Why Ohio Cannabis Is Built Different: Inside the Regulator-Operator Alignment That's Actually Working ft. Caroline Henry

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Bryan Fields: The head of their program is trying to get their arms around the regulations, around testing, and around product that's flowing in that wasn't grown in-state but is getting onto the dispensary shelves because people are trying to find ways to cut corners, and sometimes that product isn't tested. So I think Ohio looks at that and sees a lot of the problems with unlimited licensing, and also rolling out a program too quickly — issuing lots of licenses before you really have an agency that's ready to regulate it. Caroline, you said something I think the industry needs to hear: cannabis is not as mainstream as the industry thinks. Where's the disconnect? Caroline Henry: So I think the disconnect is that if you work in the industry, you're thinking about and talking about cannabis all day, every day. We're consumed by this plant and we're always, always talking about it. But out there, in our regular lives, people aren't thinking about cannabis. And when they do think about cannabis, they have a very old-fashioned view. I was telling you earlier, Bryan, I live in a very conservative suburb of Cleveland and I have two children, so I'm hesitant to tell people what I do for a living because there are a couple of common responses. You get the enthusiastic person who loves cannabis and wants to talk all about it — they have their favorite dispensary, their favorite brand, they want to know what brand you're with. That's the great response. But then there are other responses. There's the one where I get, 'I don't agree with that,' and the person just walks away — they've decided you're a bad person. Or there's the response of, 'How do you do that for a living?' I got that one recently from a nurse I was talking to. She was very upset when she found out I work in cannabis and couldn't understand how I could work with this 'gateway drug' — that's exactly how she raised it to me: 'Isn't that a gateway drug?' I had to correct her and tell her no. I think it helps people who are maybe on too many opioids get off opioids because now they've got something safer to supplement with. It can help people who are prescribed opioids by their physician use fewer of them and use cannabis instead so they don't get addicted. It's actually really good for most medical patients because it prevents that long-term addiction. She pointed out that I have children at home and that I'm setting a very bad example for them. We talked a little bit — she said, 'Aren't you afraid your 18-year-old is going to think it's okay to use cannabis?' I said, well, I think a lot of young adults — people in their 20s and 30s — have moved away from alcohol because they recognize how dangerous it is. They've seen alcoholic parents, friends who've had alcohol poisoning, people who've died from alcohol. No one has ever died from using legal, safe, tested marijuana. I think kids realize it's a safer alternative. They're not going to use marijuana and jump behind the wheel and drive like a crazy person — it's just a more chill response, and I think kids are smarter now than they used to be. Do I want her using at 18? No. But do I think it's a bad example to set for her when she's a young adult who can purchase it legally? No — I think it's a great example. I'd rather she was buying marijuana than buying a lot of alcohol and getting so drunk she can't see straight. Bryan Fields: It's really interesting because I think in the cannabis industry we assume everyone's okay with what we do. But you talk to people in conservative communities, or go to a city council meeting when you're trying to get a new dispensary licensed, and you get a whole different impression. The NIMBY response is real, the concerned parents are real. Even the parents of my fourth grader think I've got cannabis all over my house, and if they let their kids come over, they're going to get a hold of it. It's a good reminder of how far we still have to come. It's easy to get lost in the advancements of adult use and medical programs across all these states and forget there are whole generations that grew up with the D.A.R.E. program and how 'bad' cannabis is. I push back on those conversations — your young adult child is going to make adult decisions, and what you probably want to do as a parent is encourage them to make responsible decisions, because alcohol and cannabis are both choices they can make. I wish people who are against that thought more about it — the concept that adults make adult decisions, and you want to encourage them to understand the risks that come with those decisions. Caroline Henry: Absolutely. And something else I've been thinking about — the nurse I was talking to who seemed so confused about cannabis has probably seen children in Ohio who accidentally ingested a bunch of gummies their mom or dad left laying around, or adults who consumed a contaminated product. A lot of that is what we saw happening when we had a rampant intoxicating hemp market in Ohio. There were at least ten times as many hemp shops or vape shops selling intoxicating hemp products in Ohio as we had licensed dispensaries. They weren't age-gating. They were selling products marketed like Nerds or Doritos — knockoffs like 'Stonios' instead of Oreos. All of those products are very dangerous, untested, and we don't know where they're coming from. You scan the QR code and it goes nowhere, or the testing isn't even for the same product. She's probably seen a lot of people who ingested an unregulated, untested product, and those companies did us a great disservice in the cannabis industry. Licensed, regulated operators are fighting to be respected and seen as legitimate businesses. We've got security cameras all over our facilities, we're badged, background-checked, our advertising is approved, everything is tested, seed to sale, traceable. Yet we're being compared and confused with companies that have zero regulation, doing whatever they want. Since Ohio closed the hemp loophole — we closed it March 20th of this year, earlier than the federal government, which will close it at the end of this year — we've seen those shops start to close, but the stigma they left remains. We still have politicians who think we need stricter advertising and security and testing rules for marijuana, meanwhile we're already tested and secured and restricted on advertising so much we can hardly operate. They're really trying to regulate the bad actors, but they're not overregulating them — they're overregulating us, because we're the ones who show up and talk to them. It's been interesting watching those shops close, and I'm hopeful it helps improve the stigma, though I think it'll take a long time to really get where we should be. Bryan Fields: Did your former position working alongside the director of the Ohio EPA make you uniquely able to understand these challenges — being able to say, 'Here's what's happening currently, here are all the rules we follow to a T, and here are the other actors influencing the negative narrative that's hurting us and our communities'? One of the goals of the organization is to have a safe, tested, consumable product people can enjoy responsibly, and if your team is doing that but others around you aren't, it's very difficult for local communities to separate those things as easily as you and I can, being in this every day. Caroline Henry: I worked for a while for a gentleman who had been the director of the Ohio EPA. He came to work for a company I was with, and I worked with him on regulatory topics unrelated to cannabis, in another industry. But he was great at teaching me how to talk to regulators — how to understand the box they're working in, what they can and can't say yes to, and seeing them as people who are just trying to do their job and watch out for the health and safety of the communities they represent. It's the same with city council members — it's not that they're against you or hate you, it's that they have a duty and walls they're working within that they can't stretch too far outside of, or they'll lose their job or not get reelected. He taught me how to put myself in their position. I think a mistake cannabis people often make is that we're so passionate about how we feel about cannabis that we forget other people aren't. We need to use logic and data, not just passion, to make our case. If we can learn to speak the language of regulators and legislators, we'll get a lot closer to agreement — using them as partners rather than adversaries. Bryan Fields: Absolutely, because they can be partners. It's about understanding what the person across the table can actually do. Businesses always think big picture — was our ask big enough? — and forget that maybe the person can't give the big ask, but they can help with smaller things that make your business operate more efficiently if you explain it to them. It's all about base hits in this industry, not home runs. Small successes pile up over time. And if you always try to go over the agent's head to talk to the superintendent, you tick off everyone underneath and get labeled — you have to learn to work with the agent in front of you and figure out what they can and can't say yes to. Bryan Fields: Is there a specific example that comes to mind when you're telling that story? Caroline Henry: That's kind of tough. I often think about the different rule packages we've worked on in Ohio. Ohio's in a unique situation where we kicked off adult use under medical rules. Our superintendent didn't want to wait two years for the rules to be done to allow adult use sales. Bryan Fields: Explain what that means, just so people understand clearly — kicking off adult use under medical rules. Caroline Henry: It means adult-use consumers could come into dispensaries and purchase under medical rules — medical purchase limits, medical products — but purchasing as an adult-use consumer. A lot of states wait until all the adult-use rules are written, which is a lengthy process, before allowing adult-use purchases. Ohio didn't want to wait because they knew how long that process takes. There were so many legislative questions, so they started allowing adult-use sales early in the process. Overall we've had about eight different rule packages, and they only had one or two done when they said, 'Now these dispensaries can sell adult-use cannabis, so go' — under medical rules. Bryan Fields: That's a smart move — it allowed access quickly, especially for people who voted for adult use and were frustrated about not seeing it yet, and it benefited existing operators who could already provide a consistent level of product. Caroline Henry: Exactly. And that's what the last two years have been — a series of small wins, because they're rewriting all the rules completely, tackling every little topic as they go. One small example: getting rid of 'man traps' in dispensaries. We used to have a lobby and then a man trap between the lobby and the retail area, so customers were swiping through so many doors it slowed everything down, and local fire departments hated them too — it was always a nightmare getting a dispensary open because of it. Working with the state to get rid of those, pointing out it was impractical and actually made facilities less fire-safe, was a small win. The intention was to reduce theft, but it wasn't as big a concern as they thought — it was just expensive to operate, since you needed an employee constantly swiping people through. Another example: slightly increasing testing batch sizes. We wanted 50 pounds of trim and 25 pounds of flower per batch; we got the 50 pounds of trim but they kept flower at 15 pounds instead of 25. These are little things you work on with regulators over the years, understanding what they can and can't say yes to and where their real concerns are — like not wanting to look like they're removing testing or running a free-for-all. Bryan Fields: I like that example because it highlights that there's a goal in mind you're not trying to undermine — you're just trying to explain the reasoning, which takes time even for me to fully understand. And going back to what you said at the Ignite conference, which I really enjoyed — some states craft their rules by pulling from other states, and in theory learning from other states makes sense, but in practice it can create a rulebook that's overly burdensome and disconnected from reality. Is that part of what you're doing with regulators — explaining that some rules conflict with running a normal operation? Caroline Henry: Absolutely. I think it's a scary industry to regulate — you don't want to be the state everyone points to and says, 'Don't do what they did, they really made a mistake.' Staying out of the media and managing the program quietly is the goal for a regulator. For us, it's not necessarily less regulation, it's smart regulation — rules that let us operate fluidly and make our own business decisions. We've seen a lot of states adopt rules just because other states have them, especially in testing. Aspergillus testing comes to mind — a lot of states started adding it, and if you failed you had to destroy the batch. Then Oregon operators sued their program over it because they were failing constantly, and the question became: were people actually endangered, or was this just unnecessary failure that wasn't helping the program? That lawsuit helped stop other states from continuing to implement it, because it made them step back and ask whether it actually made the program safer. In Ohio, our grows are all indoor or greenhouse, so the likelihood of aspergillus is very low anyway — adding testing that wasn't necessary was driven by FOMO, fear of looking like they missed a regulation everyone else has. But sometimes adding an unnecessary regulation looks worse because you're increasing costs and failing products that shouldn't fail. Bryan Fields: I can see how that easily gets added to the rulebook — 'well, everyone else does it' — without asking why they test for it, whether it's something we can accurately test for, and whether it actually keeps consumers safer. States operate as independent silos but sometimes work against each other by copying rules without understanding the reasoning. Caroline Henry: Right, and one of the big downsides for us is that it constantly adds expenses — extra packaging, extra people, extra labeling requirements. No one thinks about the fact that one extra sticker means someone now has to apply it hundreds of thousands of times a day — that's a real cost. Child-resistant packaging is something that jumps to mind as an area that's overregulated in some respects. No one wants cannabis in the hands of children, and gummies absolutely should be in child-resistant packaging because they look like candy. But pre-rolls or flower — why? Cigarettes aren't in child-resistant packaging because kids aren't chewing on cigarettes, and if a kid is old enough to light one, they can get into child-resistant packaging anyway. Beverage packaging really highlighted this for me — hemp-derived THC beverages became so popular in regular cans, not child-resistant packaging, while if we sold the same thing as a marijuana product it would have to be in expensive, cumbersome child-resistant packaging. No one's freaking out about kids getting into beverages at liquor stores or grocery stores, but if it's a marijuana product, suddenly it needs all these extra requirements — not because of the effects of the product, but because it says 'marijuana.' Bryan Fields: I understand the challenge — some hemp companies self-regulated and added child-resistant packaging, others exploited the loophole. But on the beverage side, do you see that as a real asset for the industry? It seems like a massive unlock for social consumption and reducing stigma — holding a beverage just feels more normal than smoking or an edible where you're not sure if it's hit you yet. How do you see that fitting into the market? Caroline Henry: I think it comes back to the stigma and mainstream question. A lot of people want to go to a bar or restaurant with friends, don't want to drink alcohol, but want that relaxing, slightly elated feeling — beverages filled that niche perfectly, letting people consume alongside friends who are drinking alcohol. I think there's real opportunity to partner marijuana companies with alcohol companies through the three-tier system, using THC grown in the regulated program, because it reaches customers who would never walk into a dispensary due to stigma, but who aren't worried about ordering something at a restaurant. Once they realize they liked that, maybe they'll consider a gummy to help them sleep, or walk into a dispensary. I do call these marijuana beverages, not hemp beverages — in my opinion they were never really hemp; they're either synthetic and dangerous, or marijuana marketed as hemp to exploit the loophole. I'm in favor of these products under a regulated structure, but there are challenges — people don't realize they can fail a drug test and lose their job from consuming one over the weekend. The industry needs more education about how THC testing works and needs to work with chambers of commerce to shift employer attitudes toward THC testing as we try to make these beverages mainstream. Bryan Fields: It's kind of a gateway to the category — you try it, you feel happy and relaxed, no hangover, the boogeyman didn't get you, and it's not so scary. Caroline Henry: Exactly, it really isn't. Bryan Fields: We couldn't have an Ohio conversation without talking a little about Michigan. From your conversations, is there a clear understanding of the challenges Michigan has faced that Ohio is looking to avoid? Caroline Henry: I'll first correct you — we refer to it as 'the state up north.' We never actually say the word. [laughter] There are a lot of lessons to be learned. Unlimited licensing is one — our price is always being compared, and it's not a fair comparison, because unlimited licensing has driven everyone to the bottom, a constant race to sell the cheapest, and no one's making money, so businesses go out constantly, encouraging companies to cut corners. The head of Michigan's program is trying to get their arms around testing and product flowing in that wasn't grown in-state, getting onto shelves untested because people are cutting corners. Ohio looks at that and sees the problems with unlimited licensing and rolling out too quickly before the agency is ready to regulate it. The billboards are another example — we don't want Ohio to look like cannabis billboards every five feet, especially at the state border. We've learned from mistakes on testing and licensing not to repeat them. Ohio has taken a slower approach, and I think it's a smarter one — our program is more likely to succeed long-term because it's going a little slower. We all want to run as fast as we can, but sometimes that just makes you trip and fall. Bryan Fields: It's a difficult balance between supply, demand, sensible regulation, and strong competition. Some critiques say there aren't enough players in Ohio; others say the market is being ordered out smartly. Where's that line, and what's the fair approach? Caroline Henry: Ohio has license caps — a company isn't allowed more than eight dispensaries, one cultivation license, and one processing license. Given our new legislative cap of 400 dispensaries statewide, eight is a very small percentage of the market, so there are actually a lot of operators in Ohio. Cultivation square footage started at either 25,000 square feet for large growers or 3,000 for smaller growers, with state-authorized expansion up to 100,000 and 15,000 square feet respectively. Companies still have to request approval, and those expansions are only now really happening — partly because people were waiting to see what happened with unregulated hemp flooding the market with cheap THC from China. Now that loophole is closed, level one and level two cultivators are expanding, though no one's jumping straight to the max. Everyone's been measuring whether they can continue operating successfully before expanding, which I think means once fully expanded, this program can more than sustain Ohio with plenty of available product at reasonable prices for independent processors to use. Bryan Fields: Is there an internal understanding of modeling supply and demand, or is that really more the regulator's job? Caroline Henry: The statute defines a lot of it for us — one cultivator license per company, up to 100,000 square feet, and the state can issue new licenses as it deems necessary based on market demand. Once the additional dispensary licenses awarded under Issue 2 are fully operational, we'll land around 310 dispensaries, leaving about 90 more that the state can open through an application and lottery-style drawing process. It's not stacked against new operators — there's plenty of opportunity to enter the market if the Division of Cannabis Control perceives the demand. Right now we're mostly heads-down operating our businesses after years dealing with legislation and rules. Bryan Fields: You guys are killing it in Ohio. Are there internal conversations about expanding to other states — maybe smaller ones? Does your brain wander toward Texas, Florida, Georgia, replicating the model elsewhere? Caroline Henry: If Andy Rayburn, the president and CEO of Buckeye Relief, were sitting here, he'd say no — we are an Ohio-only business. His goal has always been to run the best cannabis company in Ohio, to be the expert in Ohio. I came from a background writing grant applications and building a renewable energy business across multiple states, so I'm always looking at other states' applications and opportunities. But one thing I've learned at Buckeye Relief over six years is that Andy's vision is really solid — his management team is the same today as when they won the license. People have stayed; they've had experience in Ohio since 2017, seen all the changes, and people we hired as trimmers on day one have grown into department directors. We have very low turnover because the focus is entirely on this state and these licenses. If you're stretched across multiple states, you end up okay at a bunch of things instead of great at one. It's especially hard in cannabis because rules are so state-specific — we work with a lot of MSOs, great operators, but I know it's hard for them because they can't benefit from the economies of scale they counted on; they can't order the same packaging for every state because every state wants something different, and mistakes happen, like sending the wrong packaging to the wrong state and triggering recalls. While part of me would love to dive into another state, I'm proud to be part of a company built around being true experts in Ohio. Bryan Fields: Great answer, and there's a lot of self-awareness there, because it is more fun to dive into other states, but attention gets split and small things become big problems as competition increases. I also want to point out — the fact that your management team has largely stayed together since 2017 is a massive accomplishment in an industry with huge turnover. Caroline Henry: It is. It's a pleasure to work with people who know what they're doing. I'm probably one of the newer people on the management team, and I've been there six years. Bryan Fields: Last question — what question do you wish more people asked you? Caroline Henry: A friend of mine asked me this today, and I'm not sure it's the best answer, but it's what's coming to mind. She asked if I know of any job openings in cannabis, because it sounds like so much fun. I said there are always openings, and if she really wants to do it I probably know someone with a position open she'd enjoy. But I wish more people would ask, 'Is it really fun?' And the honest answer is: no, it's not like a party as a job the way people imagine. Is it challenging? Yes. It's not fun, but it's never boring — always a new, crazy challenge. I wish more people understood what it's really like to work in this industry and appreciated how hard it is, from the bud tender in the dispensary to the person trimming plant material at the cultivation facility. It's full of stigma, constant regulatory change, and scrutiny, but we all do it because we love it. If you like doing hard things, this is the perfect industry for you. If you want to be bored doing the same thing every day, this isn't for you. Bryan Fields: Caroline, for our listeners who want to get in touch or learn more about you or Buckeye Relief, where can they find you? Caroline Henry: My email is caroline@buckeyerelief.com, or you can give me a call — Bryan has my number. If someone's interested, email me, let me know your question, and I'm happy to call and talk through it, especially if you're interested in getting into the cannabis industry. Bryan Fields: Thanks for taking the time, this was a lot of fun. Caroline Henry: Yeah, thanks, Bryan.