Marijuana tax money finally arrives for Elyria, other cities

More than two years after Ohioans voted to legalize recreational marijuana sale in Ohio, Elyria has finally begun to receive the tax money the state has held since sales began. Republicans in Columbus touted the release of the money last week as a boon to communities, but State Rep. Joe Miller, D-Amherst, argued that the use of marijuana tax money approved by the legislature abandons important aspects of the marijuana regulation passed by voters two years ago. Elyria Finance Director Ted Pileski announced during a City Council committee meeting on Monday that Elyria would receive $373,984.38 in revenue from the past 16 months of cannabis sales in the city. If sales continue at the same average rate, Pileski said, the city should expect about $23,000 per month. "Evidently, business is good," Pileski said after the meeting. The money was finally released after Gov. Mike DeWine signed Senate Bill 56 last month, and Elyria will now receive payment for marijuana tax revenue at the end of every month. Adult-use marijuana was legalized in Ohio by an amendment to the Ohio Revised Code called Issue 2 that passed with 57 percent of the vote in November 2023. It legalized marijuana sales to individuals 21 and older, created a state Division of Cannabis Control and placed a 10 percent tax on all marijuana sales. Of this tax, 36 percent of the proceeds were designated to go to the municipality wherein the marijuana sale occurred. Despite this, since marijuana sales began in Ohio in August 2024, the state had not released any of the funds designated for local governments as legislators argued over how, and even if, to enact the amendment. That changed last week. State Sen. Steve Huffman, R-Tipp City, announced Friday that pursuant to the passage of Senate Bill 56, the state would begin releasing the nearly $12 million owed to local municipalities. "Local governments who chose to let these businesses into their city will now see the funding these dispensaries generate returned to their cities to be used how they wish," Huffman said in a release on Friday. "Making sure both state and local governments see the revenue from these new businesses is what the voters approved of in Issue 2. I'm proud to see this funding distributed across Ohio and look forward to seeing the ways these funds will benefit local communities." Senate Bill 56 does differ substantially in multiple ways from the policy proposal stated in the issue passed by voters in 2023. This was allowed because the measure that passed was not a constitutional amendment, but a citizen initiative. Miller said that although the bill did release money to the communities that are entitled to it, the changes made to Issue 2 by Republicans completely removed two other funding categories that were laid out in the initiative. These other two funds, Miller said, were abandoned in Senate Bill 56 and the balance of the marijuana income was moved to the general fund. Issue 2 instructed the state to commit 36 percent of cannabis tax revenue to a Cannabis Social Equity and Jobs Fund and 25 percent to a Substance Abuse and Addiction Fund in addition to the 36 percent designated for host communities, according to Ohio State University's Moritz College of Law. "The speaker and the (Republican) leadership would not let us know how much money was in this fund from cannabis sales, so they could use it as leverage to get us to vote in support of changing the people's initiative," Miller said Monday. "Democrats didn't bite, we didn't trust it and we voted no on Senate Bill 56. And we were correct that they were not going to live up to the spirit and the intent of the initiative, because they are holding back two-thirds of the tax money to backfill the gap from giving tax cuts to the rich in Ohio. … Once again, Columbus believes they know what is best for Ohioans." Two other examples of changes added by the bill to Ohio's regulations include the banning of the sale of "intoxicating hemp products" outside of dispensaries and making it illegal to bring marijuana legally purchased in another state into Ohio. Dennis Willard, spokesperson for Ohioans for Cannabis Choice, told The Ohio Capital Journal that the bill DeWine signed went against what voters supported in 2023, and said his organization was planning a referendum attempt to reverse it. "S.B. 56 forcefully defies the will of the voters of Ohio," Willard told the OCJ. "We believe voters will say no to government overreach, no to closing 6,000 small businesses and pink-slipping thousands of workers across the state, and no to once again re-criminalizing hemp and marijuana." The fight over how to enact legalization has been frustrating for cities like Elyria, Mayor Kevin Brubaker said, that have watched marijuana dispensaries open and do brisk business while the income the city should be receiving sat in Columbus in limbo. "There was talk about lowering the percentage (of tax to municipalities), there was talk of paying us moving forward, but not giving us what had already been collected," Brubaker said. "Through the Ohio Mayor's Alliance and mayors testifying or just speaking with state reps, it was very obvious that this was the direction it needed to go. The residents of Ohio spoke, and this is what they wanted (legalization) to do." Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.