Ohio, the Latest State to Approve Adult-Use Cannabis Legalization, on target for June 2024 Launch
Last year Ohio became the 24th state in the United States to approve a cannabis legalization ballot initiative, which went into effect on December 7. Despite opposition from the governor and some lawmakers, the initiative successfully passed with approximately 57 percent of the people’s vote, a significant step forward in the ongoing debate surrounding cannabis legalization in the country.
Market Lauch set for September 7th, 2024
The Ohio Division of Cannabis Control (Division) has established the necessary regulations, as well as recently confirmed, that it will start the adult use application process on June 7th, 2024. New licenses will be issued by September 7th, 2024. The new framework will prioritize the inclusion of current medical cannabis businesses in the adult-use market. Regulators will be required to issue adult-use licenses to qualified applicants who operate existing medical cannabis operations in an effort to give a head start to those who have experience in the industry. This will start with the current medical licensees being allowed to sell into the adult-use market under a dual license at their own facility. Most of those same medical cannabis licensees will also be able to open adult-use cannabis dispensaries as follows:
Type 1 Medical Cannabis Cultivators can open up to 3 dispensary locations.
Type 2 Medical Cannabis Cultivators can open up 1 dispensary location.
Medical Cannabis Dispensaries can open up 1 additional dispensary locations.
Furthermore, the Division will be tasked with issuing 40 adult-use cultivator licenses and 50 adult-use retailer licenses, with a preference for applicants who participate in the cannabis social equity and jobs program. After two years of operation, regulators will have the authority to issue additional licenses for the recreational market. However, there have yet to be any announcements as to the timeline and licensing process associated with these new adult-use licenses due to disagreements in the State legislature over proposed statutes and limitations to these programs.
The legislation also respects the decisions of individual municipalities. While they have the option to opt out of allowing new recreational cannabis companies to open within their borders, existing medical cannabis operations cannot be blocked from adding co-located adult-use operations. This flexibility allows local governments to tailor the cannabis industry's presence according to their unique circumstances and preferences.
Legislative Flux
Despite the overwhelming approval of Ohio citizens and the imminent launch of medical/adult-use operations, cannabis political opponents have made it clear that they intend to amend the decision in Ohio's GOP-controlled legislature. Those efforts hit a severe setback last year when the State’s House and Senate put forward widely different competing bills to amend those programs, with neither passing into law. As of March 2024, most of those efforts continue to stall, though HB 86 was recently passed by both the OH Senate and House and is expected to be signed by the Governor. It would, among other things:
Raise the adult-use cannabis excise tax rate from 10% to 15%;
Allow local governments and local counties to levy an additional 3% tax on top of the State’s cannabis excise tax;
Limit home grows to six plants per household;
Grant automatic expungements for those with possession of amounts of 2.5 ounces of cannabis or less.
Allow Ohioans 21 and older to go into a medical cannabis dispensary and buy recreational products 90 days after HB 86 is signed into law.
Market Outlook
All of the above is major news for a state that saw $484 million dollars in medical cannabis sales in 2023 alone. Analysis conducted by cannabis research firm New Frontier Data estimates that the state's cannabis market could grow to nearly $2 billion in adult-use sales in 2028 with another $460 million in medical sales. With those types of opportunities, it is little wonder there is so much focus on the State of Ohio’s adult-use cannabis industry launch.