Cleveland, Ohio Since sales started a year ago, recreational marijuana sales have brought in $55 million in taxes, but the Ohio cities that house the shops have yet to receive a single penny of that revenue.
Dispensary-hosting towns were originally promised about $20 million, or 36% of those tax dollars, but the money has been delayed while they wait for state lawmakers to resolve a legal dispute. Rather, lawmakers in the state kicked the can down the road.
According to Kent Scarrett, director of the Ohio Municipal League, a group that advocates for local governments, they have been attempting to manipulate this the entire time.
Issue 2, the November 2023 ballot measure that legalized the sale of marijuana for recreational purposes, is where the tax controversy begins. The 10% excise tax on cannabis sales under that statute was to be used to support communities that housed dispensaries, a social justice and jobs fund, and efforts to prevent substance abuse.
However, there was a flaw in Issue 2: it lacked appropriations, which is the legal wording that permits the state government to transfer funds to local governments. Therefore, rather than going to local governments, the tax money transferred to a state bank account when legal marijuana sales began in August 2024.
Issue 2 gave municipal authorities the option to either permit or completely prohibit the selling of marijuana inside their boundaries.
According to Scarrett, towns were encouraged to agree by the additional tax revenue. Although these dispensaries are now operational, local governments do not recognize the advantages.
Lawmakers proposed altering the distribution of marijuana revenues during the state budgeting process. The amount that municipalities receive was something that some lawmakers wished to cut. Governor Mike DeWine wished to completely reallocate the funds to other purposes, such as police training and county jails.
On the surface, the final budget seems to support local governments, allocating 64% of marijuana tax revenue to the state general fund and 36% to municipalities.
Once more, however, lawmakers failed to include appropriations, which is the legal wording that is required to give the funds to the localities.
Local governments are once more waiting for a solution, according to Scarrett.
According to Scarrett, lawmakers are still not implementing Issue 2 in the manner that voters approved.
The Office of Budget and Management in Ohio affirmed that unless such allocations are made, no funds will be distributed to local governments.
However, money can be transferred to the state’s general fund right away. However, state lawmakers have yet to make a decision regarding the allocation of funds.
In an interview with Gongwer, House Finance Committee Chair Brian Stewart admitted that the state’s marijuana tax legislation has a flaw.
According to him, lawmakers decided to codify the 36% for municipalities and want to revisit the matter after the summer break.
When we return in the autumn, we’re going to keep working on the marijuana problem, Stewart added. Since we still don’t have an agreement on the marijuana bill, we’re simply going to keep delaying it. In the House version of the bill, we tried to sort of get to a road to get some of the money disbursed.
Senate Bill 56, a marijuana reform bill, has the potential to modify the regulations and the amount of taxes paid to local governments that have dispensaries.
Lawmakers are free to make any changes they want because recreational marijuana was authorized as a state legislation rather than a constitutional amendment.
In contrast, the legalization of casino gambling by a ballot initiative is already a part of Ohio’s constitution. Additionally, that statute provided funding to the local governments that housed Ohio’s four casinos.
Although some local towns haven’t prepared for uses of the money yet because they don’t know whether they will come, Scarrett stated that municipalities need these marijuana tax dollars to support their local budgets.
The state budget office stated that it is unable to disclose the amount of money that each municipality is expected to receive because taxes are determined by the sales of each dispensary.
According to Patrick Cooney, director of Euclid Law, the city has not budgeted for the funds due of the delay.
To help with future planning and budgeting, it would be beneficial to know the distribution schedule, method, and existence of any limits, Cooney told cleveland.com. In order for host cities to be in the same situation as the State, which is having access to these monies in Fiscal Year 2026, it is hoped that the issue will be settled when the legislature convenes in the fall.
This story was contributed to by reporter Cory Shaffer.
Stories by
Sean McDonnell
-
Goodbye, Shaker Lakes? Northeast Ohio Regional Sewer District recommends draining Lower Shaker Lake in stunning reversal
-
Cleveland to spend $20M on street resurfacing: Is your road on the list?
-
This is horrible : How Trump s eleventh-hour decision put 180+ Clevelanders at risk of eviction
-
Cleveland expands Southeast Side program to reach more businesses
-
Somos Arte : Kids, families reclaim Trent Park courts with colorful comeback
