Ohio’s Cannabis Market in 2026: Growth, Constraints, and What Comes Next

Ohio’s cannabis market has moved quickly since adult-use sales launched in August 2024. What began as a tightly controlled rollout is now a billion-dollar market grappling with the realities of price compression, regulatory tightening, and uneven local access.

As we head into 2026, operators and investors are no longer asking whether demand exists—it clearly does. The more pressing questions are about margin sustainability, regulatory risk, and how policy decisions at the state and federal level will shape profitability in the years ahead.

This update takes a closer look at where Ohio’s cannabis market stands today and what businesses should be paying attention to next.

Adult-use sales surpassed $1 billion, confirming strong demand

Ohio crossed a major milestone in its first full year of adult-use sales. According to MJBizDaily, the state generated more than $1 billion in combined medical and adult-use cannabis sales, with adult-use accounting for the majority of growth in 2025.

This level of demand puts Ohio among the stronger Midwest markets and reinforces that consumer adoption has been swift—even with limited retail density and ongoing local restrictions.

Data from Headset further illustrates the trajectory. By December 2025, Ohio posted over $100 million in monthly cannabis sales, with unit sales up significantly year-over-year while average item prices declined, a typical sign of a market entering its competitive phase.

For operators, this combination of high demand and falling prices marks the transition from launch dynamics to margin-driven operations.

Prices are falling, but consumers still feel the strain

While prices are trending downward, Ohio remains expensive in the eyes of many consumers, particularly when compared with nearby states like Michigan.

Local reporting has pointed to high effective prices, limited promotions, and restricted marketing channels as factors dampening enthusiasm for some consumers and slowing broader market normalization.

This pricing pressure is showing up clearly in operator financials. As wholesale and retail prices compress, businesses are discovering that early revenue growth does not automatically translate into profitability—especially when layered with high operating costs and Section 280E limitations. (We discuss 280E further below.) 

Local moratoriums continue to limit retail expansion

Despite legalization, access remains uneven across the state.

More than two years after voters approved adult-use cannabis, over 130 Ohio municipalities continue to maintain local moratoriums on adult-use dispensaries, according to Cannabis Business Times.

Polling suggests public sentiment may be shifting. The same reporting notes that a majority of Ohioans favor allowing dispensaries in their communities, even as local bans persist.

For operators, these moratoriums have real financial implications:

• Existing dispensaries in open jurisdictions may carry outsized revenue expectations
• Expansion plans are often constrained by geography rather than capital
• Acquisitions and license transfers remain one of the more viable paths to scale

SB 56 reshaped the market, especially for intoxicating hemp

One of the most consequential developments heading into 2026 is Senate Bill 56, signed into law by Governor Mike DeWine in December 2025.

SB 56 introduced sweeping changes, including:

• A ban on most intoxicating hemp products outside of licensed marijuana dispensaries
• New restrictions affecting THC potency limits
• Updated packaging, transport, and compliance requirements
• Clarifications around what qualifies as legal hemp under Ohio law

These changes effectively shut down much of the previously unregulated hemp-derived THC market and redirected consumer demand toward licensed cannabis operators—while simultaneously raising compliance expectations.

An effort to repeal or alter these changes through a voter referendum recently stalled when Ohio Attorney General Dave Yost rejected the proposed ballot language, citing deficiencies that must be corrected before the process can move forward.

For now, SB 56 stands, and operators should assume regulatory stability in the short term, even as legal challenges continue.

Tax structure and 280E remain central to profitability

Ohio’s adult-use cannabis sales are subject to a 10% excise tax, in addition to standard state and local sales taxes. Portions of this revenue are earmarked for community reinvestment and public programs, but for operators, the tax burden adds to already thin margins.

More significantly, IRS Section 280E continues to limit deductions for cannabis businesses at the federal level. While federal rescheduling discussions continue, Section 280E could remain in effect for a portion of 2026, with relief possible only for periods following a final ruling. 

This means profitability in Ohio increasingly depends on:

• Accurate inventory costing
• Proper capitalization of allowable costs
• Clean, audit-ready financials throughout the year, not just at tax time

Federal rescheduling remains uncertain

While there has been renewed attention at the federal level—including late-2025 executive actions related to cannabis scheduling—rescheduling is still not a certainty, nor is its timing.

For Ohio operators, this makes conservative planning essential. Relief from 280E could be meaningful if it materializes, but it should not be assumed in 2026 budgets or valuations.

What Ohio cannabis operators should focus on in 2026

As the market matures, the most successful operators tend to focus less on top-line growth alone and more on fundamentals:

• Margin management and cost discipline
• Regulatory compliance under SB 56
• Cash flow forecasting in a price-compressed environment
• Strategic expansion within moratorium-constrained markets
• Tax planning that reflects the realities of 280E

Ohio’s cannabis market has proven its demand. The next phase will reward businesses that treat cannabis like the regulated, capital-intensive industry it is.

How CJBS supports cannabis operators

CJBS works with cannabis businesses across Ohio and beyond, providing tax, audit, and advisory services designed for regulated operators navigating evolving state rules, federal tax constraints, and complex growth decisions.

If you have questions about tax planning, compliance readiness, or financial strategy in Ohio’s cannabis market, our team is here to help.