CINCINNATI -- Ohio’s medical marijuana market could become among the largest in the country -- pumping out up to $400 million in sales and tens of millions of dollars in annual tax revenue, according to an analysis by a national trade publication.
Colorado-based Marijuana Business Daily on Monday unveiled its preliminary estimates of Ohio’s legal pot market ahead of two conferences the trade publication is planning this week in the Buckeye state.
On Friday the group is hosting its Marijuana Business Crash Course at the Kingsgate Marriott for entrepreneurs and businesses eager to learn more about the emerging legal pot market. The event, which runs from 10 a.m. to 6 p.m., includes workshops and talks from executives and experts on the regulatory and financial climate of the industry.
Medical marijuana becomes legal in Ohio on Sept. 8 -- making it the 26th state to legalize the drug. It’s a move that’s drawing interest of homegrown start-ups and out-of-state firms already part of the multi-billion-dollar industry.
“There is a lot of excitement around Ohio, and you definitely have businesses in the more mature medical marijuana states that are looking at Ohio as very fertile ground,” said Chris Walsh, editorial director of the Marijuana Business Daily.
The trade publication projects that Ohio’s medical pot market could generate between $200 million and $400 million annually in retail sales from licensed dispensaries once the industry is established in the state.
Among other factors, the estimate is based on the state’s population, the number anticipated patients and conditions that will qualify a patient to use medical marijuana, and the average amount spent by pot patients in other states.
Ohio’s projected revenue range is considerably lower than more established markets such as California, which posted $2.7 billion in medical pot retail sales last year, but the predictions still put Ohio on pace to be a big player in the growing market, Walsh said.
“From what we can tell now, this will be one of the larger medical cannabis markets in the country, and particularly in the eastern half of the country,” Walsh said. “It also has the potential to give Ohio’s tax coffers a sizable boost at the state and local levels, which will benefit communities across the state.”
If his publication’s projections hold true, between $11.5 million and $23 million in annual tax revenue could be generated for Ohio if it applies its sales tax rate of 5.75 percent.
“I imagine that state tax rate could even be higher for medical marijuana -- and of course none of this includes local taxes that could be applied,” Walsh said. “That’s money that will work its way through communities and you could see economic benefits all around Ohio.”
But, Walsh added, there are still “a lot of unknowns” about the future of medical pot in Ohio. That’s because key features of the law such as just how many businesses' licenses will be available for cultivators and dispensaries are still to be decided.
“Until the rule-making process plays out, it’s still a murky business climate,” Walsh said.
Key decisions still ahead
Under the law, Ohio’s medical pot program is expected to be up and running by 2018. That means lawmakers have a nearly two-year effort ahead to write the rules that will govern the new industry here.
By Oct. 8, a 14-member advisory committee goes into effect. The committee will make recommendations on how to regulate growing of medical marijuana, how physicians should recommend it and how patients will obtain it.
Those recommendations will be given to three state agencies charged with oversight of the new program.
- Ohio's Department of Commerce, which will be in charge of licenses and compliance of cultivators, processors and testing labs.
- Ohio's Medical Board, which will certify physicians who recommend marijuana to patients.
- Ohio's Pharmacy Board, which will oversee how patient registration and licensing of medical marijuana dispensaries work. Under the law, epilepsy, cancer, chronic pain and Alzheimer’s disease are among the list of more than 20 conditions that would qualify patients for medical marijuana use.
Some estimates have shown that as many as 300,000 Ohioans may be eligible for a medical pot program here, said Brad White, a board member at United Ohio, a patient advocate nonprofit.
That figure, White says, is based on the number of residents known to have one of the eligible conditions included in the rules divided by the percentage of U.S. residents estimated to use marijuana (9.5 percent).
Rules governing how patients are registered and how doctors are certified to recommend the drug are key details that will determine just how robust Ohio’s medical pot program will be, White said.
“If you make the rules for a physician to become certified too restrictive then doctors will ultimately choose not to participate,” White said. “Then you end up with a scenario where it becomes very difficult for patients to get access to medication because you have just a few docs in the state making recommendations.”