Ohio adult-use program was only new cannabis market in 2024

2024 will go down as one of the quietest years for marijuana market launches.

The debut of Ohio’s adult-use retail market on Aug. 6 is the lone standout, in contrast to perennial market expansion that’s been a bedrock of the industry for more than a decade.

Last year, by comparison, three states in the Northeast and Midwest launched recreational marijuana sales, while two in the Deep South began medical cannabis sales.

This year, Ohio became the 21^st U.S. state to establish adult-use sales, following Maryland’s launch in July 2023 and Missouri’s debut in February 2023.

The gap of nearly one year between recreational market launches is believed to be the industry’s longest drought since the first wave of regulated, adult-use consumer access began in 2014.

“Insufficient funding for nonprofit advocacy efforts has hindered progress,” said Karen O’Keefe, state policies director for the Washington, D.C.-based Marijuana Policy Project.

“We would have had a much better chance of achieving victories in New Hampshire, Hawaii and South Dakota in 2024 if we had adequate resources for a robust campaign.”

On the medical side, Georgia was the last medical marijuana market to open in October 2023.

Georgia’s debut followed the January 2023 launch of Mississippi’s medical marijuana program.

Despite a lull in new-market expansion, a few states – such as Florida and New York – are significantly increasing the number of retail licenses.

Cannabis sales in Ohio

Unlike most newly minted markets, Ohio already has experienced a monthly sales dip out of the gate, a phenomenon that typically occurs well into a market’s first full year in operation.

Here’s a look at adult-use sales figures through November in Ohio, which releases sales data weekly:

• Aug. 6-31: $44.1 million.
• Sept. 1-28: $43.1 million.
• Sept. 29-Nov. 2: $56.2 million.
• Nov. 3-30: $48.0 million.

Ohio borders Michigan, which has experienced explosive sales growth in the past few years, aided by a free fall in flower retail prices.

Industry stakeholders believe Michigan’s low prices for regulated adult-use marijuana are driving Ohio-based consumers north of the border to make purchases, hampering growth of their home state’s fledgling recreational market.

Ohio marijuana regulations

Temporary product restrictions are partly to blame for waning sales figures, according to industry sources.

Ohio’s adult-use market still is operating under its medical marijuana program rules, which include a ban on pre-rolls and a 70% THC product potency cap.

“Our rollout has seen strong engagement from stakeholders, steady growth in the market and positive feedback from consumers,” Thomas Haren, spokesperson for the Ohio Cannabis Coalition, told MJBizDaily via email.

“Of course, there are areas to refine and, like any industry, we’ll continue to look for ways to improve, change and pivot as we strive to be a model for other states.”

A spokesperson for the state’s Department of Cannabis Control (DCC) in November told Columbus TV station WCMH that the agency was drafting updated rules but didn’t provide a timeline.

A ban on pre-rolls – a major revenue booster in other states – also might be impacting transaction volume.

In the November time frame, the state’s 127 dual-licensed retailers logged 13.1% fewer transactions (659,817) than in the October period (759,500), according to state data.

Ohio cannabis retail prices

Retail prices have dropped since Ohio’s Aug. 6 market launch date.

The average cost of a tenth of an ounce – another unique requirement in Ohio, since eighths of flower are common elsewhere – has fallen from $26.59 during the first week of adult-use sales to $21.05 in the week ending Dec. 7, a 20.8% drop.

The price per gram, meanwhile, has dipped 20.9%, from $9.40 in August to $7.44 in December.

Prices for manufactured products such as edibles and vapes have decreased 9.4%, from $31.06 per stock-keeping unit to $28.13.

Marijuana multistate operators

Despite some blips, retailers appear content with the rollout.

Recreational marijuana products now account for about 50% of Curaleaf Holdings’ total sales in Ohio, where it has retail operations in Cuyahoga Falls and Newark.

“Sales at our two locations have exceeded expectations,” said Luke Flood, senior vice president at the New York-based multistate operator.

“We’ve also successfully retained our medical patient base while welcoming a surge of new adult-use customers.

“This growth highlights Ohio’s potential as a significant cannabis market.”

Insa, a Massachusetts-based MSO that has a store in the Cleveland suburb of Willoughby, reported steady sales growth since transitioning its medical license to a dual-use permit to serve consumers.

The company cast a wide net for product offerings in an effort to learn about Ohio consumer demand and preferences, according to Sara Sullivan, Insa’s vice president of retail development, experience and operations.

“We’re encouraged by the growth, as it has been consistent with what we’ve seen in other states that started with a medical program, such as Connecticut,” Sullivan said.

Seattle-based cannabis data firm Headset recently noted that Ohio recorded year-over-year sales growth of 93.5% through November.

Cannabis marketing restrictions

Another anomaly in Ohio came in July, when regulators issued several restrictions on cannabis advertising and marketing that dampened the celebratory vibe common during other market launches.

Bans on outdoor music, celebratory decor, unapproved signage and use of the word “recreational” in promotional materials still are in place.

In August, Ohio regulators issued more than $200,000 in fines to five cannabis retailers for violating marketing and promotional restrictions.

“Ohio’s adult-use launch has been largely successful, though the lack of direct marketing to adult-use customers has made raising broader awareness a challenge,” Flood said.

In response to the restrictions, Curaleaf focused on the in-store experience, leveraging word-of-mouth referrals and scaling cultivation capacity to meet demand for flower, he added.

Sullivan also highlighted how marketing restrictions have limited awareness about the new adult-use market.

“It was a challenge to reach nonmedical customers in the Ohio market to introduce our brands, products and in-store experience, given the limitations with advertising in the state,” she said.

Business opportunities elsewhere

Though market expansion has been limited across the U.S. this year, Florida and New York both have provided growth opportunities for operators.

New York now has 265 licensed retailers, a 562.5% increase over the 40 stores open one year ago.

State regulators just approved another 68 adult-use licenses, though thousands of applications filed a year ago are still pending, and a judge last week temporarily halted the licensing process.

New York’s adult-use sales, which were stagnant for over a year amid a rocky market rollout, now are on pace to crack the $1 billion milestone this year.

In Florida, where an adult-use legalization ballot measure failed to meet the 60% approval threshold needed to pass on Election Day, regulators are finally expanding licensing for the medical marijuana market.

The state’s Office of Medical Marijuana Use in late November greenlit 72 applicants hoping to secure licenses for Medical Marijuana Treatment Center, as dispensaries are called there..

The applicants, representing 22 companies, applied for the permits in April 2023.

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.