State politicians are offering new proposals to change Ohio’s recreational marijuana law enacted by voters in 2023. Their plans would alter many parts of the law—approved by 57 percent of voters that November—and range from lowering potency levels to reducing the legal number of homegrown plants, dictating where marijuana can be legally consumed, and whether it can be shared between adults.
Lawmakers’ efforts to redirect newly collected tax dollars from marijuana sales are drawing the most attention. The ballot language of Issue 2 specified that Ohio would establish a 10 percent excise tax on recreational marijuana sales and then divvy up those revenues this way: 36 percent to a Cannabis Social Equity and Jobs Fund, 36 percent to a Host Community Cannabis Fund, 25 percent to a Substance Abuse and Addiction Fund, and 3 percent to a Division of Cannabis Control and Tax Commissioner Fund. (See “Tending to Ohio’s Budding Marijuana Industry” in the October 2024 issue of Cincinnati Magazine for insight into how recreational marijuana has been rolling out in local communities.)
Ohio voters passed Issue 2 as a legislative statute, providing elected officials the collective power to change it. Three proposals currently are on the table.
Gov. Mike DeWine’s biennial budget proposal for 2026 and 2027 proposes doubling the recreational marijuana excise tax to 20 percent and reallocating all taxes to projects that include a program for Ohioans to expunge past marijuana possession charges, operating funds for the 988 Suicide and Crisis Lifeline, law enforcement training, and jail and law enforcement facility construction projects.
Senate Bill 56 is a 152-page bill passed in the Ohio Senate in late February that would overhaul the current marijuana law. The bill cuts household grow limits from 12 to six plants and bans smoking marijuana outdoors. Initially, the bill proposed raising the excise tax to 15 percent and rerouting the dollars, but all tax-related changes were removed before it passed.
Finally, the Ohio House of Representatives last month began to consider House Bill 160, a 120-page bill that would revise a variety of state liquor control, hemp, and adult-use marijuana laws and has been received as a less dramatic departure from the law approved by voters. The excise tax is kept at 10 percent but alters pathways for tax revenue, eliminating the Social Equity and Jobs Fund and reducing the Host Community Fund to 20 percent for just a five-year period beginning in 2026. Remaining tax revenue would be allocated to the General Fund.
Critics, including The Cleveland Plain Dealer’s editorial board, say changing the law undermines Ohioans right in the state constitution to propose by petition amendments to Ohio law and undercuts local governments. “Lawmakers should leave the local-government earmark in place,” the newspaper’s editorial board wrote. “Doing otherwise would demonstrate contempt for Ohio voters.”
The Host Community Fund will distribute revenue on a quarterly basis among Ohio municipalities and townships in an amount proportional to the marijuana tax revenue collected in each community. The law passed by voters gave host communities permission to spend tax dollars how they see fit. As of March, the state had collected more than $36 million in marijuana excise taxes, yet none had been distributed as lawmakers are still deciding where it will go.
For many years now, the Drug Enforcement and Policy Center at the Ohio State University’s Moritz College of Law has been studying marijuana legalization across the country, with a trained eye on Ohio’s process. The center estimates Ohio could conservatively collect around $62 million from the marijuana tax in the first year, resulting in roughly $22 million allocated to the Host Community Fund.
To understand that impact, OSU researchers from the center recently contacted the majority of Ohio’s host communities to ask about their plans for any expected marijuana tax revenue.
Officials in Norwood told researchers the city planned to use the money for infrastructure projects. “Our streets and bridges are in dire need of repair/replacement,” Norwood’s response reads. “Many years of underfunding and the lack of resources to take on large critical infrastructure projects with minimal preventative maintenance means communities bear the burden of trying to take on huge projects with limited funds.”
The city of Monroe said it was one of the first to embrace medical and adult-use cannabis businesses in Ohio because of the opportunity for new revenue. “Monroe City Council took this step with the vision that it would likely create a new revenue stream to help deliver services to our residents without imposing any additional burden on them,” reads the city’s response.
Harrison was planning to add the tax revenue to its General Fund for future infrastructure projects, “as well as aid our police and fire departments. Losing it would have a major impact on our fire fund as well as limit the number of infrastructure projects,” leaders wrote.
Milford said the changes could result in the loss of approximately $100,000 annually, “potentially impacting both the school resource officer program and economic development initiatives.”
Host communities from across the state spoke of significant impacts, the OSU report concluded, with “many also indicated that they are operating at or near a deficit, while dealing with additional mandates from the Ohio General Assembly such as the increase (from 19 percent to 24 percent) in required local contributions to the Ohio Police and Fire Pension Fund.”
What’s next? SB 56 has already been passed by the Senate and in March was introduced in the House and assigned to its Judiciary Committee. The same committee is also considering HB 160 and will hold public hearings, then decide whether to be in favor of, defeat, or amend each bill or create a substitute bill. The House Rules and Reference Committee reviews what the committee comes up with and decides to either re-refer it to another committee, take no action (effectively killing the bill), or schedule it for a third consideration by the full house, resulting in a floor debate and vote.
If the House passes HB 160, it’s taken up by the Senate, which follows the same process and decides whether to pass an amended version, which would need to go back and forth until the two houses agree. It can also decide to do nothing and effectively kill the bill.
If the House ultimately passes SB 56 or if the Senate passes HB 160 or if they pass an amended compromise bill, it then goes to DeWine to be signed into law or vetoed.
As for the governor’s biennial budget, it’s been introduced as House Bill 96 and is currently under review by the House Finance Committee. The lengthy budgeting process also involves public hearings and both houses working on their own versions of a budget until they can agree and present a budget proposal to the governor by July 1.
Despite what state voters approved in 2023, politicians are poised to change possession and sales details and redirect tax funds from recreational weed sales. Read More
