Nearly five years after the first marijuana stores opened in Michigan, Ohio joins the growing number of U.S. states that sell cannabis for recreational purposes.
The Ohio market launched on Tuesday, August 6, with 120 stores allowed to sell marijuana to adults 21 and older with valid identification.
In the first five days, sales in Ohio totaled $11.5 million, an average of nearly $2.3 million per day, according to data from the Ohio Department of Commerce. In Michigan, marijuana sales are generating nearly $9 million per day, more than three times the average daily sales in Ohio.
While sales in Ohio are significant, the new competition from the South has gone largely unnoticed in the Michigan market – even by stores near the border that depend on sales to Ohioans.
“We’re not too worried about it right now,” says Camden Miller, manager of the Pinnacle Emporium in Morenci, Lenawee County, on the Ohio border. “Supply and demand are not yet in line in Ohio, and just like in Michigan … prices aren’t going to go down until there’s oversaturation.”
“I am sure it will have a bigger impact in the coming years.”
The Ohio State Budget Office projects that marijuana sales will reach $1.5 billion in the first year and result in new excise taxes of nearly $150.
Ohio has only a few stores open within a half-hour drive of the Michigan border—two in Toledo, Ohio, and one in Bowling Green, Ohio—but the state’s Department of Cannabis Control plans to approve more stores opening in the future.
In the meantime, Miller said, Ohioans appear willing to travel further for the offerings and choices in Michigan.
A large portion of Pinnacle Emporium’s sales come from outside Michigan, including Ohio, where customers often “stock up,” placing orders averaging over $100, sometimes nearly $1,000.
Miller said shops in Ohio are selling 1/10 ounce (1.6 grams) of flower for nearly $50.
“We’re selling eighths (2 grams) here for only $8,” he said. “We’ve already had customers come in and say the prices in Ohio are crazy right now.”
According to an MLive comparison of available online prices, the price for an ounce of flower in Ohio is regularly at least twice as high.
A store in Toledo, Ohio, is offering 14-gram jars of marijuana for $170, while the average retail price for flower in Michigan fell to a record low of just under $80 an ounce in July, according to sales data from the Michigan Cannabis Regulatory Agency (CRA).
Ohio retail data shows that the average retail price for an ounce of marijuana during the first five days of sales was about $266.
When the market first opened in Michigan, supply and competition were limited, resulting in the average retail price for an ounce of marijuana being over $500.
Although prices vary widely, tax structures in Ohio and Michigan are similar, although in some cases they are slightly higher in Ohio.
Both states impose a 10% excise tax on recreational marijuana. However, Michigan’s flat 6% sales tax is sometimes lower than Ohio’s sales tax, which consists of a 5.75% state sales tax and varying local sales taxes.
“I think a lot of people do the mental math: Is the drive time greater than the (additional cost) of driving somewhere in their community in Ohio,” said Harrison Carter, manager and co-owner of NAR Cannabis, which has a location in Monroe, about 12 miles north of the Ohio border. “There’s such a big price discrepancy between the oversupply in Michigan and the undersupply that currently exists in Ohio that consumers are basing their decisions very much on their budget.”
Representatives of the Michigan Cannabis Regulatory Agency declined to comment on the market opening in Ohio or predictions about the possible impact on Michigan.
“The (Ohio) Division of Cannabis Control has been closely monitoring these early days of non-medical sales and has been extremely impressed with the industry’s seriousness and responsiveness in meeting the requirements to participate in non-medical sales,” said Jamie Crawford, spokesman for the Ohio Department of Commerce. “Going forward, the Division’s top priority will continue to be the safe and legal sale and regulation of both medical and non-medical cannabis for Ohioans who choose to use it.”
Michigan matures
Michigan has a much more liberal licensing program than Ohio, which has led to strong growth since December 2019, when the first licensed companies began operations.
Since then, Michigan stores have sold nearly $10 billion worth of cannabis products, including about $1.3 billion for medical marijuana.
The recreational market is expected to generate over $3.3 billion in sales next year, and Michigan currently has more than 800 licensed cultivation and processing operations that had 1.7 million cannabis plants in the pipeline (as of July).
The Ohio Department of Commerce website this week listed 46 licensed processors, 37 growers and 120 licensed stores.
As of August 1, there were 817 licensed retailers, 269 processors and 1,026 separate cultivation licenses in Michigan.
In Ohio, the Division of Cannabis Control, created through a November 2023 referendum and approved by 57% of voters, acts as a central state-level clearinghouse for all new licenses, similar to a state liquor control commission. However, local communities in Ohio can also enact zoning ordinances or moratoriums that block marijuana trade.
In Michigan, individual cities, towns and villages determine where and how many of the various license types they allow, or they ban marijuana sales altogether. State regulators simply ensure that businesses meet operational requirements.
“Michigan was an unlimited license state based on a city ordinance,” Carter said. “Ohio is a limited license state, so they are much more targeted in the number of licenses issued.”
The Michigan model has resulted in stores being concentrated in communities where recreational marijuana sales are permitted, often along the border. For example, Monroe, near the Ohio border, has 18 licensed marijuana stores despite a relatively small population of about 20,300. In Morenci, there is one marijuana store for nearly 450 residents.
Michigan’s more liberal licensing program has created unique market conditions, including low prices and high sales.
Michigan has issued 1,017 retail licenses since the market’s inception, 829 of which are still active, according to a state license search. Nearly 20% of all retail licenses issued no longer exist.
Michigan retailers who spoke to MLive say the competitive market benefits customers by giving them a variety of options at low prices. Critics believe the market structure could lead to unnecessary volatility, a decline in product quality and what’s called a “race to the bottom.”
For now, the Michigan market remains attractive to residents from other states, said the NAR’s cannabis manager.
“We’re very focused on ourselves here in Michigan,” Carter said. “We continue to provide not only good service, but good products at affordable prices…
“We are in a period of oversupply and can achieve certain prices that many Ohio consumers have become accustomed to.”
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