Ohio cities with marijuana dispensaries won’t receive tax money until lawmakers agree on changes to Issue 2, which voters approved in 2023

• Ohio is withholding tax revenue from cities with marijuana dispensaries until state lawmakers agree on cannabis and hemp regulations.
• Local governments express frustration over the withheld funds, while state officials claim they lack the constitutional authority to release the money without a specific appropriation.
• The debate over marijuana and hemp regulation will continue in the fall.

Ohio will continue to withhold money from cities with marijuana dispensaries after Republican efforts to change cannabis and hemp laws came up empty.

The two-year budget approved by the House and Senate maintains current funding for municipalities, which is 36% of the tax revenue from adult-use cannabis sales. But lawmakers won’t release that money until they reach an agreement on rules for marijuana and intoxicating hemp products.

Republicans hoped to have a deal on marijuana before the Legislature’s summer break, but it didn’t happen − punting the issue to later this year. Local leaders say that puts them in the difficult spot of trying to fund services without money they were promised.

“What they’re saying is if we can take your lunch money, we will,” said David Kubicki, chairman of Columbia Township Trustees.

Ohio lawmakers reach impasse on marijuana, hemp

As approved by voters in 2023, Issue 2 divides marijuana revenue between local communities, a social equity program, substance use research and administrative costs. The budget keeps local funding in place and directs the rest to Ohio’s general bank account.

Republicans pledged early on to dismantle the social equity program, which aimed to diversify the industry and right the wrongs of cannabis prohibition. State regulators have allowed the program to languish amid uncertainty about its future.

But that’s not the only part of Issue 2 lawmakers want to change.

The House and Senate spent months negotiating over Senate Bill 56, which would revise Issue 2 and govern gray market cannabis such as delta-8. The latest version regulates the gifting of home-grown cannabis, allows up to 400 dispensaries and permits smoking only at private residences and outdoor concert venues.

“We need to specify that they can have more dispensaries, for example, rather than a tightly locked number,” Rep. Jamie Callender, R-Concord, said. “The only way we’re going to drive the price down to be more competitive with other states is to have more dispensaries.”