The campaign to legalize marijuana in Ohio released a new ad Wednesday, drawing attention to potential tax revenue lost by the state when residents travel to nearby states like Michigan to buy cannabis.
The message comes just days after a new economic analysis found that the ballot initiative, Issue 2, would likely produce around $260 million in net benefits to the state on an annual basis.
“Although there is a chance the costs outweigh the benefits,” Scioto Analysis said this week, “our simulation model suggests that in 90 percent of likely scenarios, recreational marijuana legalization will have a positive net economic benefit on society.” What’s more, the model predicted that “extremely positive results are more likely than extremely negative results.”
Overall, 90 percent of modeled scenarios projected outcomes ranging from a $150 million net loss for Ohio to a net gain of $1.9 billion.
The new ad from the Campaign to Regulate Marijuana Like Alcohol, the main backer of Issue 2, focuses on how much money is currently lost when Ohioans travel to neighboring Michigan, where cannabis is legal. It’s produced as though it’s from Morenci, Michigan—the southernmost city in the state, sitting close to the border with Ohio.
“We’re only 2,000 people, but we have five marijuana shops, and we’re here to serve Ohio!” the spot says. “That’s right—Ohioans are flocking to Michigan to buy marijuana. Just look at all these Ohio license plates.”
The ad notes that when Ohioans shop in Michigan, their tax dollars go to support the neighboring state’s schools, roads and other investments.
“Take it from Morenci, Michigan,” it concludes: “We sure hope Ohio lets us keep Ohio’s tax money.”
Tom Haren, a spokesman for the campaign, said in a press release that “like all Ohioans I want to see my tax dollars stay in our state and go toward making our communities stronger.”
“Ohioans can deliver a blow to ‘That State Up North’ by voting yes on Issue 2,” he said.
Meanwhile, tax revenue is a major piece of Scioto’s 13-page economic analysis. Most benefits from Issue 2, it says, would flow from its 10 percent tax on marijuana products, which is estimated to bring in $190 million in tax revenue. (A separate analysis published in August by Ohio State University researchers found the change could bring in $404 million in annual tax revenue.)
Other chief considerations include impaired driving, employment and crime.
“The key reason benefits are likely to outweigh costs when it comes to marijuana legalization is how the tax dollars raised are going to be used,” Michael Hartnett, a policy analyst for Scioto, said in a statement. “The programs outlined in the ballot initiative have historically been very efficient ways to use public dollars, and will likely generate a lot of value for Ohioans.”
Investments in job training and addiction recovery programs, in particular, would yield significant returns, the report says. Of the projected $190 million in annual tax revenue, for example, about $67 million would flow to a proposed Cannabis Social Equity and Jobs Fund—which Scioto says would create $390 million in benefits. Putting $46 million into a separate proposed Substance Abuse Addiction Fund, meanwhile, would generate $430 million in benefits.
Issue 2 would also create about 3,300 jobs in the first year after legalization, the analysis found, which would make for roughly $190 million in wage benefits for workers across the state.
New analysis: recreational marijuana legalization in Ohio will generate hundreds of millions in benefits. https://t.co/MQMyGtdk4H
— Rob Moore (@RobMoorePayLess) October 24, 2023
In terms of crime, fewer people will be arrested as the result of ending prohibition in Ohio, the report says—a benefit to society “because arrests are costly for both law enforcement and the people being arrested.” Using data from the ACLU, the report estimates that each marijuana-related arrest costs taxpayers about $4,400. For individuals, being prosecuted on marijuana-related charges costs an average $10,900 in the form of attorney fees, lost wages and other expenses, the report says.
Legalization in Ohio would likely mean 4,400 fewer arrests per year, Scioto found, amounting to about $38 million in annual savings.
One source of social costs from legalization, the report says, could be lower worker productivity. “If legalizing recreational cannabis will lead to increased consumption,” it says, “then it will also lead to lower productivity.”
Drawing from a 2017 report, Scioto’s report says that across four industries—mining, arts and entertainment, construction and hospitality and food service—average productivity fell by just over 1 percent in states that legalized adult-use cannabis. While those inefficiencies might be worked out in the long run, it continues, legalization in Ohio could lead to about $760 million in lost productivity during the first year of legalization.
That said, a 2021 study published by the National Bureau of Economic Research found that legalizing marijuana for adult use is associated with an increase in workforce productivity and decrease in workplace injuries.
Impaired driving, which the Scioto report says increased by 16 percent in Colorado after legalization, could be another added cost. Analysts predicted that Ohio would see 1,700 more instances of operation of a vehicle while intoxicated (OVIs) each year and lose about $130 million annually as a result.
Here are the key provisions of the legalization ballot measure on the November 7 ballot:
- The initiative would legalize possession of up to 2.5 ounces of cannabis for adults 21 and older, and they could also have up to 15 grams of marijuana concentrates.
- Individuals could grow up to six plants for personal use, with a maximum 12 plants per household.
- A 10 percent sales tax would be imposed on cannabis sales, with revenue being divided up to support social equity and jobs programs (36 percent), localities that allow adult-use marijuana enterprises to operate in their area (36 percent), education and substance misuse programs (25 percent) and administrative costs of implementing the system (three percent).
- A Division of Cannabis Control would be established under the state Department of Commerce. It would have authority to “license, regulate, investigate, and penalize adult use cannabis operators, adult use testing laboratories, and individuals required to be licensed.”
- The measure gives current medical cannabis businesses a head start in the recreational market. Regulators would need to begin issuing adult-use licenses to qualified applicants who operate existing medical operations within nine months of enactment.
- The division would also be required to issue 40 recreational cultivator licenses and 50 adult-use retailer licenses “with a preference to applications who are participants under the cannabis social equity and jobs program.” And it would authorize regulators to issue additional licenses for the recreational market two years after the first operator is approved.
- Individual municipalities would be able to opt out of allowing new recreational cannabis companies from opening in their area, but they could not block existing medical marijuana firms even if they want to add co-located adult-use operations. Employers could also maintain policies prohibiting workers from consuming cannabis for adult use.
- Further, regulators would be required to “enter into an agreement with the Department of Mental Health and Addiction Services” to provide “cannabis addiction services,” which would involve “education and treatment for individuals with addiction issues related to cannabis or other controlled substances including opioids.”
- With respect to social equity, some advocates are concerned about the lack of specific language on automatic expungements to clear the records of people with convictions for offenses that would be made legal under the legislation. That said, the measure does include a provision requiring regulators to “study and fund” criminal justice reform initiatives including expungements.
Surveys of likely Ohio voters—as well as lawmakers—suggest that Issue 2 will pass at the ballot box next month. A recent survey of likely voters found that 57 percent supported the legalization measure, including a slim majority of Republicans. Another survey of 35 state lawmakers found that majorities of both Democrats (63 percent) and Republicans (52 percent) expected voters to approve the measure.
But while Ohio lawmakers might expect the initiative to pass, many Republican elected officials don’t want it to. As early voting kicked off this month, the GOP-controlled Senate passed a resolution urging residents to reject measure.
State Sen. Mark Romachuk (R), meanwhile, has warned that passing Issue 2 would lead to more problems for children, on roadways and at work. “This creates challenges to maintaining safe workplaces, especially in industries that require high alertness and precision like Ohio’s manufacturing businesses,” he said, according to local media reports. “These concerns have led the Ohio Chamber of Commerce, the Ohio Manufacturers Association and the Ohio Business Roundtable to oppose legalizing recreational marijuana.”
Romachuk also criticized the initiative’s proposed 10 percent tax as too low. “The 10 percent tax the marijuana industry has written for itself would be one of the lowest in the country, with no money earmarked for the counties that administer the human services programs which will have to manage the increased abuse and addiction,” he said.
If the measure does pass, Senate President Matt Huffman (R) said earlier this month, it’s “coming right back before this body” for lawmakers to amend. Huffman later clarified that he wouldn’t seek to repeal the legalization plan entirely but would instead “advocate for reviewing it and repealing things or changing things that are in it.”
A number of Ohio lawmakers said last month that they doubted the legislature would seek to repeal a voter-passed legalization law. “There are not a majority of legislators in both chambers that would be pro-repeal,” Rep. Ron Ferguson (R) told The Dispatch. “That’s definitely not the case. You would have no Democrats, and there are not enough Republicans to put them in the top.”
Both sides of the campaign have been stepping up messaging and get-out-the-vote efforts as the election draws nearer. Earlier this month, the yes campaign sent cease and desist letters to TV stations airing what organizers called opposition advertisements “filled with lies.” And the Campaign to Regulate Marijuana Like Alcohol put out a pro-Issue 2 election ad of its own.
Attorney General Dave Yost (R), meanwhile, published an analysis of the initiative that he said is meant to provide voters with “vital clarity and transparency” amid a campaign that has seen “inflamed and inaccurate” rhetoric.
Despite the GOP-led resolution, other Republicans officials in Ohio remain divided on the issue. Gov. Mike DeWine (R) said in August, for example, that he believes “it would be a real mistake for us to have recreational marijuana,” adding that he visited Colorado following its move to legalize in 2012 and saw what he described as an “unmitigated disaster.”
Sen. John Hickenlooper (D-CO), who was Colorado’s governor in 2012, said last year that while he was initially concerned that legalization would encourage more use by young people, he came to believe those worries were unfounded.
“I think we’ve proven and demonstrated that there is no increase in experimentation among teenagers. There is no change in frequency of use, no change in driving while high,” Hickenlooper said. “All the things we most worried about didn’t come to pass.”
Unlike the top state Republican lawmakers, U.S. Rep Dave Joyce (R-OH), co-chair of the Congressional Cannabis Caucus, said last month that he’ll be voting in favor of the initiative in November. And he encouraged “all Ohio voters to participate and make their voices heard on this important issue.”
The Ohio Ballot Board approved summary language for the legalization measure in August.
If the initiative becomes law, it would bring the total number of states with adult-use legalization to 24.
Ohio voters rejected a 2015 measure, on a 64–36 vote, that would have amended the state’s constitution to legalize marijuana and give control of the market to a small group of producers. Organizers for the current campaign said they drew on lessons learned from that failure in crafting the current initiative.
Bipartisan Ohio lawmakers filed a separate bill to legalize marijuana in May, offering the legislature another opportunity to take the lead on the reform. But it has yet to advance, and now the stage is set for voters to make the choice.
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