Ohio Projects Significant Tax Revenues from Potential Cannabis Legalization

LOS ANGELES— Ohio might experience a significant influx in tax revenue from adult-use cannabis sales, estimated between $276.2 million to $403.6 million annually by the fifth year, should voters approve a prospective legalization measure this November. This analysis is according to an updated report from researchers at Ohio State University.

Drawing parallels from neighboring Michigan, which has a demographically similar populace and a tax structure akin to what Ohio could implement, the study offers insights into potential economic outcomes of legalization. Additionally, the study encompasses sales data from Colorado, Illinois, Nevada, Oregon, and Washington State spanning 2018 to 2023.

This marks the report’s second rendition, incorporating two more years of legal cannabis sales data from the aforementioned states. The surge in the higher-end estimate, nearly $30 million more than previously predicted, stems from the additional sales data. The disparity in projected revenues is due to varying pricing models studied, which evaluated potential outcomes based on taxation rates aligned with Michigan, or at a 10% or 20% higher rate.

“Comparatively, in the fiscal year 2021, Ohio casinos generated over $300 million in tax revenues. It’s plausible that cannabis sales might match or surpass such figures,” the authors noted. However, they emphasized that the definitive tax amount will largely hinge on the specific taxation framework adopted upon legalization. Although the prospect of steeper taxes could yield higher revenues, it could inadvertently bolster illicit trade due to pricier legal products.

Highlighting that these projections are informed hypotheses, the researchers believe they can assist the public and policymakers in deliberation processes. “Regardless of the tax structure chosen, Ohio could likely amass substantial annual revenues from a mature adult-use cannabis market, though this would still form a minor portion of Ohio’s $60+ billion yearly budget,” the report mentioned.

As the analysis underscores, tax revenue from cannabis usually sees a sharp incline initially post-legalization but could taper as the market matures and prices potentially drop. For context, states like Nevada and Colorado observed a decline in cannabis tax revenue between 2021 to 2022, whereas newer markets like Michigan and Illinois saw considerable growth.

Anticipating the trends, the study predicts Ohio could amass upwards of $218.4 million in its second year post-legalization, progressing to potentially $366.9 million by the fourth year.

In related news, states such as Michigan and Illinois have been recording consistent, record-breaking monthly cannabis sales. Notably, Michigan observed sales crossing $277 million this past July, while Illinois retailers reported sales nearing $140 million in the same month.

Back home, Ohio advocates remain optimistic about the cannabis legalization measure reaching the ballot. While an initial petition fell short, a subsequent 10-day curing period for signature collection could bridge the gap. An official confirmation is awaited from the state’s secretary.

Recent polls indicate a positive public sentiment, with about 59% of Ohioans voicing support for adult-use cannabis legalization. Concurrently, bipartisan efforts by Ohio legislators to push for legalization remain underway, further emphasizing the state’s readiness for policy change.

Historically, Ohio has witnessed consistent support for cannabis reforms, with over three dozen localities opting for decriminalization in recent election cycles. The forthcoming vote in November might cement Ohio’s stance in the larger national debate on cannabis legalization.