What Ohio's Push for Recreational Cannabis Might Mean for Michigan

The proposal's framework is similar to Michigan's, with a 10% excise tax.

The upcoming vote in Ohio on recreational cannabis legalization, known as Issue 2, could chip away at Michigan’s established stronghold in the industry if voters approve it.

For years, Michigan has been a go-to destination for Ohioans seeking more affordable and accessible cannabis. With an abundance of dispensaries near the border between the two states, Michigan has enjoyed a steady stream of out-of-state clientele.

The measure, set for a vote on Nov. 7, would allow adults aged 21 and over in Ohio to purchase, possess, and cultivate marijuana for recreational use. The framework of the proposal is similar to Michigan’s, with a 10% tax levied on top of the state sales tax.

“The two biggest opponents of Issue 2 are Michigan dispensary owners and drug dealers,” Tom Haren, spokesperson for the Coalition to Regulate Marijuana Like Alcohol, recently told the Columbus Dispatch.

Michigan’s cannabis prices have been very appealing to people from Ohio. As more shops opened in Michigan, prices went down, and now there are many discount deals available to attract customers.

But businesses in Ohio believe they can match Michigan’s prices and hope that the new proposal will make things easier for existing patients in the Buckeye State’s medical program, which has suffered from limited access and plummeting prices.

Beyond that, there will be an adjustment period. If the proposal passes next month, it would still take a while for a new program framework to get set up.

And market dynamics in new cannabis states are often unpredictable.

For example, when Missouri launched adult-use sales, it took a bite out of Illinois demand along the border. But the cannibalization wasn’t as dramatic as some may have initially thought.

Though Michigan has a head start, with legal adult-use marijuana approved by voters in 2018, Ohio’s entrance more than anything could pose a predicament for state coffers. The revenue from Michigan’s sales, which partly funds schools and road maintenance, could see a decline if Ohio’s proposal succeeds and keeps its residents’ spending in state.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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