Ohio’s Marijuana Tax Shake-Up: What Proposed Changes Could Mean for You

Ohio’s cannabis industry is undergoing a major transformation, and at the heart of this evolution is a proposed shake-up in the state’s marijuana tax system. With legal recreational cannabis sales on the horizon, lawmakers and industry experts are debating how tax reforms will shape the future of the market. But what exactly do these changes mean for businesses, consumers, and the state’s economy?

The Current Marijuana Tax System in Ohio

Ohio legalized medical marijuana in 2016, with the first legal dispensaries opening in 2019. Under the state’s current marijuana tax framework, medical cannabis is subject to a 5.75% state sales tax, with additional local sales taxes ranging from 0.25% to 2.25%, depending on the county. However, medical marijuana patients are exempt from excise taxes, keeping costs relatively lower than in fully legalized states.

In November 2023, Ohio voters approved Issue 2, legalizing recreational marijuana. The measure set a 10% excise tax on adult-use cannabis sales in addition to state and local sales taxes. This tax revenue is earmarked for several key areas:

• 36% to support social equity and job programs
• 36% for local governments permitting dispensaries
• 25% for addiction treatment and education
• 3% for administrative costs

Despite this framework, lawmakers and policymakers have since proposed amendments to Ohio’s weed tax system, sparking debates on how best to balance revenue generation, market growth, and consumer affordability.

Proposed Tax Changes and Their Implications

Ohio legislators have introduced several tax-related changes that could reshape how cannabis is taxed and sold. Some key proposals include:

1. Raising the Excise Tax on Recreational Marijuana

One of the most discussed changes is increasing the excise tax on adult-use cannabis from 10% to 15% or higher. Proponents argue that a higher tax rate could generate additional state revenue for public programs, mirroring approaches seen in states like California (15%) and Illinois (10-25% based on THC levels).

However, critics warn that excessive taxation could drive consumers to the illicit market, where untaxed products are often cheaper. A study by the Ohio Cannabis Coalition found that more than 60% of cannabis consumers prioritize affordability, meaning a significant price hike could undermine the legal industry’s success.

2. Adjusting How Revenue is Distributed

Some lawmakers are pushing to redirect marijuana tax revenue toward different programs, including infrastructure projects, law enforcement, and healthcare. While the original allocation focused on social equity and addiction services, opponents argue that broader investment in state needs could enhance public support for cannabis legalization.

3. Local Tax Increases and Opt-Out Provisions

Currently, Ohio allows local governments to impose up to 2.25% in additional sales tax. Some proposals suggest giving municipalities more control over taxation, potentially increasing the total tax burden for cannabis consumers in specific regions.

On the flip side, some local officials are advocating for opt-out provisions that would allow cities to ban dispensaries while still receiving a share of marijuana tax revenue. This model mirrors states like Colorado, where over 60% of municipalities have banned dispensaries despite legal cannabis statewide.

How Ohio Compares to Other States

Understanding Ohio’s proposed cannabis tax changes requires a look at how other states structure their tax systems. Here’s how Ohio’s current and proposed rates compare:

If Ohio raises its excise tax to 15% or more, it would bring the state closer to Colorado and Illinois, both of which have struggled with black market competition due to high taxation.

Potential Impact on Consumers and Businesses

Consumer Prices and Affordability

Higher cannabis taxes inevitably lead to higher retail prices, which could push some consumers back to the illicit market. A study by the Ohio Cannabis Business Association found that price sensitivity is a major factor in purchasing decisions, with 28% of consumers stating they would switch to illegal sources if legal prices increase by more than 15%.

For medical marijuana patients, the biggest concern is whether they will face higher prices as the recreational market expands. Although medical cannabis is currently tax-exempt from excise taxes, there are discussions about introducing a small excise tax on medical sales to balance state revenue needs.

Dispensary Growth and Industry Investment

For cannabis businesses, tax changes could determine profitability and expansion opportunities. A higher marijuana tax could reduce dispensary profit margins, discouraging small businesses from entering the market. In contrast, a well-structured tax policy with incentives for legal compliance could boost investment, job creation, and market stability.

Industry experts predict that Ohio’s cannabis market could generate $1.5 billion annually by 2027, with tax revenues exceeding $300 million per year if structured effectively. However, a poorly designed tax policy could slow this growth, mirroring California’s struggles with over-taxation and black market dominance.

What’s Next for Ohio’s Marijuana Tax Policy?

As Ohio navigates its cannabis tax future, lawmakers will need to strike a balance between revenue generation, market competitiveness, and consumer affordability. Key questions remain:

• Will Ohio increase its excise tax rate, and if so, by how much?
• How will tax revenue be distributed to ensure public benefits while supporting industry growth?
• Can Ohio avoid the pitfalls seen in states like California, where excessive taxation has fueled black market activity?

With public input and legislative debates ongoing, Ohio residents should stay informed and engaged as policymakers refine the state’s marijuana tax structure.

Final Thoughts: What It Means for You

Ohio’s weed tax shake-up will impact consumers, businesses, and government programs alike. While higher taxes could bring in more revenue for state initiatives, they also risk pricing out consumers and hindering dispensary growth.

For now, Ohioans should monitor legislative updates and consider how potential tax changes will affect their access to affordable, legal cannabis. Whether you’re a casual consumer, a medical patient, or a cannabis entrepreneur, understanding Ohio’s evolving marijuana tax policy is crucial to navigating the future of legal weed in the state.

As Ohio’s marijuana market evolves, now is the time to stock up on high-quality wholesale cannabis products from D Squared WorldWide. With competitive pricing, compliance-ready solutions, and a commitment to excellence, we help dispensaries and retailers maximize profits while staying ahead of industry changes. Don’t let high taxes and market shifts slow you down—partner with D Squared WorldWide for reliable supply and unbeatable value.

Schedule a call today to explore our wholesale options and secure your inventory for Ohio’s booming cannabis industry!

Reference:

1.      BeMiller, H. (2023, November 8). Will of the voters? Republicans in Ohio pledge to push back on abortion, marijuana. USA Today. https://www.usatoday.com/story/news/politics/2023/11/08/ohio-republicans-push-back-abortion-marijuana/70812340007/

2.      Borchardt, J. (2021, August 30). Ohio marijuana legalization backers get OK to collect signatures. The Cincinnati Enquirer. https://www.cincinnati.com/story/news/politics/2021/08/30/ohio-marijuana-legalization-backers-get-ok-collect-signatures/5641234001/

3.      Campaign to Regulate Marijuana Like Alcohol. (n.d.). About. https://www.regulatemarijuanainohio.com/about

Dennis, J. (2023, July 8). Ohio voters could be able to legalize marijuana this year. WJW-TV. https://www.fox8.com/news/ohio-voters-could-be-able-to-legalize-marijuana-this-year/