[[{“value”:”
CLEVELAND — Legalizing recreational weed has been the talk of the state since it passed in 2023, as cities were looking forward to receiving extra dollars generated from sales tax, but now, that all may change.
RELATED: Recreational marijuana is now legal in Ohio. Here are some do’s and don’ts.
Recreational marijuana hit the shelves of authorized dispensaries last August.
Since then, adult-use cannabis sales have skyrocketed – collecting more than $390 million as of March 15.
Amid state and local taxes imposed on marijuana, there is an additional 10% tax levied on purchases solely because it’s recreational.
According to the Ohio Office of Budget and Management (OBM), recreational marijuana tax revenue has hit more than $30 million. That total is just from September through the end of February.
Thirty-six percent of those proceeds were to be directed to the Host Community Cannabis Fund.
Distributions from that Fund “SHALL” be based on the percentage of adult use tax attributable to each municipal corporation or township.
In mid-November, I spoke with the City of South Euclid Director of Community Services, Keith Benjamin, about the extra funding the city anticipated receiving.
RELATED: South Euclid: When and how recreational marijuana tax revenue distribution will happen is unclear
South Euclid’s Finance Director estimated the city had made an extra $100,000 from adult-use cannabis in 2024.
There are more than 120 marijuana dispensaries licensed to sell for adult use in Ohio. Of that, South Euclid is only home to one: Certified Dispensary on Cedar Road.
“We don’t know at this time the number of sales that our current dispensary in South Euclid has generated and we don’t know what the process will be for the state of Ohio to distribute those funds to the city,” Benjamin told me in November.
I asked OBM this month how much each city in Ohio should be getting based on its calculations.
“We are unable to provide the requested allocations by municipality or township due to taxpayer confidentiality reasons,” a spokesperson said.
The City of Cleveland estimates it will receive about $410,000 but said, “We do not know what dollar amount the city will receive since the state makes the collections and has not shared that information with us.”
Cleveland has six marijuana dispensaries within city limits, which means the city hosts 4.7% of the dispensaries in the state.
“The city initially expected to start receiving its share of the cannabis revenues on or around November 2024, but since the allocation was not included in the prior state budget, the earliest the funds would be distributed to municipalities without additional legislation is July 2025 when their new fiscal year starts,” City of Cleveland Chief Communications Officer, Sarah Johnson said.
Johnson added, “There is some concern that the state may try to divert these funds for state use instead of distributing them to the cities.”
Governor Mike DeWine has proposed a budgetary plan for the Fiscal Year 2026-2027. In that plan is what Ohio Municipal League Executive Director Kent Scarrett described as “changing the rules in the middle of the game.”
The Ohio Municipal League is a statewide nonprofit that serves the interests of the Ohio Municipal government.
“There’s a lot of different things going on with [recreational marijuana] right now. It’s a new system in Ohio, and so I think we’re trying to work out the bugs of getting the dollars to our communities that are due now,” Scarrett told me.
The Governor’s plan would redirect recreational cannabis sales tax funds out of city decision-maker hands.
The proposed budget would also redirect those dollars to poison control and laboratory testing, safe driving programs in schools, local drug investigation task forces, and substance use treatment prevention and education.
The Governor’s Press Secretary, Dan Tierney, said Issue 2, as passed, did not appropriate any funds to cities.
“We understand the frustration of being told this by those who drafted Issue 2 and coming to find out Issue 2 did not contain appropriations,” he added.
Scarrett said it’s on the state to have enacted a mechanism of distribution.
“That wasn’t a priority for them. They’ve been sitting on the money,” he stated. “The state is gaining interest off that money that is dedicated for the host communities. We’re hopeful that there will be a mechanism put in the state operating budget that will be passed at the end of June.”
Scarrett said if cities had known this is how the extra money would have been allocated, many wouldn’t have allowed recreational marijuana to operate within their cities.
“A lot of our communities would have been much more hesitant or even would not have gotten into zoning and bringing this type of industry into their communities without the assurance that there was gonna be that financial support to support their services such as safe roads, police, fire, and all the other important municipal services that our cities and villages provide,” Scarrett said.
He added that the governor’s proposal appears to be a Big Brother response, and cities feel as if the state government doesn’t trust them to decide where the money is best spent.
“Can you do anything? Can you fight it?,” I asked Scarrett.
“It wasn’t a constitutional amendment. The legislature has the ability to change how that program works. I don’t think the legislature is really crazy about this new industry being in the state, especially since they’re talking about doubling the size of the excise tax. This legislature has always talked about reducing taxes and incentivizing business. It looks like they’re doubling the tax that would de-incentivize this industry the voters approved,” he responded.
Scarrett said the Ohio Municipal League and its members have spoken with the Governor’s Office about their concerns, and now it’s just a matter of waiting on what the outcome will be.
“We’re just hopeful that the legislature and the governor respect the needs of our communities and respect the partnership that has been established in this issue,” Scarrett said.
Some cities, like Cleveland Heights told me with the high level of uncertainty surrounding the sales tax going to cities, it is not including it in budgetary plans.
The FY 2026-2027 biennial budget, House Bill 96, could be the legislative vehicle that will authorize the spending of recreational marijuana tax revenue, but it is ultimately up to the General Assembly to choose how it will proceed.
We’ll continue to follow through.
“}]] Legalizing recreational weed has been the talk of the state since it passed in 2023, as cities were looking forward to receiving extra dollars generated from sales tax, but now, that all may change. Read More
