Ohio’s Cannabis Market 2024: Opportunities and Challenges

After legalizing adult-use cannabis in the November 2023 election, Ohio began adult-use (non-medical) cannabis sales on August 6, 2024. 

Since launching, Ohio’s new adult-use cannabis market has seen robust growth, with nearly $90 million in sales recorded in the first seven weeks, and a total of $155 million at the time of this writing. The first-mover advantage went to already-operating medical cannabis operators. Those dispensaries have recorded $1.9 billion in sales since the medical cannabis program began in 2019. 

Some in the industry have noted that Ohio’s adult-use market is off to a slow start compared to other states’ launches. Nonetheless, the expansion of the Ohio cannabis industry has created both significant opportunities and notable challenges for operators entering this new landscape. 

Market Potential and Consumer Demand

Ohio is home to more than 11.5 million residents, making it one of the most populous states to legalize adult-use cannabis. The dense population and pent-up demand have fueled robust early sales. The average retail price per gram of cannabis flower was $17.90 in October 2024, according to industry data provider Headset. 

Projections estimate the market will generate several hundred million dollars annually, to eventually become a $2.1 billion yearly market at full maturity, Headset reports. This will foster economic growth not only for license holders but also the ancillary businesses that serve cannabis operators. 

Licensing and Regulatory Framework

Dual-Use Licenses

More than 120 dispensaries are operational and are licensed to sell non-medical cannabis. These medical cannabis businesses benefited from streamlined eligibility for dual-use licenses (medical and non-medical), as have the state’s cultivators and processors. 

Equity Initiatives + Additional Licenses 

The Division of Cannabis Control (DCC) will allocate 50 dispensary and 40 cultivation licenses for social equity applications, per the Cannabis Social Equity and Jobs Program that was passed in the state’s referendum. 

“Following 24 months from the first date of issuance of a non-medical cannabis operator license, the DCC must review the number of licenses on a biannual basis and may authorize additional licenses,” according to the Department of Commerce. 

In the short term, operators will need to look to acquisition opportunities to enter the Ohio cannabis market. For example, earlier this month, multi-state operator TerrAscend inked a $103 million agreement to expand its Ohio presence by acquiring Ratio Cannabis LLC. 

Financial and Operational Challenges 

Taxation

Cannabis businesses in Ohio are subject to federal tax restrictions under IRS Section 280E, which prohibits standard business deductions and increases financial strain. Combined with state and local taxes, this creates a significant hurdle for operators trying to maintain profitability. Consumers pay a 5.75% state tax for non-medical cannabis, as well as a 10% excise tax. 

Banking Access

Like many states, Ohio’s cannabis businesses face limited access to banking services due to federal restrictions. While some specialized institutions offer tailored financial solutions, many companies are forced to operate largely on a cash basis, which increases  security risks and operational inefficiencies.

Compliance Costs

Not unlike other state adult-use programs, Ohio’s stringent regulatory requirements come with associated costs, including compliance auditing, legal consultation, and operational adjustments. These expenses add to the financial burdens already imposed by taxation and limited banking options.

An Adult-Use Market Operating Under Medical Rules 

Despite the legalization of recreational cannabis in Ohio, adult-use regulations have not yet been fully implemented. 

While the state has begun allowing recreational sales through dual-use licenses for existing medical dispensaries as outlined above, the comprehensive framework for adult-use cannabis businesses is still under development. 

Key areas such as license application processes, testing requirements, packaging standards, and marketing restrictions remain under review by state regulators. 

The DCC is expected to release detailed rules and guidelines in the coming months, but until then, businesses must operate with limited clarity, rely on interim guidance, and adapt as new updates are issued.

Conclusion

Ohio’s cannabis market stands out as a promising opportunity for businesses willing to navigate its challenges. With strong early sales figures, a supportive regulatory framework, and a growing consumer base, the state is well-positioned to become a leading cannabis market in the Midwest. However, operators must remain vigilant about compliance, taxation, and banking limitations to thrive in this competitive environment.

Partnering with an experienced cannabis accounting firm is key to staying compliant and optimizing financial performance in this evolving market. 

For audit and assurance solutions, tax planning and compliance, and business solutions–cannabis businesses in New Jersey can turn to CJBS for assistance. Learn more about our cannabis practice and leaders Matt Bergman, CPA, and Ryan Guedel, CPA here.