to any group or individual, which could be a deathblow to ResponsibleOhio’s efforts. This response from lawmakers suggests that intentions are not to block legalization in general, but to prevent this measure specifically. It is unclear whether ResponsibleOhio will continue to push for cannabis law reform if the language that designates their landholdings as the sole growing spaces in Ohio were to be deemed unconstitutional.

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A second, albeit seemingly less serious threat to ResponsibleOhio is coming from cannabis advocates. John Pardee, president of Ohio Rights Group, says of the opposition to ResponsibleOhio among cannabis proponents,

“It’s a battle for the heart and soul of this new economy. The wealthy are starting to see this new market and step on it right out of the crib.”

Pardee’s organization had planned to launch a campaign to put a legalization measure on the 2016 ballot, but is now gathering signatures for the 2015 ballot in an attempt to provide voters with an alternative future for cannabis business in the state.

In the event the ResponsibleOhio measure is the only pro-cannabis amendment on the November ballot, voters will have to decide whether they are willing to swallow the bitter pill of oligopoly in the cannabis market in order to finally have access to legal marijuana. The National Organization for the Reform of Marijuana Laws (NORMAL), the best known of all cannabis advocacy groups in the U.S., has said it is willing to support ResponsibleOhio if its plan turns out to be the only legalization option on the ballot in the strategically important state. NORML’s support will not be overly enthusiastic, however, as it recognizes that longtime cannabis supporters will be pushed aside by profiteers.

“Those people … have invested their lives and taken great risks to get us to where we are today. We would like the market to be open to small- and mid-sized growers, not just the big guys,”

Keith Stroup, an attorney for NORML, said of allies who will be squeezed out of the market by ResponsibleOhio.

ResponsibleOhio: Uncertain Precedent

ResponsibleOhio: Uncertain Precedent

ResponsibleOhio — the private investment group critically referred to as a cartel that is attempting to convince voters in the Buckeye State to pass a constitutional amendment legalizing marijuana — has gained plenty of national media attention during the past few weeks.

While the controversial effort, if successful, would allow cannabis consumers in the state to possess, consume, and even grow a small number of plants, the majority of marijuana advocates are against it. But why?

Production Monopoly

In a word: Monopoly.

Or, as some picky observers will correct, an oligopoly. Regardless of semantics, if passed by voters, ResponsibleOhio’s bill would create a closed market for the production of cannabis in the state. Unlike Colorado, Oregon, and Washington — which are open markets that invite robust competition (resulting in lower prices and higher quality for consumers) — ResponsibleOhio’s plan would limit production to 10 “pot factories” located throughout the state, each owned by a different investor who has ponied up nearly $4 million.

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Following the saga of ResponsibleOhio has become a near-daily task due to the rapid pace at which the drama is unfolding. On Monday, July 20, it was revealed that the investment group’s signature drive, which collected more than double the number necessary to place the bill on the November ballot, had come up short of valid signatures to the tune of 29,509 (nearly 306,000 signatures are necessary).

In Franklin County, where ResponsibleOhio is headquartered, the validity rate for signatures collected was only about 40 percent. In Hamilton County, located in extreme southwest Ohio and home to Cincinnati, the validity rate was only 34 percent. In most counties, the majority of signatures collected were invalid.

Unless the percentage of valid signatures from the previous signature gathering campaign dramatically improve during the 10-day cure period, about 75,000 signatures will need to be collected overall (that’s 7,500 signatures per day). The group has until July 30 to accomplish its goal.

Some observers have theorized that ResponsibleOhio’s validity rate is so low due to the fact that it hired paid signature gatherers, many of whom arguably had little concern or vested interest in passage of the law. Cannabis legalization efforts in other states have traditionally utilized grass roots volunteers and activists for signature drives, helping ensure their dedication and concern for the campaign (and not simply collecting a paycheck).

Ohio law permits the group to compensate for its shortfall with a “cure period” of 10 calendar days in which it may collect additional signatures. If ResponsibleOhio is able to gather nearly 50,000 valid signatures during this period, it will appear on the Nov. 3 ballot. If not, it’s dead in the water.

Multiple Fronts of Opposition

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However, even if the group is able to gather the required number of valid signatures within this time period, its bill still faces two major obstacles to passage.

First, November’s election will be an “off-off” year, meaning there are no major state or national offices or issues on the ballot. This typically results in lower turnout comprised mostly of an older voter population, a demographic that recent polls have shown is decidedly against marijuana legalization. ResponsibleOhio would need all the help it could get to convince enough citizens who will actually step into the voting booth that the measure is worthy of passage.

Second, ResponsibleOhio faces opposition not only from marijuana advocates who are opposed to the monopolization of production facilities in the state, but also from conservative politicians. Ohio’s Republican-dominated legislature and its most prominent leaders are openly against legalization of cannabis.

Whether as a ruse to cover their true intent of maintaining cannabis prohibition or a sincere effort to prevent monopolies in the state, Ohio’s lawmakers recently cleared a bill for inclusion on the November ballot that, if passed by voters, will prevent modifications to the state’s constitution that result in monopolies.

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The proposed constitutional amendment, called House Joint Resolution 4 (HJR4), would:

“…prohibit an initiated constitutional amendment that would grant a monopoly, oligopoly, or cartel, specify or determine a tax rate, or confer a commercial interest, right, or license to any person or nonpublic entity.”

If ResponsibleOhio is able to gather the required number of valid signatures during the cure period, it will go toe-to-toe in November with the anti-monopoly issue. Assuming voter turnout is, as predicted, largely baby boomers and retirees — most of whom will know few of the details of either bill — they will likely support preventing monopolies in their state while also desiring to maintain marijuana prohibition.

However, assume that enough voters in Ohio say yes to ResponsibleOhio for passage. If HJR4 also passes, it will go into effect immediately, not 30 days later, as is the case with the legalization bill. This would nullify the investment group’s victory in no uncertain terms. The organization’s only option would be to rewrite its bill and begin the signature gathering effort anew for the 2016 ballot. Whether the proposed cartel’s wealthy investors would be willing to assume even more risk and wait another year for victory is obviously uncertain.

Desperation is a Stinky Cologne

Watching the ResponsibleOhio PR machine at work has been like witnessing an overly confident, opportunistic squirrel slowly die after a fatal fall incurred from reaching too far out on a branch for a nut. Recently, the campaign addressed naysayers by claiming that limited production will prevent low-quality or tainted product from making it to market.

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Critics quickly countered that states like Washington and Oregon employ the simple process of testing. In states where recreational cannabis is legal, testing laboratories are quickly emerging to ensure the safety of cannabis and related products in an effort to help dispensaries and retail outlets comply with state regulations and protect patients.

Advocates Concerned about Precedent

Cannabis advocates and activists around the country are closely watching this situation. The fear is that, if it passes, ResponsibleOhio will send a message to similar well-heeled investors throughout the nation that citizens in other states might be willing to accept a constitutional amendment granting investors a closed market and, thus, guaranteed revenue based on a lack of competition.

Similarly, if ResponsibleOhio fails — whether from a shortfall of valid signatures, lack of votes in November, or being overruled by the passage of HJR4 — it will send a signal to investors eager to cash in on the “green rush” that there are limits to what state legislatures and citizens are willing to accept in exchange for legal pot.

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