OCRA: Will cannabis be taxed under the OCRA?

A:

Short Answer: Yes. The OCRA permits reasonable taxation of therapeutic Cannabis and taxation of hemp in a manner similar to other agricultural products.

Longer Answer: While pharmaceutical drugs and food purchased for consumption on premises (ORC 5739.02) are not taxed in Ohio, the state does apply excise taxes to specific goods like tobacco, alcoholic beverages and kilowatt hours. Ohio has a 5.75% sales tax, and depending on local municipalities, total sales tax can be as high as 8.75%. Sales tax is applied to herbs if purchased as plants (horticulture) and to herbs as dietary supplements (ORC 5739.0).

While the therapeutic properties of cannabis are well documented, the only cannabinoid-based pharmaceutical drug exempt from Ohio sales tax is Marinol®. Sativex®, a whole Cannabis extract, still appears to be years away from approval as a pharmaceutical drug and exempt from Ohio sales tax.

Thus, the “medical” framework that exempts sales from sales tax can only be applied to a limited number of FDA approved cannabinoid-drugs. Instead, the applicable regulatory framework for cannabis is that for “herbs.”

The OCRA does not name specific taxes or tax rates, preferring to leave this for the legislature or Commission to impose or repeal as circumstances change.

Amendment Reference: Section 2 (D)