"Tinkering with Taxes: Contextualizing Proposals to Alter Ohio's Marijuana Tax Rate and Revenue Allocations"

The title of this post is the title of this new paper that I helped produce along with my co-authors, Jana Hrdinova amd Dexter Ridgway, from the the Drug Enforcement and Policy Center at The Ohio State University Moritz College of Law.  Here is the paper's abstract:

On November 7, 2023, Ohio voters approved a statutory ballot initiative making Ohio the 24th state to legalize recreational marijuana. The marijuana legalization initiative included a specific tax rate and tax allocation provisions. Some Ohio legislators have expressed concern about transgressing the will of the voters when discussing proposals for reforming various aspects of current law, but the recent introduction of Senate Bill 56 and the Governor’s budget proposals suggests that Ohio policymakers remain eager to have their own say about marijuana tax rates and the allocation of marijuana revenue. This report analyses these proposals to change Ohio’s marijuana tax rate and allocation and compares them to other states. Based on Ohio’s market performance, we estimate the projected revenue for fiscal year 2025 to be over $60 million from the 10% marijuana excise tax and an additional $35 million in the state sales tax. While the present Ohio tax rate of 15.75% is slightly lower than the median state marijuana tax rate of 17%, the newly proposed tax rate of 20.75% under Senate Bill 56 would make Ohio’s marijuana tax rate the fifth highest. The proposed tax rate under Governor’s Proposed Budget, which would raise the total point-of-sale tax rate to 25.75%, would make Ohio the third highest tax rate state. Both proposals would also result in Ohio being nearly 5% or 10% above the effective tax rate of our neighboring state, Michigan, where the prices of marijuana products are already significantly lower than current prices in Ohio’s dispensaries.