Record-Breaking Cannabis Sales In Ohio Mask Stagnating Growth Rate: What's Behind The Numbers?

Ohio medical cannabis sales hit a new record with $484.4 million worth of products sold in 2023, according to the Ohio Department of Commerce.

A recent Crain’s analysis highlighted that's an increase of only 1.2% year-over-year, suggesting the market has been stagnant over the period. Even though annual sales had an upward trend since its launch statewide, the annual financial growth rate has been simultaneously dropping, according to the analysis.

Medical cannabis became legal in the Buckeye State in 2016 after then-Gov. John Kasich signed House Bill 523 into law. Sales kicked off in January 2019. In the first year of the state’s medical marijuana program, Ohio faced challenges such as patient dissatisfaction, license delays and high prices, among others. Dollar-wise, revenue surged 297% in 2020.

However, in 2021, 2022, and 2023, year-over-year revenue increases equaled to 72%, 26% and 1%, respectively.

Even though a slowdown in growth trends can be attributed to the market’s maturation, some question it.

"One percent growth in a five-year-old medical market is a major concern, especially when licensees have had to ship 20% to 30% more product to keep up with 2022," Andy Rayburn, Buckeye Relief's CEO and president of the Ohio Cannabis Coalition, said.

The state data suggest that in 2023 Ohio cannabis operators sold 39% more plant material, such as flower, and 25% more manufactured products than in 2022. In the meantime, the average flower retail price dropped by 37% between January 2022 and December 2023.

Positioning For Rec Sales Launch

"Buckeye Relief and Amplify are doing fine, but our returns are greatly reduced from the prior three years," Rayburn said. "Our focus has been to keep market share and shelf space because eventually there will be a recreational program."

In November, Ohio voted overwhelmingly to legalize adult-use marijuana use despite vocal opposition from Republican Gov. Mike DeWine. The law took effect on Dec. 7, while recreational marijuana sales have not yet kicked off.

Two two competing bills that have been introduced after Issue 2 got the green light, House Bill 86 and House Bill 354 are still advancing through the state legislature and seek to address the details around the upcoming recreational cannabis market launch.

In the meantime, operators like Green Thumb Industries Inc. GTBIF, Curaleaf Holdings Inc. CURLF and Cresco Labs Inc. CRLBF, are not wasting time and are positioning for the new opportunity.

Cresco's CEO Charlie Bachtell called Ohio’s legalization of recreational marijuana a “tipping point.”

"It is clear when cannabis is on the ballot — people turn out to vote — and we commend the people of Ohio for raising their voices on an important issue that has helped break down barriers of partisanship in states across the country,” Bachtell said in a statement. “Now, over 85 percent of the U.S. population lives in a state with some form of legal cannabis, and over 50 percent reside in a state with adult-use cannabis —the tipping point has been reached.”

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