Evaluation: Ohio Hashish Taxes in Line with Different Grownup-Use Markets


Ohio Gov. Mike DeWine referred to as on the state legislature to discover a “candy spot” for tax charges.

This story was republished with permission from Crain’s Cleveland Enterprise and written by Jeremy Nobile.

Amongst two dozen states which have legalized leisure marijuana, the present efficient tax charges for adult-use hashish in Ohio—which can be between roughly 16% and 18%, relying on the county—are proper in the course of the pack, in accordance with a new evaluation by The Ohio State College’s Drug Enforcement and Coverage Heart.

DEPC’s report comes as Ohio lawmakers take into account adjusting proposed tax charges for leisure marijuana following the passage of Concern 2 earlier this month.

Whereas the state’s adult-use regulation is slated to enter impact Dec. 7, the soonest rec gross sales are anticipated to start is September 2024. This is because of a number of procedural steps that should be addressed first. Regulators should nonetheless draft some guidelines for the rec program, for instance, and adult-use licenses should be awarded to hashish companies.

Within the meantime, Ohio Gov. Mike DeWine has referred to as on the state legislature to evaluate numerous features of the adult-use regulation. This contains discovering a “candy spot” for tax charges, which the governor doesn’t need to be too excessive as to dissuade individuals from shopping for authorized marijuana right here but in addition not too low.

However in accordance with DEPC’s analysis, Ohio’s taxes for authorized marijuana seemingly are already in a candy spot when put next with different markets.

Concern 2 levies a ten% excise tax on adult-use gross sales. Coupled with state gross sales tax of 5.75% plus native gross sales tax, which varies by jurisdiction, the efficient tax charge on the level of sale on rec merchandise in Ohio ought to be between about 16% to 18%.

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DEPC notes that evaluating tax charges amongst all authorized marijuana markets is complicated on account of so many variations. Relying on the state, these taxes might embrace a particular marijuana gross sales tax as a proportion of value; normal state gross sales tax; relevant native gross sales tax; weight-based gross sales tax; and a tax based mostly on THC efficiency.

Nonetheless, when taking a look at 19 states with a percentage-of-price retail tax on the level of sale, the median and common tax charge amongst these states are 17% and 18%, respectively.

Amongst these 19 states, simply two cost lower than 10%. Eleven states cost between 10% to 19%. And 6 cost 20% or extra.

In the meantime, Michigan—the place many Ohioans go to buy authorized marijuana—has an efficient tax charge of 16% (there are not any native gross sales taxes there).

A priority amongst business stakeholders is that some Ohioans should go to Michigan for leisure marijuana if taxes and total costs are decrease.

A good greater tax charge, it’s feared, might have the impact of pushing customers away from authorized retailers right here, whether or not these individuals are crossing state traces or shopping for from the illicit market.

“In respect to the tax charge, the Ohio Common Meeting might want to steadiness their want to maximise tax income and maximize deterrence of problematic use with their want to curtail the illicit hashish market as a lot as doable,” in accordance with the DEPC report. “The next tax charge would possibly theoretically herald further tax income, however it will possibly additionally incentivize grownup clients to buy their hashish product from unsanctioned sellers if the upper tax ends in uncompetitive costs for authorized hashish product.”

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As of this March, taxes and charges associated to the medical marijuana program have generated an estimated $183.33 million for Ohio’s state and native authorities entities since gross sales started in 2019, in accordance with DEPC. With an adult-use program in place, Ohio might see roughly $276 million to $404 million in further annual tax revenues within the fifth yr of rec gross sales.

These projections might be roughly on the right track contingent on a bunch of things which will form shopper demand, in fact, together with pricing and taxes.

DEPC’s newest evaluation additionally takes a have a look at how tax proceeds are anticipated to be disseminated right here and the way that compares with different markets. How proceeds are presently set to be allotted is one other facet of the adult-use regulation into consideration by Ohio lawmakers.

Trade stakeholders are ready anxiously for readability on guidelines and laws that may form the market as they try to organize for adult-use gross sales.


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