Ohio's Hemp Laws: A Strain on Small Businesses

The hemp industry has gained significant momentum nationwide since the 2018 Farm Bill legalized hemp production at the federal level. Once heralded as the “crop of the future,” hemp offered small businesses and entrepreneurs an opportunity to innovate, expand, and thrive in agriculture and beyond. Yet, in Ohio, restrictive hemp laws are cutting short that promise. Despite the potential for economic growth, state policies have unintentionally placed heavy burdens on small businesses, threatening their survival.

This post explores the impact of Ohio's hemp laws on small businesses, the barriers they face under current policies, and how legislators could enact change to create a fair landscape for small business owners in this burgeoning industry.

The Current Landscape of Ohio Hemp Laws

Ohio's hemp framework was designed to align with federal guidelines. However, the implementation of these laws has created obstacles that disproportionately affect small business owners. While large companies often have the resources to cope with stringent regulations, smaller operations face financial and operational hardships.

Here’s a breakdown of the core challenges currently affecting Ohio's hemp industry:

1. High Application Fees: Farmers are required to pay a $500 application fee per acre of land used for hemp cultivation. For larger corporations, this may be manageable. But small, family-owned farms—arguably the backbone of Ohio’s agricultural landscape—struggle to afford these costs, leading many to downsize their operations or stop cultivating hemp altogether.
2. CBD Retail Restrictions: Ohio’s Board of Pharmacy prohibits the sale of CBD products unless they are licensed under the state’s Medical Marijuana Control Program (MMCP). CBD retailers in the state cannot compete with the administrative costs and complexities of licensing under the MMCP, leading to widespread closures.
3. Confusion Around Consumable Hemp: The Ohio Department of Agriculture’s prohibition on selling consumable hemp products without clear guidelines around definitions has thrown many businesses into a state of uncertainty. This lack of clarity results in reduced sales and operational challenges, particularly for businesses that create or sell products like hemp-derived edibles or beverages.
4. Regulatory Ambiguity: A lack of clear rules around compliance, licensing, and product testing has left many small businesses struggling to ensure their operations align with legal standards. Banks and investors remain reluctant to work with these businesses due to regulatory risks, limiting their ability to secure financing and partnerships.
5. Costly Oversight: The cost of navigating Ohio's strict compliance oversight is disproportionately higher for small businesses. Many lack the internal expertise or financial resources to keep up with regulatory demands, placing them at a significant disadvantage compared to larger, well-funded companies in the industry.

The Human Impact of Restrictive Hemp Laws

Behind every struggling small business is a story of resilience, passion, and determination. But Ohio’s hemp regulations have created uphill battles for entrepreneurs and their families. Consider these real-life examples:

• A Family-Owned Hemp Farm: A small farm in southern Ohio had big dreams of contributing to the burgeoning hemp industry. But the $500-per-acre application fee left them unable to scale. Facing mounting costs, they were forced to downsize and abandon their broader cultivation goals, losing both revenue and employment opportunities for their community.
• A Boutique CBD Shop in Columbus: After years of serving loyal customers, a boutique CBD retailer had to shut its doors when the Ohio Board of Pharmacy banned the sale of non-MMCP CBD products. This decision eliminated a major revenue stream and disrupted access for consumers seeking wellness alternatives.
• An Online CBD Retailer in Cleveland: Regulatory restrictions on consumable hemp products caused this eCommerce business to see its sales plummet. Lack of clarity created hesitancy among customers, and financial losses led the business to consider halting operations altogether.
• A Hemp Processing Facility in Dayton: Regulatory confusion and financing challenges pushed this facility to lay off employees and scale down production. With clearer policies, they could explore vital partnerships and production innovations, but the current landscape makes this nearly impossible.

These stories highlight the very real economic and personal toll Ohio’s hemp laws have taken on small businesses and everyday Ohioans.

Why Change is Necessary—and How It Can Be Achieved

Ohio’s restrictive hemp laws are stifling an industry that could be a major contributor to the state's economy. Beyond providing opportunity, the hemp industry has the potential to drive innovation in sustainable agriculture and environmentally friendly products—areas of interest to modern consumers and investors alike.

To address these challenges and level the playing field for small businesses, policymakers must consider the following steps:

1. Lower Application Fees: By lowering or restructuring fees for small-scale hemp farmers, Ohio can promote greater participation from family-owned farms and entrepreneurs. Fee waivers or tiered pricing based on farm size could be solutions.
2. Introduce Clear CBD Regulations: Streamlining the process for selling CBD products and removing the burden of MMCP-linked licensing would foster growth for retailers while maintaining oversight and consumer safety.
3. Define Consumable Hemp Laws: Clear, accessible guidelines on what constitutes “consumable hemp products” would remove uncertainty for businesses, encouraging compliance and driving product innovation.
4. Simplify Compliance Processes: Providing small businesses with tailored resources—such as compliance toolkits or subsidized third-party services—could reduce regulatory pressure, allowing enterprises to thrive within legal boundaries.
5. Facilitate Lending Opportunities: Creating incentives for local banks to finance hemp businesses or introducing state-backed financial programs could help small businesses secure the funding they need to grow.
6. Establish Statewide Stakeholder Committees: Regular dialogue between regulators, hemp farmers, processors, and retailers would ensure that laws support the needs of small businesses while safeguarding public interests.

A Call to Action

Ohio has an opportunity to position itself as a leader in the hemp industry by fostering innovation, supporting small businesses, and creating a thriving ecosystem for entrepreneurs. But this requires targeted action from policymakers and industry advocates.

If you’re a small business owner, hemp industry professional, or policymaker, now is the time to push for change. Advocate for sensible regulation that balances industry growth with compliance and consumer safety.

Together, we can make Ohio a leader in sustainable agriculture and innovation—by ensuring the hemp industry is healthy and equitable for all.

Are you ready to join the conversation? Share your thoughts in the comments and check out our resources for small business advocacy in the hemp industry. Change is possible, but it starts with us.