47 Ohio Localities Enact Cannabis Moratoriums Ahead of Adult-Use Sales Launch

Update: As of June 13, 2024, there are 55 Ohio localities with active cannabis moratoriums. Since this article was published, two municipalities—Austintown Township and Lakewood—have rescinded their moratoriums on cannabis businesses as of early June.

As Ohio prepares to commence adult-use cannabis sales via existing medical cannabis dispensaries as soon as next month, 47 localities representing roughly 9% of the state’s population have enacted cannabis moratoriums.

This comes six months after Ohioans voted with a 57.2% majority to legalize adult-use cannabis via Issue 2 in November’s election, making the Buckeye State the 24th in the nation to reform its laws for nonmedical consumers.

While the statutory measure paved way for adults 21 and older possess up to 2.5 ounces of flower (or 15 grams of extract) and to home cultivate up to six plants per person or 12 plants per houses beginning Dec. 7, 2023, a taxed and regulated retail market has yet to launch.

But as medical cannabis companies gear up to expand their operations for the broader consumer market, 47 Ohio localities have active moratoriums on adult-use cannabis operations in their jurisdictions as of March 31, 2024, according to the Ohio State University’s Drug Enforcement and Policy Center (DEPC) within the Moritz College of Law.

“The moratoriums are generally brief and often describe the need to ensure ‘public peace, health, safety, and welfare of [the locality’s] citizens,’” according to the DEPC. “The moratoriums also often cite the need for time to review current ordinances and identify any conflicting laws with state laws legalizing marijuana, or to wait for lawmakers in the Ohio General Assembly to [potentially] revise Issue 2 before making any changes to their own code. Multiple jurisdictions have indicated an intent to actively study current law and create recommendations for their locality once the final state rules for the adult-use recreational industry are adopted.”

Editor’s note: Although Ohio Gov. Mike DeWine and certain state lawmakers have called for enacting amendments to voter-approved Issue 2, there’s nothing that requires them to make any changes at all to the statutory measure.

RELATED: Ohio Medical Cannabis Operators Could Launch Adult-Use Sales in June

While the majority of Ohio’s 47 municipalities have expiration dates in 2024 or 2025 for these cannabis moratoriums, government officials can choose to extend the moratoriums at a later date under the voter-approved statute.

Under the statue, local control is preserved for municipalities to adopt resolutions to ban or limit the number of adult-use cannabis operators permitted in their jurisdictions. However, municipalities where medical cannabis cultivators and processors exist cannot restrict or limit these licensees from transitioning to adult-use operations, but municipalities can restrict existing medical dispensaries not connected to cultivation or processing facilities from selling adult-use products within their jurisdictions. 

However, standalone medical dispensary operators who receive a license from the Division of Cannabis Control would be allowed to operate and transition to adult use sales "unless a majority of the members of the legislative authority of a municipal corporation affirmatively pass an ordinance, or a majority of township trustees in a township affirmatively pass a resolution, after the license is issued and within [120] days from license issuance, prohibiting the operation of the adult use dispensary within the municipal corporation or within the unincorporated territory of the township, respectively," according to the voter-approved law. Dispensary owners could petition the decisions and put the issue before voters, a process that is detailed in the Ohio Revised Code. 

While the DEPC’s analysis on Ohio’s local cannabis moratoriums are extensive, it’s not all-inclusive. For example, it does not include Logan, a city of roughly 7,300 people about 45 miles southeast of Columbus, where city council members voted, 5-2, in mid-March to ban the sale of adult-use cannabis within their city limits, the Logan Daily News reported.

Logan is home to a Columbia Care medical cannabis dispensary that’s owned and operated by The Cannabist Co., one of the largest publicly traded cannabis companies in the world. The company has four medical dispensaries in Ohio, two of which are in municipalities that have cannabis moratoriums—Logan and Monroe.

“I’m disappointed, but not surprised, to see some locales moves forward with banning cannabis,” Adam Goers, senior vice president of corporate affairs at The Cannabist Co., told Cannabis Business Times. “I think we’ve seen it in a number of different states, even in the bluest to blue states and the reddest to red states, and ultimately, I just think that better education about what this means and what this looks like is needed.

“And that's something that we’re working on in all of our locales, and I'm hopeful with that, that policymakers [and] decision-makers are going to recognize that regulated, adult-use cannabis is a positive for their city, because people are consuming cannabis everywhere within Ohio. They’re just consuming it from the illicit marketplace.”

A few advantages of a regulated marketplace include consumer safety with respect to products tested for safety, licensed stores that ensure age compliance of buyers, and funding for communities from a taxed system.

"I think there's a much better understanding and appreciation for how thoroughly regulated our stores are in the regulated medical and adult-use program coming relative to what people may perceive if they've never seen a dispensary before," said Jeff McCourt, CEO and founder of Firelands Scientific, a cannabis cultivator and processor and parent company of The Landing Dispensary, which has five retail locations in Ohio. "[People] are scared or concerned about what this is going to look like and how it's going to be regulated."

McCourt said that he has found municipalities with existing medical dispensaries tend to be less apprehensive

"They know these businesses in their community. We interact with them, we employ a good amount of folks in the local community. We have a lot of patients—some that may be on the city councils—that come and visit our stores," he said. "And so I think the temperature comes down a little bit once they can actually get over that fear of the unknown and actually experience that this is a really great business. And it's kind of just like other businesses, except there's a lot more regulation and compliance and a lot more tax revenue that benefits the city."

Still, municipal opt-outs are not unusual throughout the U.S., where roughly 50% of localities in states with adult-use cannabis programs prohibit sales, according to CBT research. Among states that have commenced adult-use cannabis sales, Maryland and New Mexico are the only two that don’t allow for municipalities to ban commercial retail operations, although they can establish zoning restrictions for where dispensaries can operate.

RELATED: 'State-Legal' Cannabis Is Not What It May Seem

Ohio’s 47 localities with cannabis moratoriums, primarily Cleveland and Cincinnati suburbs, account for more than 1 million of the state’s residents, including five jurisdictions with more than 50,000 people—Hamilton, Kettering, Lakewood, Washington Township and West Chester Township—according to OSU’s DEPC. There are 924 incorporated municipalities and 1,307 townships in the state, according to DEPC.

Located west of Cleveland, Lakewood has two RISE medical cannabis dispensaries owned by Chicago-based Green Thumb Industries, one of the largest cannabis operators in the world with $1.1 billion in revenue in 2023. Lakewood’s current cannabis moratorium is through July 31, 2024.

In the cannabis industry, a dispensary’s convenient location—its distance from where one lives or works—trumps product variety, brand preference and price points as the most influential factor for where cannabis consumers shop, according to Brightfield Group.

This accessibility is a key ingredient to the success of a regulated cannabis market with regard to outperforming an unlicensed market, where products are not held to the same strict government oversight that help ensure consumer safety.

There are also certain economic variables at play. In neighboring Michigan, for example, the licensed cannabis market provides for nearly 36,000 jobs as of March 31, according to the state’s Cannabis Regulatory Agency.

“Because cannabis businesses advance economic development in myriad ways, municipalities and townships considering moratoriums need to weigh not only public health and public safety concerns, but also the potential benefits of economic development, job creation, and tax revenue,” according to the DEPC.

In addition to Lakewood, two other Ohio cities with active cannabis moratoriums have existing medical cannabis dispensaries—Beavercreek and Monroe—according to the DEPC.

Beavercreek, a city of roughly 47,000 people in the Dayton metropolitan area, has one medical cannabis dispensary operated by Harvest of OH, a Black-owned business that also has retail facilities in Athens and Columbus.

And Monroe, a city of roughly 15,000 people just north of Cincinnati, has four medical cannabis dispensaries, including:

• two Shangri-La Dispensaries retail facilities owned by a Missouri-based company;
• one The Landing Dispensary location, owned by Ohio-based Firelands Scientific; and
• one Columbia Care dispensary that’s owned by New York-based The Cannabist Co.
  

Shangri-La has four retail locations in Ohio, but its “superstore” in Monroe is the company’s largest dispensary in the state.

“We know from talking to customers at our four Ohio locations that people want access to safe, affordable and convenient cannabis products throughout the state,” Shangri-La CEO Nevil Patel told CBT. “We’re planning to open four more locations in Ohio this year to meet that demand.”

Those additional locations are still being considered based on customer needs, community support and local laws, he said.

Not only do municipalities that enact moratoriums on licensed cannabis sales leave the door wide open for the unregulated market to fill in the access gaps, but these municipalities also miss out on tax revenue.

Included under Ohio’s voter-approved adult-use cannabis tax structure is a 10% excise tax at retail, a 5.75% state sales tax and a maximum 2.25% local sales tax.

If Ohio follows the same trajectory as neighboring Michigan, which recorded just shy of $3 billion in adult-use sales in 2023—its fourth full year of an adult-use marketplace—then that 2.25% local sales tax would generate $67.5 million in annual revenue for municipalities statewide. In Ohio, that’s roughly $5.62 per capita, which equates to more than $280,000 for a city of 50,000 people.

But that’s if all municipalities participate in the adult-use cannabis marketplace in Ohio. When a city or town chooses to place a moratorium on cannabis sales, those potential tax dollars aren’t being collected or are flowing elsewhere, like to a neighboring city’s operating budget.

Also, Ohio’s voter-approved adult-use measure created an additional incentive for cities, villages and towns to participate in the adult-use marketplace via the creation of a “host community fund.” Specifically, 36% of revenue collected from the state’s 10% excise tax will go toward supporting municipalities with dispensaries.

However, state lawmakers in Ohio have proposed changing this tax revenue allocation, shifting much of the excise tax dollars to funding for law enforcement.

“I think we've seen across the country in markets new and old that having a local buy-in is important for those localities to also benefit from it,” Goers said. “So, I certainly think it’s important that that continues.”

If the will of the voters is kept in place, the beneficiaries of Ohio’s host community fund would reap a hefty payout.

The DEPC projected in August 2023 that a legalized adult-use market in Ohio would generate between $276 million and $403 million in annual tax revenue by the fifth year of commercial cannabis operations.

Editor-in-chief Michelle Simakis contributed to this report.