Local governments in Ohio are “unequivocally opposed” to lawmaker-proposed changes to marijuana tax revenue allocations approved by voters in 2023. That’s according to a new study published by the Ohio State University’s (OSU) Moritz College of Law representing 38 municipalities across the state.
When voters legalized adult-use cannabis in 2023, the law they passed included a 36 percent allocation of marijuana tax revenue to local governments that host retail stores. But Republican-led legislation currently before lawmakers would make significant cuts to those funds, which municipal representatives said in the new report could lead to tax increases and layoffs.
Comments from officials surveyed as part of the OSU study indicated that many localities currently plan to use the voter-approved allocations for public safety and infrastructure.
“When it came to how municipalities planned to spend expected marijuana tax revenue, they typically spoke of prioritizing law enforcement, fire, infrastructure maintenance, and parks,” the report says. “They indicated that this revenue would be critical to their ability to maintain public safety and improve the lives of their residents.”
“Similarly, others expressed that they may not want to continue to have recreational sales in their area if the revenue was eliminated,” the report adds, “or that the revenue was part of the original motivation for wanting dispensaries.”
According to the new OSU report, municipalities that host dispensaries are expected under current law to divide roughly $22 million in fiscal year 2025. That’s assuming Ohio hits state revenue of $62 million overall.
In other words, authors wrote, each retail store would generate approximately $175,000 for host communities.
Ohio lawmakers have proposed changing a provision that directs a portion of #marijuana #tax revenue to municipalities that host dispensaries. Our survey asked host localities how these proposed changes would impact their communities. Read their two cents: https://t.co/XCvYSXfBHR pic.twitter.com/oTx3PJLRAz
— Drug Enforcement and Policy Center at Ohio State (@OSULawDEPC) March 18, 2025
Researchers identified 75 localities that Division of Cannabis Control data showed was host to at least one adult-use marijuana retailer, then gathered contact information for 159 officials like mayor and city manager across 73 municipalities.
Overall, 38 localities provided responses to the survey.
“Any revenue we could receive from the marijuana sales would be beneficial in supporting many city services: police and fire protection, street maintenance, and other critical infrastructure projects,” said an official from the city of Ravenna. “These funds would help us improve services for our residents and community and maybe even reduce the need for future tax increases.”
Another, from the city of Monroe, noted that the jurisdiction “was among the first municipalities to embrace the controversial introduction of medical marijuana and adult-use cannabis in a generally oppositional climate.”
“Monroe City Council took this step,” the official told authors, “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.”
A representative from Euclid expressed similar sentiments: “I would say that part of our decision for allowing marijuana facilities in the community was due to the potential revenue. I view it [as] a broken promise if they change the host community fund provision.”
The city of Milford, meanwhile, reported that expected tax revenue would allow them to maintain “fiscal stability and avoid drastic cuts to vital city services.”
So far three bills have been introduced that would make major changes to the state’s cannabis law. In their current forms, two would amend local tax provisions.
A budget proposal from Gov. Mike DeWine (R) for fiscal years 2026 and 2027 would do away with the municipal allocations entirely. (It would also double the state tax on marijuana, raising it to 20 percent.)
A separate bill, HB 160, would reduce local allocations from 36 percent to 20 percent, and it would sunset the disbursements after five years.
As the OSU report notes, while marijuana revenue has been collected for the current year, it has not been disbursed “because the ballot measure did not include appropriation language. The Ohio legislature could pass an appropriation for these funds at any time but has not yet chosen to do so.”
As of March 10, it continues, the state has collected $37.6 million in marijuana excise tax.
Municipal officials told OSU researchers in the new survey that they felt local communities were best positioned to decide how to spend tax dollars collected for host localities.
“The City strongly feels that decisions on how best to use tax dollars are best made at the local level, where we are providing front-line services to our residents and businesses,” said an official from Lebanon.
Another respondent, from Lorain, wrote: “I see the legislature thinks we didn’t know what we were voting for and are going to help us poor citizens. We do oppose the proposed move by the General Assembly, and the Governor, to once again impact the people’s wishes.”
The OSU study notes that despite the governor’s and GOP lawmaker’s efforts to amend how marijuana tax revenue is spent, they’ve given little explanation for the changes.
“In the case of the various proposed changes to the marijuana tax allocation, the Ohio General Assembly has not provided any policy rationale or reason as to why changes to the voter-approved allocations are needed,” the report says. “Various members of the General Assembly have suggested that voters simply did not understand or care about the specific details of Issue 2 when they voted for it, but the official ballot language that voters considered was quite explicit about the express tax allocations in the initiative.”
“The impacts of the proposed changes to the marijuana tax revenue allocation are significant for local governments and local communities that made decisions about allowing marijuana dispensaries based on the promise of future tax revenue,” it adds. Whether that means cuts to public safety, infrastructure, or parks, or a potential need for future tax increases on local residents, municipal governments are unequivocally opposed to the proposed changes to the original marijuana tax revenue allocation to the Host Community Cannabis Fund.”
The House bill that would affect tax allocations, HB 160, is one of a pair of bills introduced by Ohio Republicans this session that would make major changes to the voter-passed marijuana law. That measure, from Rep. Brian Stewart (R), and another in the Senate—SB 56, from Sen. Steve Huffman (R)—both would also create new limits and criminal penalties around legal marijuana.
SB 56 originally included amendments to local tax allocations but in its current form does not contain tax provisions.
While the Senate bill is seen as stricter in some ways—for example, it would cut in half the number of plants adults could grow under the law—both bills would set THC limits on marijuana products, weaken or eliminate equity provisions and set a 350-shop restriction on retail across the state.
Advocates from drug reform and civil liberties groups held an event last week to encourage pushback on the two measures as well as the governor’s budget bill, with speakers from NORML, the Drug Policy Alliance (DPA), Marijuana Policy Project (MPP) and ACLU of Ohio describing them as efforts to undo the will of voters.
Lawmakers could also still introduce other measures, noted Gary Daniels, chief lobbyist for ACLU of Ohio, and it’s also expected that a sweeping state budget bill could be used to make changes to the cannabis law. For example, an increased cannabis excise tax was introduced and later removed from the Senate bill, but an even steeper tax hike is now in the governor’s budget proposal.
Daniels added that Ohio voters are passionate about cannabis reform. While ACLU works on an array of issues—free speech, religious liberty, LGBT rights—he noted that “it seems that nothing activates Ohioans the same way as this particular issue.”
“The reception is, over the past couple years, much larger, much more robust than any of our other issues,” he said.
Earlier this month, Ohio’s Senate president pushed back against criticism of SB 56, claiming that the legislation does not disrespect the will of the electorate and would have little impact on products available in stores.
“My definitive message is: If you want to go purchase marijuana products from a licensed dispensary, that is going to be unchanged by Senate Bill 56,” Senate President Rob McColley (R) said during a podcast appearance. “The only difference you’ll notice is the packaging may not look as appealing to children, but you’ll still be able to buy the same products.”
Critics in the statehouse, such as Sen. Bill DeMora (D), who spoke against the measure on the Senate floor, said the plan “goes against the will of the voters and will kill the adult industry in Ohio.”
Separately in the legislature this month, Sens. Huffman and Shane Wilkin (R) introduced legislation that would impose a 15 percent tax on intoxicating hemp products and limit their sales to adult-use dispensaries—not convenience stores, smoke shops or gas stations.
“Currently, intoxicating hemp products are untested, unregulated psychoactive products that can be just as intoxicating, if not more intoxicating, than marijuana,” Wilkin said in recent sponsor testimony to the Senate General Government Committee.
DeWine has repeatedly asked lawmakers to regulate or ban intoxicating hemp products such as delta-8 THC.
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