This story was republished with permission from Crain’s Cleveland Business and written by Jeremy Nobile.
While Ohio could be just a couple weeks out from the awarding of dual-use licenses and the state’s first non-medical marijuana sales, most operators are mum on what prices could look like for products at the retail level.
Crain’s asked several companies to weigh in on what dispensary prices on adult-use products might look like in the beginning and how those might compare with medical prices today.
Each declined to share figures but opted to comment in more general terms — though some speculated in more detail than others.
“There is typically an increase (in price) with adult-use, and that percentage increase differs by state,” said Tripp McDermott, chief operating officer with Chicago-based multi-state operator Verano, which operates a Level II cultivation and processing facility in Canton plus five Ohio dispensaries branded as Zen Leaf. “We are evaluating the landscape right now. But I think you see that it is fairly similar to medical pricing.”
“As products are priced differently state-to-state and each market has its own determining factors, pricing in Ohio, from our perspective, will ultimately depend on supply and demand, the opportunity for discounts and promotions, etc., so we will need to see how the market plays out,” said Paul Chialdikas, central regional leader for New York-based multistate operator Curaleaf.
While much of this is up in the air, prices on marijuana flower are already beginning to increase some at the wholesale level as retailers begin stocking up in anticipation of adult-use sales, said Andy Rayburn, CEO of Buckeye Relief, a vertically integrated marijuana company with three Ohio dispensaries branded as Amplify.
“We are seeing increased orders from a significant number of dispensaries, but not nearly all of them just yet,” Rayburn said.
Rayburn, who is also president of OHCANN, the state’s cannabis industry trade group, suggested that retail prices on adult-use products could, in general, be roughly 20% higher than medical products at the outset of rec sales and come down over time as the market further matures and supply increases.
“I would expect significant new flower capacity entering the market in the second half of 2025,” Rayburn said, “which will pressure flower prices down.”
Still, the “challenge early, especially in the first six months of the new program, will be ensuring adequate supply, especially for flower,” he added.
Projecting big sales, no matter the cost
Based on what’s transpired in other markets that have added adult-use sales to medical programs, the prevailing guidance among industry players and observers is for the public to expect high prices when rec sales commence due to strong demand and low supply.
But what exactly represents a high price or low supply in a market like Ohio that has long grappled with comparatively high prices despite an oversupply of product?
That’s impossible to say until adult-use sales go live and yet there’s been some time to gauge consumer participation, as officials like Chialdikas point out.
According to Statista, an estimated 22% of Ohioans used cannabis in the past year, which amounts to nearly 2.6 million people.
Now, it’s extremely unlikely all those people will be buying legal cannabis at licensed dispensaries.
But the takeaway is that there’s a massively larger potential customer pool for rec marijuana compared with the fewer than 166,000 medical marijuana patients currently registered in the state.
Realistic expectations project demand for marijuana products to double or triple in short order under the adult-use program. By 2030, annual legal adult-use marijuana sales in Ohio could top $2.8 billion, according to estimates from cannabis research firm New Frontier Data.
This all comes in the wake of a medical market in the state that has been largely underwhelming from an industry standpoint. Annual medical sales totaled $484 million in 2023. Compared with 2022, retail sales grew last year by a paltry 1.2%.
As of May 27, 2024, medical marijuana sales have totaled roughly $220 million, according to the Ohio Division of Cannabis Control. That puts medical sales on pace for its first down year in Ohio since they began in 2019.
“My estimate is that over the last year and a half, the large majority of license holders in Ohio have been losing money,” Rayburn said. “The new market will double demand on day one and bring relief to those companies that have been funding losses for a pretty long time.”
With a potentially significant new adult-use customer base in front of it, the cannabis industry has been gearing up accordingly but cautiously.
There’s always the risk of losing money producing too much product that doesn’t sell. That’s why marijuana cultivation capacity has increased a little bit, but not yet dramatically.
According to DCC, just 41.7% of the state’s total allotted cultivation capacity is authorized for use at this time, and just 27.2% of that is in operation now. That leaves 58.3% of permitted space unauthorized and unused.
Nonetheless, the Ohio cannabis industry has been preparing an already built-up supply for the adult-use market. Flower or manufactured products that have been made under the medical program can be sold to adult-use customers so long as they’re labeled accordingly.
Between June 2023 and June 2024, the state supply of bulk flower and shake has decreased by 19% and 9%, respectively.
However, the supply of products ready for sale has meaningfully increased: flower supply is up 69%; oils and solids for vaporization are up 78%; edibles are up by 90%.
So will the market be undersupplied as adult-use sales begin?
At this point, it’s impossible to say.
And DCC has no position on that, though it’s something that the agency will be paying attention to, said spokesman James Crawford.
The importance of pricing
Besides being of inherent interest to consumers, where prices begin and eventually settle will be important factors in how competitive Ohio’s new adult-use market is with both illicit markets and neighboring states. The more competitive and accessible the market is, the greater the sales will be for companies, which translates to more tax revenue for the state and its municipalities.
Capturing revenue—and tax dollars—from cannabis that’s being purchased illegally or across state borders is, after all, a key purpose of Ohio’s medical and recreational marijuana laws.
High prices have been regularly cited as one of the public’s top frustrations with the medical marijuana program in surveys conducted by Ohio State University’s Drug Enforcement and Policy Center.
In a September 2023 report, OSU’s Drug Enforcement and Policy Center (DEPC) found that while retail prices on medical marijuana products In Ohio have been coming down, they were still about 70% more on average compared to Michigan dispensaries.
At the time that the DEPC study came out, medical marijuana flower was retailing in Ohio around an average of $17.08 per one-tenth of an ounce (or the so-called “daily unit”, which equals 2.83 grams) and about $6 per gram.
While there are ups and downs, those prices haven’t really moved much. As of May 27, the average price for one-tenth of an ounce was $18.19, according to DCC, and roughly $6.43 per gram.
“Basically, what we have seen in other states as they transition is that initial pricing is high due to increase in demand and low supply, which later stabilizes as more growers come online. If we were being super optimistic, you would expect new supply to come online maybe two to three months after approval of a dual license, unless existing medical marijuana growers were able to prepare for cultivation ahead of time,” said DEPC administrative director Jana Hrdinova. “Regardless, I would anticipate for prices to stabilize within 12 to 18 months, as the industry adjusts to Ohio’s new levels of demand.”
“Of course, unlike some of the earlier states, Ohio’s industry has to take into account the fact of Michigan being within an easy driving distance for most of the state,” she added, “which might affect how they can price their product, although that seemed to have only limited impact on the medical providers.”
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