Ohio could earn $218M in new tax revenue in the first year if marijuana is legalized, OSU study finds

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COLUMBUS, Ohio (Statehouse News Bureau) — If Ohioans approve a proposal to legalize recreational marijuana in November, a new study by Ohio State University shows the state could rake in an extra $218 million in tax revenue the first year alone. And by the fifth year, the 10% excise tax could mean up to $404 million, according to researchers at the OSU Drug Enforcement and Policy Center.

That comes as no surprise to Tom Haren, spokesperson for the Coalition to Regulate Marijuana Like Alcohol, the group pushing for legalization for Ohioans 21 and older.

“Like most people in Ohio, I trust The Ohio State University, and I think their findings validate what we have been saying all along,” Haren said.

Ohioans would have to pay a 10% excise tax plus the state sales tax at 5.75% plus the local tax which could range from 0.25% to 2.25%. The study points out Ohio’s proposed excise tax rate of 10% is less than some other states that have legalized marijuana

Haren said a lot of thought went into coming up with a taxation plan that would make Ohio competitive with nearby Michigan but, more importantly, to accomplish another goal.

“We’re going to put the black market out of business,” Haren said. “Ohio consumers will have a true alternative to the black market where products are safe and tested, they are regulated and they are also on par as it relates to price with the black market.”

Ohio’s medical marijuana program would continue to be in place and those participating in it would not be taxed for their products.

Marijuana plants at Hepworth Farms in Milton, N.Y.
Marijuana plants at Hepworth Farms in Milton, N.Y. Sixteen percent of Americans say they smoke marijuana, with 48% saying they have tried it at some point in their lives. [Mary Altaffer | AP]

Changes could lie ahead for the marijuana law

Because Issue 2 is a proposed law and not a constitutional amendment, Ohio lawmakers could change it if voters pass it. In fact, Senate President Matt Huffman (R-Lima) has already indicated he’d do that, especially if it isn’t passed with a supermajority.

The Ohio Chamber of Commerce and hospital leaders throughout the state have also argued against the proposal.

Gov. Mike DeWine (R-Ohio) has also criticized the proposal, saying legalizing cannabis would be a big mistake.

DeWine argued more kids who are underage will be getting their hands on marijuana, which, he says, is not your marijuana of the 1960s, 70s or 80s. This product has been developed and its potency is significantly higher than it was years ago, he said.

“This is not your grandfather’s marijuana or your grandmother’s marijuana. This is different,” DeWine said.

Haren agreed. It’s safer, he said, and passage of the plan would mean marijuana that is sold is tested and controlled – something that doesn’t happen with illegal marijuana.

Haren said he’s been talking to lawmakers and he doesn’t think they will make substantive changes to the marijuana plan if Issue 2 passes on Nov. 7.