EXTRAS ON EXCISE: ELECTION RESULTS – OHIO VOTES NO TO MARIJUANA LEGALIZATION

Marijuana and Cash

Marijuana legalization efforts in the United States took a hit yesterday, as Ohio voters resoundingly rejected a ballot initiative that would have legalized and taxed marijuana in the state. After the votes were tallied, 64 percent of Ohioans voted no to Issue 3, with just 36 percent of voters approving the measure. 

Marijuana legalization is a contentious topic in and of itself, but there was additional controversy surrounding Issue 3 in the days and weeks leading up to the election, stemming from its creation of a “marijuana monopoly” within Ohio. 

Issue 3 would have established just 10 marijuana farms in Ohio, all run by wealthy supporters of the legalization campaign. Authorizing only 10 growers/wholesalers would have created an industry monopoly in the state, although more than the 10 wholesalers would have been allowed to apply for licenses to manufacture and sell marijuana to the public. 

The idea of a “marijuana monopoly” did not sit well with many people in Ohio, particularly state legislators.

In response to Issue 3, the Ohio General Assembly passed a joint resolution proposing its own constitutional amendment. Issue 2 prohibits individuals and organizations from proposing constitutional amendments that would create a monopoly, oligopoly or cartel, specify a tax rate, and confer licenses and other rights to certain individuals that would not be available to other people or agencies. Basically, Issue 2 is designed to invalidate measures like Issue 3. 

Issue 2 passed by a slim margin, approximately 52 percent to 48 percent. Thus, even if voters had approved Issue 3, Issue 2 would have invalidated it. 

ResponsibleOhio, the organization that sponsored Issue 3, released a statement after the election results were announced, stating that the legalization campaign “starts anew tomorrow” and that Ohio “needs the jobs and tax revenue that marijuana legalization will bring.” A budget estimate released in early October predicted that Ohio could have seen between $133 and $293.3 million in tax revenues after the legal marijuana system was fully up and running, more revenue than Colorado, which has seen almost two full years of legal marijuana sales, estimates its program to produce. 

Colorado voters had to decide their own marijuana issue—not whether to legalize marijuana or not, but what to do with all of the extra tax revenue the industry generates. 

Coloradoans voted on Proposition BB, which authorizes the state to keep marijuana revenues that exceed Taxpayer Bill of Rights (TABOR) projections. Voters approved the measure by a vote of 69 percent to 31 percent, and now the government can keep approximately $66.1 million in revenue generated by the marijuana industry. The funds will be divided as follows: $40 million will be used to fund school construction, $12 million will go to fund school, drug enforcement and other state programs, with the remaining $14.1 million being put into the state’s general fund to be allocated later. If Proposition BB had been rejected, the excess revenues would have been refunded to taxpayers. 

Ohio’s Issue 3 was just the beginning of legalization efforts leading up to the 2016 election. Campaigns in at least 16 states have either gotten marijuana legalization initiatives certified for the 2016 ballot, or are working on collecting signatures in order to get an initiative certified. The 2016 election is going to be pivotal to legalization efforts across the U.S. 

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What state do you think will legalize marijuana next?

 

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