Ohio Bar Corporation Law Committee members Jeff Wahl and Holly Gross testify before the Ohio House Civil Justice Committee this week.
Legislative Leaders Signal Possible Post-Election Changes to Recreational Marijuana Law, But Not Abortion
In the aftermath of the Nov. 7 election in which Ohioans voted to enshrine abortion rights in the Ohio Constitution via State Issue 1 and to legalize recreational marijuana in statute via State Issue 2 (see unofficial results), there’s been a lot of speculation around how the Ohio General Assembly and legislative leaders would respond.
Issue 1. This week, we got some clues. Senate President Matt Huffman (R-Lima), who strongly opposed Issue 1, hasn't precluded the possibility of further action on the topic, but told reporters this week that he doesn’t think anything should go before voters in 2024. House Speaker Jason Stephens (R-Kitts Hill) also dismissed as not seriously being considered, a proposal from a small faction of pro-life lawmakers that would strip judges of their ability to interpret Issue 1.
And so it seems that in the near term at least, clarifications and other developments on Ohio abortion law will be left to the courts. On that front, the Ohio Supreme Court this week called on attorneys in Preterm-Cleveland v. Yost, the dispute over whether to lift a 2022 preliminary injunction against Ohio’s so-called “Heartbeat Law” that bans abortions after fetal cardiac activity is detected, to file briefs on the effects of the passage of Issue 1 in this case in the next three weeks.
Issue 2. On the other hand, we could see some legislative tweaks to the recreational marijuana law in the very near future, possibly before it is set to take effect on Dec. 7. Huffman, Stephens and Gov. DeWine have all stated they intend to respect the wishes of Ohio voters to legalize marijuana, but there are some related topics they want to explore including, but not limited to, “guardrails” around homegrown provisions, the tax rate and where to direct that revenue, how marijuana can be used in public and language surrounding THC content caps. Gov. DeWine and President Huffman would like to see changes made prior to the effective date of the initiated statute while Speaker Stephens doesn’t necessarily share that sense of urgency. Minority Leaders Allison Russo (D-Upper Arlington) and Nickie Antonio (D-Lakewood) have been consulted and are willing to talk, but Russo called passage of something before the end of the year “rather ambitious.” We’ll keep you posted.
Ohio Bar Corporation Law Committee Calls for Key Improvements to Corporate Code
Not one, but two, of our Corporation Law Committee experts appeared before the House Civil Justice Committee this week to make the case for passage of House Bill 301, sponsored by Rep. D.J. Swearingen (R-Huron). HB301 would improve Ohio’s corporate code via two primary areas our committee has been recommending.
Nonprofits. First, as outlined by Holly Gross, an associate with Benesch who serves as vice chair of our nonprofit subcommittee, HB301 would align Ohio's nonprofit corporation law (ORC 1702) with its general corporation law (ORC 1701) and in doing so, address the fiduciary duties of officers, requiring them to act in good faith and bringing the law in line with 2016 amendments to the general corporation law that were enacted via Senate Bill 181 of the 131st General Assembly. It would also allow religious organizations to opt in to the benefits and privileges associated with being an unincorporated nonprofit association under ORC 1745.
For Profits. Second, former Ohio Bar Corporation Law Committee Chair Jeff Wahl of JRW Esquire Ltd., advocated for removal of a 2013 requirement that has become a significant barrier for Ohio corporations seeking to dissolve or merge. These entities are currently required to wait for a tax clearance certificate from the Ohio Department of Taxation before the dissolution or merger can take effect, a process for which there is no required time period and which our practitioners have found can take several weeks or longer, sometimes beyond a critical time deadline for those involved in a transaction. In order to streamline, we are recommending (and HB301 prescribes) that we go back to the way it worked for about 35 years prior to the 2013 change in which the corporation could, instead of waiting for the certification, file an affidavit with the Ohio Secretary of State that states the date of dissolution and acknowledges all its potential tax liabilities.
As Wahl explained, though this approach would allow the dissolution or merger to move forward without that proof of final payment in hand, the state already has adequate guarantees of payment of any outstanding obligations. Section 1701.95 provides that the dissolving corporation’s directors are jointly and severally liable for obligations of the dissolving corporation that are not paid or adequately reserved for in the plan of liquidation of the corporation. And in the case of a merger or other conversion (with and into an entity that is not registered in the State of Ohio), the successor entity remains liable for all the obligations and liabilities, including tax and other payment obligations to the state, following the merger or conversion.
Our committee’s recommended changes have the potential to prevent unnecessary delays in time-sensitive corporate transactions and to help ensure Ohio is not at a competitive disadvantage by subjecting its corporations to a longer and more costly dissolution and merger process than its out-of-state brethren, or even in-state LLCs and taxable nonprofit corporations, none of which are required to obtain tax clearance certificates. This would also bring the process in line with accounting for liabilities governed by other state agencies such as unemployment and workers’ compensation.
We look forward to working with Rep. Swearingen and the Civil Justice Committee to see these important changes enacted into law.
Ohio Bar Supports Expansion of Electronic Filing in Ohio Courts
Speaking of streamlining and efficiencies, the Ohio Bar also filed written proponent testimony in support of another bill currently pending before the House Civil Justice Committee. House Bill 305, sponsored by Reps. Brian Stewart (R-Ashville) and Richard Brown (D-Canal Winchester), would allow for the electronic filing of pleadings or documents in courts of common pleas, municipal courts and county courts (with the exception of probate and juvenile courts). HB305 builds upon the improvements made in House Bill 567 from the last General Assembly, which required that courts of common pleas make their civil dockets and relevant case files available for viewing online and was also supported by the Ohio Bar.
Like HB567, HB305 will modernize and increase efficiency in our courts, as well as provide consistency across the state in how legal professionals and individuals are able to access our justice system. Electronic filing offers a more convenient way for attorneys and parties to file documents and eliminates the extra time and transportation costs of filing documents at the courthouse. However, as much as we welcome these improvements, we are also cautious of the burden to courts in making these updates. As such, we let legislators know we support the modest increase in allowable fees to cover computerization costs and urged them to ensure this transition is not overly burdensome on our courts. You can view our testimony here.
Other Legislation on the Move This Week
Passed by the House
HB201, sponsored by Reps. Brett Hillyer (R-Uhrichsville) and Steve Demetriou (R-Bainbridge Township), would prohibit a state agency, county or township from restricting the sale or use of a motor vehicle based on the energy source used to power the motor vehicle and prohibit a state agency from adopting the California emissions standards for motor vehicles. The bill passed by a vote of 70-23 and now heads to the Senate for further consideration.
HB214, sponsored by Rep. Adam Holmes (R-Nashport), would require each public school to adopt a policy on staff speech and amend the version of section 3314.03 of the Revised Code that is scheduled to take effect Jan. 1, 2025, to continue the changes on and after that effective date. The bill passed by a vote of 64-30 and now heads to the Ohio Senate for further consideration.
HB250, sponsored by Reps. Jessica Miranda (D-Forest Park) and Tracy Richardson (R-Marysville), would revise the Military Enlistment diploma seal and allow high school graduates preparing to enlist in a Reserve Officers’ Training Corps (ROTC) program or those appointed to military service academy the privilege of having a military seal on their high school diploma. The bill passed by a vote of 94-0 and now heads to the Ohio Senate for further consideration.
SB34, sponsored by Sen. Tim Schaffer (R-Lancaster), would designate April as "Parkinson's Disease Awareness Month," July as "Sarcoma Awareness Month" and name certain provisions of the act as Hank's Law. The bill passed by a vote of 93-1 and now heads to the Governor for his signature.
Passed by the Senate
SB29, sponsored by Sen. Stephen Huffman (R-Tipp City), regards educational records and student data privacy. It passed the Senate by a vote of 30-0 and now heads to the House for further consideration.
SB62, sponsored by Sens. William Reineke (R-Tiffin) and Andrew Brenner (R-Delaware), would designate Oct. 4 as "Rutherford B. Hayes Day." The bill passed by a vote of 30-0 and now heads to the House for further consideration.
SB81, sponsored by Sen. Mark Romanchuk (R-Ontario), would authorize certain advanced practice registered nurses to sign documents related to psychiatric inpatients, authorize physician assistants to sign documents related to hospital patients and amend the version of section 4723.431 of the Revised Code that is scheduled to take effect on Sept. 30, 2024, to continue the changes to that section on and after that date. The bill passed by a vote of 29-1 and now heads to the Ohio House for further consideration.
SB115, sponsored by Sen. Kirk Schuring (R-Canton), regards limitations imposed by health insurers on dental care services. The bill passed by a vote of 22-8 and now heads to the Ohio House for further consideration.
Week Ahead
It’s a holiday week and as such, there are no legislative sessions or hearings slated. With all that’s going on in Ohio, Washington D.C. and around the globe, we’ll all be taking some time to count our blessings big and small — good food, precious time with loved ones and the absolute privilege it is to work on issues that promote access to justice and make the law work better for lawyers, legal professionals and the people they serve. Thank you for all you do day in and day out that makes our work possible.
Ohio Bar offices will be closed on Thursday and Friday to commemorate Thanksgiving and your Weekly Legislative Report will be on hiatus. We’ll see you right back here on the 31st.
