The Ohio Department of Commerce stated that medicinal cannabis sales in Ohio reached a new high in 2023, totaling $484.4 million. Nonetheless, a recent Crain's research shows a meagre 1.2% gain over the previous year, pointing to a sluggish market trend. A parallel reduction in the yearly financial growth rate over time is revealed by the data, despite an initial upward trajectory in annual sales since its statewide introduction.
In 2016, House Bill 523 was signed into law by then-Gov. John Kasich, legalizing medicinal cannabis in Ohio, sometimes referred to as the Buckeye State. The state's medicinal marijuana program encountered difficulties in its first year, including patient discontent, licensing delays, and high costs. Sales of medical marijuana officially began in January 2019. In 2020, income increased by an astounding 297%.
However, subsequent years showed diminished year-over-year revenue increases, with 2021, 2022, and 2023 witnessing growth rates of 72%, 26%, and 1%, respectively. Despite a perceived slowdown attributed to market maturation, concerns have been raised.
Andy Rayburn, CEO of Buckeye Relief and president of the Ohio Cannabis Coalition, expressed apprehension, stating, "One percent growth in a five-year-old medical market is a major concern, especially when licensees have had to increase product shipments by 20% to 30% to keep up with 2022."
According to state data for 2023, Ohio cannabis operators saw a 39% increase in the sale of plant materials, such as flowers, and a 25% rise in manufactured product sales compared to 2022. Concurrently, the average retail price of flowers witnessed a significant 37% drop between January 2022 and December 2023.
Preparing for the Launch of Recreational Sales
Despite Buckeye Relief and Amplify maintaining stability, Rayburn notes a significant reduction in returns compared to the preceding three years. Emphasizing the importance of preserving market share and shelf space, he anticipates the eventual introduction of a recreational program.
Ohio decisively voted in favor of legalizing adult-use marijuana in November, despite opposition from Republican Gov. Mike DeWine. The law officially came into effect on December 7, yet recreational marijuana sales have not begun.
Following the approval of Issue 2, two competing bills, House Bill 86 and House Bill 354, are currently advancing through the state legislature. These bills aim to address the intricate details surrounding the upcoming launch of the recreational cannabis market.
In the meantime, proactive operators like Green Thumb Industries Inc. (OTC: GTBIF), Curaleaf Holdings Inc. (OTC: CURLF), and Cresco Labs Inc. (OTC: CRLBF) are strategically positioning themselves for the impending opportunity.
Cresco's CEO, Charlie Bachtell, sees Ohio's legalization of recreational marijuana as a "tipping point." Recognizing the significant role of cannabis-related ballot initiatives in encouraging voter turnout, Bachtell commends the people of Ohio for addressing a crucial issue that has transcended partisan divides in states nationwide. With over 85% of the U.S. population residing in states with some form of legal cannabis and over 50% in states allowing adult-use cannabis, Bachtell believes the tipping point has been reached.
Early Struggles and Remarkable Surges
Ohio's foray into medicinal cannabis faced significant hurdles during its initial phase. In its inaugural year, challenges like patient discontent and delays in the licensing process cast shadows over the program's prospects. Patient dissatisfaction raised concerns about the acceptance of medical cannabis within the community, while licensing delays complicated the industry's early operations.
Despite these obstacles, the medicinal cannabis program showcased resilience and adaptability. The challenges of the first year were met with strategic adjustments by industry stakeholders, reflecting a determination to overcome initial setbacks. Notably, the sector experienced a transformative surge in 2020, defying early doubts. The remarkable 297% increase in income during that year underscored the industry's potential for growth and stability, offering a glimmer of hope after the tumultuous start.
The early challenges of Ohio's medical marijuana program shed light on a larger story of the industry's development. Through strategic revisions brought about by patient discontent and delays in licensing, the industry not only weathered early obstacles but emerged stronger. The exceptional 2020 result not only showed the industry's tenacity but also established it as a major participant in the changing cannabis scene, opening the door to a more promising future.
Anticipating Ohio's Recreational Cannabis Landscape
After Ohio voters approved the legalization of marijuana for adult use in a ballot held in November, the state is about to see a dramatic change in the cannabis scene. Although the law—which goes into effect on December 7—is a major step forward, recreational marijuana sales have not yet begun. Two crucial proposals, House Bill 86 and House Bill 354, are advanced by the state legislature as the regulatory framework takes shape. These laws are intended to handle the complex intricacies and rules related to the upcoming opening of the recreational cannabis market.
Industry leaders are actively preparing for the opportunities presented by Ohio's move into recreational cannabis. Proactive operators, including Green Thumb Industries Inc. (OTC: GTBIF), Curaleaf Holdings Inc. (OTC: CURLF), and Cresco Labs Inc. (OTC: CRLBF), are strategically positioning themselves to navigate the evolving landscape. The anticipation of the recreational market's launch has prompted these companies to make strategic moves, ensuring they are well-positioned to capitalize on emerging opportunities and meet the demands of a broader consumer base.
The CEO of Cresco Labs Inc., Charlie Bachtell, views Ohio's decision to legalize marijuana for recreational use as a critical "tipping point." While acknowledging the influence of cannabis-related ballot measures on voter turnout, Bachtell praises Ohioans for their contribution to tearing down party boundaries. Bachtell contends that the time has come for broader acceptance, given that more than 85% of Americans live in states where cannabis is legal in some capacity and more than 50% in states where it is legal for recreational use. This represents a turning point in the development of the cannabis market on a national scale.
Bottom Line
Ohio's medicinal cannabis market, though marking a milestone with record-breaking sales in 2023, grapples with a restrained growth rate and concerns about market maturation. The industry's journey from legalization in 2016, overcoming early struggles with a notable surge in 2020, sets the stage for a proactive response from operators preparing for the anticipated launch of recreational cannabis sales. With legislative advancements and strategic positioning by industry leaders, including Green Thumb Industries Inc., Curaleaf Holdings Inc., and Cresco Labs Inc., Ohio's cannabis landscape reflects a transformative phase. Cresco Labs Inc.'s CEO, Charlie Bachtell, underscores Ohio's recreational legalization as a "tipping point," symbolizing a broader shift in cannabis acceptance nationally, as the industry navigates challenges and steers toward a dynamic and promising future.
THE OHIO CANNABIS SCENE, READ ON...
