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Will Ohio Benefit From Marijuana Tax Revenues?

Travis Irvine Travis Irvine Will Ohio Benefit From Marijuana Tax Revenues?
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Some disappointing news on the legal marijuana front recently emerged out of California — only $34 million came into the state’s coffers from taxing cannabis products, about a third of what was originally projected by officials.

At first glance, one may look at that stat and think, “What? Only $34 million for taxing a product that should’ve been legal for decades?!” And while this statement is absolutely and logically correct, there is more to the story. California’s annual budget estimated that legal marijuana sales would bring in $175 million in tax revenue within the first six months of 2018. However, the challenge is that the illegal marijuana market that was operating in the state for years still provides consumers with cheaper and more convenient sales than the newly legal one. Thus, Californians are continuing to utilize the marijuana services they always used before and are avoiding paying the taxes — to the tune of tens of millions of dollars.

There are a couple of other factors at play with this equation as well. For starters, city and county officials across the state have been “bickering” over how to issue licenses and limit the number of growers and dispensaries per area. Some jurisdictions around the state have even banned marijuana businesses entirely or have been slow with passing regulations, all of which needs to be done before state licenses can be issued. Plus, the numerous taxes on marijuana and cannabis products range from a 15 percent excise tax, taxes applied to ounces of bud grown or dried plants sold, in addition to local taxes, which vary, but average around 8 percent.

This situation in California should be a big ol’ fat warning to those leading the supposedly coming medical marijuana market being enacted in Ohio, which remains in danger of being delayed. Experts say if more participation is desired, the barriers for entry into the market need to be reduced. Marijuana legalization being done poorly can be potentially worse for patients, and there is currently a list of problems with Ohio’s medical marijuana efforts — from three different agencies overseeing the whole industry, to licensing problems with vendors, growers, testing facilities and doctors alike. There is very little confidence in the state giving the right green lights to the right entities at the right times for seeds to get planted in time for launch.

This means Ohio is dangerously approaching a California-like situation, where any hope of adequately meeting projected tax revenues is going to be hampered by going about the process incorrectly, or perhaps not at all. Of course, Ohio doesn’t have a huge illegal marijuana market already in place to contend with, but considering Ohio’s program has been projected to rake in as much as $200 million within the first five years, even a meager $34 million in the first quarter could be a nice addition to the state’s budget.

Nevertheless, it would behoove those making the decisions about Ohio’s medical marijuana program to consider California’s plight. After all, the clock until September is ticking.


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