Southeast Ohio mayors grapple with potential loss of marijuana tax revenue

By: Charlie Ihlenfeld

Posted on:
Friday, June 20, 2025

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ATHENS, Ohio (WOUB) — “Shock,” said Athens Mayor Patterson when asked about his reaction to the proposed changes to marijuana revenues.

It seems Athens and other municipalities may receive a lot less tax revenue than they thought, or none at all.

On Nov. 7, 2023, voters in Ohio overwhelmingly approved a measure to make recreational marijuana legal.

A 10% tax on marijuana was baked into the issue, and 36% of the tax revenue would go to municipalities that hosted the dispensaries.

Once the measure reached Columbus, the governor and the Legislature had other plans. Under Gov. Mike DeWine’s proposed budget, all marijuana revenue would be funneled into state projects.

This would include proposals such as jail construction and renovation, law enforcement training, poison control and testing, peace officer training, a program to expunge marijuana possession offenses, the 988 crisis hotline, substance abuse education, grants for local task forces, driver education in schools, the Ohio Investigative Unit and administrative costs.

The state Senate and House have their own visions for the municipality revenues. While they are not proposing to strip municipalities entirely, they are proposing to scale back the revenue from 36% to 20% under House Bill 160, which is still in its first committee. The 20% revenue would only last for five years before the state sunsets the funds and adds the total to their general revenue stream.

In recent days, the leading proposal, Senate Bill 56, hit a snag when it reached the House. When it was introduced, the bill would have given all the revenue to the state’s general revenue fund. However, the bill underwent drastic changes.

When the bill reached the House Judiciary Committee, it had been modified to restore the 36% of tax revenue allocated for municipalities in Issue 2. But the measure did not make it out of the committee.

Meanwhile, if the state budget passes in its current form, all marijuana tax revenue will go to the state general revenue fund.

“Our thought was, this was going to be new revenue coming in at a great time,” said Patterson. Athens, like many cities in southeast Ohio, has felt budget pressures in the past few years. Rising costs for salary, pensions and insurance make the potential tax revenue from dispensaries invaluable.

Ohio State’s Moritz College of Law published a study estimating municipalities with dispensaries would each receive an average of $175,000 in 2025. Over five years, the total would be about $1 million. This follows trends across the country where dispensaries generally grow in revenue over their first five years.

According to the Ohio State study, Athens would have been in line for $350,000 in direct revenue from marijuana sold by its two dispensaries. So far, the city has not received a dime in tax revenues from the businesses.

While Patterson described his shock, not every mayor was surprised by the revenue disappearing. Even before the governor’s and the Legislature’s proposed changes, Marietta Mayor Joshua Schlicher said the city had not banked on any of the money coming to the city.

Joshua Schlicher, mayor of Marietta. [Charlie Ihlenfeld | WOUB]Marietta hosted a medicinal dispensary before the passage of Issue 2. Now, the dispensary has recreational marijuana available for purchase. Schlicher said the city never intended to “play the game” to “maximize tax revenues.” There is a second dispensary in the works in the city.

“We’re just trying to do what fits in our zoning requirements,” said Schlicher. He said the marijuana tax line item would be one of many different sources of state revenue, and the city wasn’t counting on it. Schlicher said it was too early to project the revenue before the proposed changes are resolved.

Schlicher said when he has conversations with state representatives for Washington County, marijuana revenues are not “at the top of my list of things to worry about.”

While the city did not have the same expectations as Athens, Marietta has many of the same concerns as other southeast Ohio municipalities. Eighty-six percent of Marietta’s general fund goes to salaries and benefits with 60%, about $8 million, going to public safety. If the dispensaries grow based on Ohio State projections, Marietta could have raised about 5% of its current public safety budget through the marijuana tax.

First responder budgets were a major sticking point for many after the governor’s proposed budget was released. Ohio Municipal League Executive Director Kent Scarrett referenced “playing the game” too, but as he has said throughout the process, the state is “changing the rules in the middle of the game.”

Scarrett said the state has already collected close to $400 million in revenue originally designated for municipalities.

“Communities were counting on the revenue support from sale of marijuana … to support our first responders,” said Scarrett. He said the cut is the latest step in the state undercutting vital revenue for small towns and cities across the state.

“It’s a real challenge we’ve had in the state,” said Scarrett. “They cut the local government fund, which is a significant amount of revenue. That was cut by over $500 million under Governor Kasich’s first budget, and that has not come back. They’ve made other cuts that impact local revenues. And this is just the latest chapter in that book.”

Scarrett said the governor’s proposal to put some of the marijuana tax revenue toward police training was “appreciated” but expressed frustration that the state was taking control of the money in the first place.

“These dollars were meant to be unencumbered to the host communities,” said Scarrett. “Those dollars were to meet the priorities of each individual community.”

Greg Fraunfelter said he was not counting on the revenue either but for very different reasons. The mayor of Logan was never convinced by the vision sold by groups like the Marijuana Policy Project. The Washington, D.C.-based policy group put close to $3 million in lobbying for the change on the ballot in Ohio, according to Ballotopedia.

Greg Fraunfelter, mayor of Logan. [Charlie Ihlenfeld | WOUB]“These guys that came in, they were salesmen,” said Fraunfelter. “And they couldn’t guarantee anything.”

He said he was not “holding his breath” about the funding coming through. In the heart of small-town southeast Ohio, Logan is the largest municipality and only city in Hocking County. With limited funding, Logan cannot meet the legal minimum for firefighters in Ohio. Marijuana tax revenue could have helped the city add more firefighters.

The average salary for a firefighter in Ohio is right below $80,000 per year, according to Indeed , although there are other costs beyond wages, such as training. The city will likely not receive initial projections of $175,000 per year or the long-term estimate of $200,000 per year in tax revenue.

Fraunfelter said he was an outlier among mayors for his skeptical stance on marijuana revenues.

“I had this (Mayor’s Partnership for Progress) meeting, and I said I wasn’t holding my breath,” said Fraunfelter. “And some mayors got mad at me. I said, ‘I don’t care.’”

While Fraunfelter believes marijuana was never going to be a viable form of revenue for municipalities, he was sure to mention that the state is encroaching on home rule.

“All of us are concerned about home rule,” he said of the mayors.

For Logan, the issue with home rule began with Airbnb. After the city dealt with constant noise complaints from several properties in close proximity listed by the business, the city passed an ordinance to prohibit the company from having two properties within 500 feet of another short-term rental.

But Fraunfelter said the ordinance was stopped by the state of Ohio. Now, he has to go to Columbus to argue against the nearly $82 billion company.

“I’ve been up three times to the testimonies about Airbnb,” said Fraunfelter. “There’s me in my jeans and my shirt, and there’s these three-piece suits, four, $5,000 suits, $1,000 shoes. You sit and think, ‘We don’t stand a chance.’”

With Issue 2, the marijuana initiative, Fraunfelter joked that voters should never vote for the first version of a ballot initiative.

“They have to go back and figure things out,” said Fraunfelter. “It may be better the third time.”

On the issue of home rule, Fraunfelter has an unlikely ally who did not mince words about how the governor and state Legislature handled implementing Issue 2.

“It’s ridiculous, it’s shameful,” said Bill DeMora, a state senator from Columbus. “They don’t like when citizens actually do something.”

“They want to control the state for their own good, for their own financial interests,” said DeMora. He has been one of many voices to criticize the proposed budget from the state.

DeMora slammed the state taking the marijuana tax revenue from municipalities to use for their own political priorities.

“They’re doing it for their own self-interest,” said DeMora, “giving the money to the general revenue fund so they can support this $900 million tax cut for the wealthy. … Instead of the money going to the communities, prevention and addiction services, it’s going to none of that.”

DeMora echoed Scarrett’s thoughts about the local government fund that was slashed from 3.68% to 1.66% under Gov. John Kasich.

While some local governments are reeling from the change while others are shrugging their shoulders, Scarrett characterized the current relationship between the state and municipalities.

“I’ve been around the state government for a long time, and I have worked with local governments for a long time,” he said. “And you cannot say there isn’t a good relationship with our state leaders. There is. But it’s just getting through those policy differences from the state and local communities. (That) is where we meet heads.”

AthensCity GovernmentGov. Mike DeWineLoganMariettamarijuanamarijuana dispensariesmarijuana legalizationState GovernementSteve PattersonTax Revenue