Ohio’s adult-use cannabis market may be operational, but the Buckeye State has a long way to go to catch up to its peers.
Through the first 61 days following Ohio’s adult-use sales launch on Aug. 6, the state’s roughly 130 dispensaries—including 124 with their dual-use certificates of operation to serve both patients and nonmedical consumers—reported $98.3 million in adult-use sales and $67.6 million in medical cannabis sales, according to the Ohio Division of Cannabis Control (DCC).
The combined total of $165.9 million in sales through the first two months of an expanded market represents an annual run rate of nearly $1 billion in sales, meaning Ohio will likely join the ranks of 11 states with billion-dollar markets forecasted for this year.
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From a pricing standpoint, Ohio’s average cost for a tenth ounce of dried flower decreased 13.5% since the first week of adult-use sales, dipping from $26.59 as of Aug. 10 to $23.00 as of Oct. 5, according to the DCC.
But from an overall sales perspective, how does Ohio compare to its fellow adult-use predecessors in the U.S.?
Michigan dispensaries rang up $16.8 million in adult-use sales during the first two months of a program launch—December 2019 and January 2020—but only 42 active retailers were licensed through that initial period, according to the Michigan Cannabis Regulatory Agency. The state recorded $67 million in overall sales when factoring in the medical market through those first two months.
More recently, Missouri launched an adult-use cannabis program in February 2023 with roughly 200 dispensaries reporting more than $165.2 million in adult-use sales during the first two months, according to the state’s Department of Health and Senior Services. The state recorded $229.1 million in overall sales when factoring in the medical market through those first two months.
In Maryland, an adult-use program launched in July 2023 with roughly 100 dispensaries ringing up $104.7 million in adult-use sales through the first two months, according to the Maryland Cannabis Administration. The state recorded $179.8 million in overall sales when factoring in the medical market.
In terms of the number of dispensaries serving the marketplace, Ohio most closely correlates with Maryland. However, Ohio has nearly double the population of Maryland, 11.8 million residents to 6.2 million residents, yet the Buckeye State still fell short of how Maryland’s adult-use cannabis sales performed through the first two months of a market launch.
What does this mean?
Although Ohio’s average price of $8.13 per gram of dried flower as of Oct. 5 is less than Maryland’s average price of $9.60 per gram, Ohio’s licensed dispensaries appear to be falling short of reaching the natural in-state consumer demand. In other words, a large percentage of Ohio’s cannabis consumers are still making their purchases outside the state’s regulated marketplace or are growing their own cannabis at home.
For instance, Ohio’s current annual rate of $1 billion in total cannabis sales equates to roughly $88 spent per capita per year. This compares to $331 spent per capita in Michigan, $233 per capita in Missouri and $183 per capita in Maryland, according to Cannabis Business Times analytics.
Several factors can determine a state’s consumer participation in a licensed cannabis market—from prices to the number of dispensaries, local moratoriums that limit consumer access and permissive cannabis laws in border states. One key factor in Ohio is its proximity to Michigan, where more than 800 adult-use dispensaries offer some of the lowest prices in the nation. Michigan’s average retail price was $80 per ounce for dried flower in August, according to the CRA.
From a revenue standpoint, individual Ohio dispensaries still appear better situated than in Michigan. Based on current sales trends, the average Ohio dispensary will sell nearly $8 million of cannabis in one year compared to roughly $4 million per dispensary in Michigan. This is because fewer stores currently share a larger piece of the overall sales pie in Ohio.
However, this will likely change in the coming months as Ohio adds roughly 170 adult-use dispensaries for existing operators—dubbed 10(B) dispensaries—as well as another 50 dispensaries for social equity operators, as required under the state law voters passed in the November 2023 election.
With eventually 350 dispensaries serving Ohio’s cannabis market, the state’s consumers would need to spend roughly $2.8 billion per year at licensed facilities to maintain the average rate of $8 million in annual revenue per store.
The average dispensary is recording nearly $22,000 in adult-use and medical cannabis sales per day—a rate of roughly $8 million per store per year. Read More