After five years of quiet but rapid growth making equipment for the marijuana industry in other states, Apeks Supercritical is ready to ramp up business in Ohio. With passage of a state medical-marijuana law that takes effect Sept. 8, the company not only expects to see a jump in manufacturing orders, but it also plans to get into the business as a marijuana processor.
After five years of quiet but rapid growth making equipment for the marijuana industry in other states, Apeks Supercritical is ready to ramp up business in Ohio.
With passage of a state medical-marijuana law that takes effect Sept. 8, the company not only expects to see a jump in manufacturing orders, but it also plans to get into the business as a marijuana processor.
âWe had to work from the sidelines,â said Andy Joseph, Apeksâ CEO. âNow, Iâm very optimistic about doing business in Ohio. I think itâs going to be fantastic.
âThis isnât just a bunch of stoners trying to get high all the time,â he said. âThis is real business and real opportunities for the state of Ohio. This is truly an economic-development opportunity for the state.â
Based in Johnstown in Licking County, Apeks makes equipment that uses liquid carbon dioxide to extract oils from plant materials. Although the business initially extracted oils from plants such as mint, it now is 95 percent focused on the marijuana industry.
The concentrated marijuana extract is used to make edible products for vaporizing and in lotions and patches, all of which will be legal in Ohio for patients with specific diagnosed illnesses. Apeks has 31 employees and did $12 million in business last year.
But growing a marijuana business from the ground up in Ohio isnât going to be easy.
The new medical-marijuana law establishes business operations at four levels: cultivators, processors, testing laboratories and dispensaries. Each will operate under rules still to be determined by one of three state agencies: the Ohio Department of Commerce, Ohio Board of Pharmacy and State Medical Board. An appointed advisory committee also will be involved in rule-making.
The Ohio program must, by law, be up and running by September 2018.
Justin P. Breidenbach, an assistant professor of accounting at Ohio Wesleyan University who specializes in the business of the marijuana industry, said businesses must overcome several big hurdles, including accessing banking services.
âMarijuana businesses are going to have a lot of problems trying to find banking. Where do they put their cash, and how do they do their payroll?â he said.
The problem is that federal banking regulations still consider marijuana to be an illegal business. Ohioâs new law gives businesses some leeway on state banking rules, but most banks are federally chartered, Breidenbach said.
He said that leaves the business to smaller, hometown banks and credit unions, but many of those in other states charge marijuana businesses high fees and impose service restrictions because of the greater financial risk involved.
Getting insurance for marijuana businesses also might be a challenge, Breidenbach said.
Nevertheless, the Ohio Wesleyan professor said marijuana entrepreneurs will have abundant business opportunities in Ohio when it becomes the 25th state to legalize medical marijuana.
âThere are so many unknowns in Ohio right now,â he said. âBut advocates think this is going to be a great market because of population size.â
The potential price of medical marijuana is up in the air, too, but Breidenbach said it can be $300 or so per month in other states. The cost is rarely covered by insurance.
Joseph said his company is ready for the challenge despite obstacles. Apeksâ bank account has been shut down twice because of conflicting financial regulations.
âItâs a giant pain in the butt,â he said. âEvery single marijuana company is a startup. There are no General Motors.â
Hurdles aside, there is money to be made as marijuana becomes part of the legal economy, Joseph said in an interview while attending the Cannabis World Congress & Business Exposition in New York last week. The event attracted 2,000 participants, and the keynote speaker was former New Mexico Gov. Gary Johnson, the Libertarian Party nominee for president.