Ohio Cannabis Sales Tax Revenue
With the legalization of adult-use cannabis in Ohio in 2023, a new source of revenue has emerged for the state. But how significant is the contribution of cannabis sales to Ohio’s overall tax revenue? As the market matures, it’s important to understand how much of Ohio’s sales tax is generated by cannabis and how it impacts the state’s budget.
The Cannabis Tax Landscape in Ohio
In Ohio, cannabis is taxed through a combination of excise taxes and sales taxes. The state imposes a 10% excise tax on adult-use cannabis sales. Additionally, cannabis is subject to Ohio’s 5.75% state sales tax, along with local taxes that can reach up to 2.25%, depending on the municipality. These taxes are paid by consumers at the point of sale, with dispensaries collecting and remitting the amounts to the state.
The excise tax is a significant source of revenue. For example, by December 2024, total sales of recreational marijuana had already surpassed $242 million. That means cannabis sales alone were contributing tens of millions of dollars in excise tax revenue.
Cannabis as a Portion of Total Sales Tax Revenue
Though cannabis is a substantial contributor to Ohio’s revenue, it’s important to understand that it’s still a small portion of total sales tax collections. According to early 2025 reports, the cannabis sector accounted for over $30 million in excise taxes alone. While this amount is growing rapidly as more dispensaries open and consumer demand increases, it is still a small slice of Ohio’s total sales tax revenue, which in 2024 exceeded $10 billion.
To put it into perspective, cannabis taxes contribute a small but notable percentage of the state’s total tax collections. However, this number is expected to rise as the adult-use market matures and more consumers choose to legally purchase cannabis.
How Cannabis Revenue Benefits Ohio
Cannabis revenue has a direct and impactful role in Ohio’s budget. Tax revenue from cannabis sales is allocated to several key areas, including education, local government funding, and addiction treatment programs. This revenue helps fund public health initiatives and provides financial relief to local governments, supporting services for Ohio residents.
The Future Outlook
As the cannabis market continues to expand, its contribution to Ohio’s sales tax revenue is expected to grow. However, it’s important to note that cannabis is just one piece of the larger tax puzzle, and its percentage of total tax revenue will remain modest in the near future. Still, for businesses and policymakers alike, understanding the role of cannabis in Ohio’s tax landscape is essential as the market evolves. If you are unsure about cannabis taxation in Ohio, reach out to our dedicated team today. Dimov Tax presents professional assistance.