In November of 2023, Ohio became the 24th state to vote to legalize adult-use cannabis. In August of 2024, dispensaries across the state opened their doors.
Now, six months into sales, recreational marijuana sales are steadily rising, said Jana Hrdinova, the administrative director at Ohio State University’s Drug Enforcement and Policy Center. The 123 dispensaries across the state have sold more than $255 million of adult-use cannabis.
That’s especially impressive, given not all dispensaries are up and running yet, said Hrdinova.
“[The amount of recreational marijuana sales] is a pretty high number considering where other states have been at this point in their opening and the states that have gone before us,” Hrdinova said. “So I think it's going really well.”
The sales translate into around $40 million in tax revenue from the state, when accounting for both the 5.75% sales tax and 10% marijuana-specific excise tax on the product. If demand continues, Hrdinova estimates that the state will receive somewhere between $90 million and $115 million dollars in tax revenue.
Where does the money go?
While sales tax revenue generated by recreational marijuana sales goes to the state’s general fund, revenue from the marijuana excise tax goes to specific pots of money within the state’s budget.
Around 36% of the excise tax funds goes directly back into communities that host dispensaries, incentivizing local governments to allow its sale. Another 36% goes to the Cannabis Social Equity Fund and Jobs Program, which researches criminal justice reform and works to increase representation of under-served communities in the marijuana sales industry.
“We have a lot of communities that are struggling. And this money can be really helpful in terms of paying for things that would uplift those communities and potentially also invest in things like record relief for people who have criminal records because of the past marijuana prohibition,” Hrdinova said.
A fourth of the funds also support the state’s Substance Abuse and Addiction Fund, which support addiction services, education and research.
The remaining 3% goes to the Division of Cannabis Control and Tax Commissioner Fund, the division charged with the regulation of marijuana sales in the state.
Marijuana moratoriums
Since Ohio voters passed the constitutional amendment to legalize recreational marijuana, some small Ohio towns have started placing moratoriums on the sale of adult-use cannabis.
As of the end of 2024, 124 Ohio municipalities, or around 5% of the state’s local governments, had passed a temporary ban. When compared to other states with legal recreational marijuana,that’s a modest number, Hrdinova said.
In Michigan, 75% of municipalities have prohibited marijuana dispensaries from setting up shop. In New York, around half have put some kind of moratorium in place.
Hrdinova cautions it’s not an apples-to-apples comparison.
“We have limited licensure, which means that only a certain number of dispensaries can be located anywhere around the state, which is different from other states,” Hrdinova said. “But in terms of moratorium, we are a little bit of an exception on the side of being more permissive than other states.”
Potential policy changes
Ohio is eyeing making changes or adding restrictions to recreational marijuana sales. Legislators have thrown around ideas like regulating public smoking of marijuana, limiting the number of plants an adult can grow in their place of residence and further regulating the concentration of THC products.
But, Hrdinova said one of the biggest changes suggested was increasing taxation. They proposed increasing excise tax from 10% to 15%.
Right now, compared to the 19 other states that tax marijuana at the point of sale, Ohio’s taxes are on the low end. The change would make it the fourth highest tax rate.
“So we are going to be at the high end of taxation. That might, in the short term, raise tax revenue, but it might also push more people toward the illicit market or to push them toward other markets in other states or potentially decrease our revenue in the long term,” Hrdinova said.
The latest version of the proposed changes would also redirect all related tax revenue to the state's General Revenue Fund, according to reporting by the Statehouse News Bureau.
