Analysis: Ohio Adult-Use Weed Market Could Produce $374 Million in Yearly Tax Revenue
While Ohio has decriminalized certain levels of cannabis possession and has boasted a robust medical cannabis program since June 2016, the state is still awaiting a shift toward an adult-use market. A new economic analysis, published by the Ohio State University Moritz College of Law’s Drug Enforcement and Policy Center, found that the state could see as much as $374 million in annual tax revenue should it press forward into the recreational market.
A pair of researchers affiliated with Ohio State University estimated the potential tax revenue that would be raised by the passage of a proposed citizen’s ballot initiative, which would impose a 10% tax on retail cannabis if enacted.
The researchers provided a range, giving $276 as the low figure by year five of operations and said the estimates were “conservative.”
The study notes that three proposals are currently before the Ohio General Assembly, with two distinct bills introduced by Democratic and Republican lawmakers, along with the citizen’s initiative.
“Because leaders in the General Assembly have expressed opposition to the full legalization
of cannabis, it seems unlikely that any of these proposals will be passed through the traditional legislative process,” the analysis reads. “However, if the General Assembly does not act on the citizen-initiated statute, it could be put before Ohio voters on the November 2022 ballot if an additional 130,000 signatures are collected between May and August 2022.”
The Secretary of State’s Office affirmed in January that activists had collected a sufficient number of signatures from registered voters to place a cannabis legalization measure before lawmakers.
Ohio lawmakers now have four months to either enact the proposal from the Coalition to Regulate Marijuana Like Alcohol (CTRMLA) as written, amend it, or ignore it. If lawmakers opt for either of the latter two options, advocates have the ability to gather additional signatures to place the measure before voters on the November ballot.
The initiated measure allows for the possession of up to 2.5 ounces of cannabis or 15 grams of cannabis extract by those age 21 and older. Those of legal age could purchase cannabis at retail locations and would be allowed to grow up to 12 plants of cannabis in a private residence where at least two adults reside. Municipalities would be able to opt out of allowing cannabis sales if a majority of elected officials favor an ordinance to do so.
“We are ready and eager to work with Ohio legislators over the next four months to legalize the adult use of marijuana in Ohio,” CTRMLA spokesman Tom Haren said in a press release in January. “We are also fully prepared to collect additional signatures and take this issue directly to voters on November 8, 2022, if legislators fail to act.”
So far, it looks as though lawmakers may ignore the proposal.
“I don’t want anybody to misunderstand my position,” Ohio Senate President Matt Huffman told The Columbus Dispatch in February. “I’m not going to bring it to the Senate floor. And if that means people want to go put it on the ballot, have at it.”
Representative Bill Seitz also voiced his doubts that a recreational bill could pass, and Governor Mike DeWine has indicated he would veto the bill if it did.
Should CTRMLA be left to a signature drive to pass its policy, it would need to submit the same number of signatures it has already gathered (about 133,000) at least 125 days before the November 8 elections, by July 6.
The economic analysis concludes that, should legislators pursue another tax structure, it could significantly alter actual tax revenues collected if adult-use cannabis is enacted.
“Whatever tax structure is adopted, our analysis suggests it is reasonable to predict that Ohio would collect hundreds of millions in annual cannabis tax revenues from a mature adult-use cannabis market,” the analysis says. “But the amount of tax revenue collected would likely still represent a small percentage of Ohio’s $60+ billion annual budget.”