Ohio has joined the growing number of states legalizing cannabis for adult use, but legalization also brings a new tax structure that impacts consumers, dispensaries, and state revenue. Understanding how the Ohio cannabis tax works can help both businesses and buyers navigate the market confidently.
How Is Cannabis Taxed in Ohio?
The tax framework for cannabis in Ohio depends on whether the purchase is for adult use (recreational) or medical purposes.
- Adult Use Cannabis – Adult-use marijuana is subject to multiple taxes, including a state-level excise tax, standard state sales tax, and possibly local sales tax. The Ohio adult use cannabis tax is set at 10% excise tax on the retail price, in addition to Ohio’s base sales tax rate of 5.75% and any applicable local taxes.
- Medical Cannabis – Ohio takes a more patient-friendly approach for medical users. Currently, there is no additional Ohio medical cannabis tax beyond the standard sales tax, making it more affordable for registered patients.
Ohio Cannabis Tax Rate for Adult Use
The Ohio cannabis tax rate for recreational purchases combines several layers:
- 10% state excise tax on adult-use cannabis sales
- 5.75% Ohio sales tax applied to all retail transactions
- Local sales taxes (ranging from 0.25% to 2.25%) depending on the county or municipality
This means that recreational consumers can expect to pay roughly 16%–18% total tax on purchases, depending on location.
Cannabis Sales Tax in Ohio vs. Excise Tax
While the cannabis sales tax Ohio charges is similar to taxes on most retail goods, the excise tax is unique to certain regulated products such as cannabis, alcohol, and tobacco. The Ohio cannabis sales tax is calculated on the product’s retail price, while the excise tax is an added percentage set aside specifically for cannabis regulation, public health initiatives, and community programs.
Ohio Cannabis Tax Revenue
Revenue from the cannabis tax Ohio is distributed for various state and community purposes, such as:
- Funding addiction treatment and prevention programs
- Supporting law enforcement and public safety
- Contributing to the state’s general revenue fund
- Providing grants for community development in areas disproportionately affected by past cannabis laws
As sales increase, Ohio cannabis tax revenue is expected to become a significant funding source for the state—similar to trends seen in other states with legalized cannabis.
Key Takeaways for Businesses and Consumers
For businesses, understanding how cannabis is taxed in Ohio is essential for pricing, compliance, and reporting. Retailers must register to collect and remit both excise and sales taxes through the Ohio Department of Taxation. For consumers, knowing the tax breakdown can help estimate the final cost before making a purchase.
In summary:
- Medical cannabis in Ohio is taxed at the standard sales tax rate, with no additional excise tax.
- Adult-use cannabis carries a 10% excise tax plus sales tax (5.75% + local).
- Tax revenue supports public health, safety, and community programs.
As Ohio’s cannabis industry develops, tracking the Ohio cannabis tax rate and revenue trends will be important for policymakers, businesses, and consumers alike.
If you’re running or planning a cannabis business in Ohio and want to stay compliant while protecting your margins, contact Dimov Tax to model your tax exposure, set up proper reporting, and file your cannabis-related returns accurately and on time.
