Monday, April 18, 2022
"What Tax Revenues Should Ohioans Expect If Ohio Legalizes Adult-Use Cannabis?"
The title of this post is the title of this new report available via SSRN and produced by the Drug Enforcement and Policy Center and authored by Jana Hrdinova and Dexter Ridgway. Here is its abstract:
Advocates for cannabis reform in Ohio and in other states often stress the tax revenue that can be raised through legalization. If a citizen-initiated statute currently under consideration in the Ohio General Assembly were to reach the ballot, Ohio voters are likely to hear from reform advocates about the potential tax revenue a new cannabis industry could bring to the Buckeye State. The purpose of this policy paper is to provide an initial estimate of potential cannabis tax revenue in Ohio that is informed by tax revenue data and trends from a select group of other adult-use states.
Based on our analysis, we are using Michigan FY 2021 data on cannabis tax revenue as our focal point for Ohio cannabis tax revenue estimates given the demographic and tax structure similarities; we are assuming a conservative rate of diminishing retail sales growth through year five of an operational legal adult-use program; we are using state population figures as our basis for calculating per capita cannabis tax revenue rates; and we are modeling for three different Ohio pricing scenarios. Given these assumptions, the potential annual tax revenue from adult-use cannabis in the state of Ohio ranges from $276 million in year five of an operational cannabis market to $374 million in year five of operations.