Ohio Cannabis Tax Guide: 2025 Edition

Key Points

• Ohio conforms to federal 280E, meaning only COGS is deductible on state returns.
• Ohio adult-use cannabis retailers are subject to a 10% statewide excise tax and state + local sales taxes.
• Excise tax increases to 15% or more have been proposed in 2025, but no changes have been enacted as of July.
• Medical cannabis is exempt from the excise tax, though standard sales tax still applies.
• Accurate monthly tax filings are mandatory via the Ohio Business Gateway; penalties apply for noncompliance.
• Social equity programs are at risk under current state budget proposals.

Understanding Ohio’s Cannabis Tax Structure

280E Conformity in Ohio

Ohio conforms to federal IRC §280E. This means:

• Only Cost of Goods Sold (COGS) is deductible for state income tax purposes.
  
• Ordinary business expenses such as rent, payroll, or marketing are not deductible.
  
• Operators must work with a qualified cannabis CPA to structure their chart of accounts for maximum compliance.
  

  Adult-Use Cannabis Taxes

Excise Tax
Ohio imposes a 10% statewide excise tax on all adult-use cannabis sales. This tax is collected at the point of sale by licensed dispensaries and remitted to the state.
While proposals to raise the excise tax to 15–25% have been introduced in 2025, no increase has been passed as of July.

Note: Ohio law prohibits local excise taxes on cannabis. The 10% rate is uniform statewide.

Sales Tax
Ohio applies a 5.75% state sales tax to all cannabis sales. Local jurisdictions add their own taxes, typically between 0.75% to 2.25%, resulting in a combined rate of 6.5%–8.0%, depending on location.

2025 Sales Tax Rate Examples

Sales Tax Calculation: Retailers should confirm whether the excise tax is included in the taxable base. Consult a tax advisor or the Ohio Department of Taxation for compliance guidance.

Medical Cannabis: Tax Treatment

• Excise Tax: Medical cannabis sales are exempt from the 10% excise tax.
  
• Sales Tax: State and local sales taxes still apply to medical cannabis.
  
• Compliance: Dispensaries must maintain clear, separate records for medical vs adult-use sales.
  

Social Equity & Revenue Allocation

The 2023 voter-approved Issue 2 directs adult-use cannabis excise tax revenue as follows:

• 36% to the Cannabis Social Equity and Jobs Fund
  
• 36% to host communities
  
• 25% to addiction treatment and education
  
• 3% to administrative costs
  

As of mid-2025, state budget proposals from Governor DeWine and the Ohio House seek to divert or eliminate the Social Equity & Jobs Fund. Final outcomes are pending.

State Licensing Body

• Program Administered By: Ohio Department of Development
  
• Eligibility Criteria: Minority status, disability, gender, economic hardship, and location in high-unemployment areas.
  

Local Social Equity Details (as of July 2025)

Filing and Payment Requirements

Cannabis Excise Tax

• Rate: 10% of retail sales
• Who Pays: Adult-use dispensaries
• Filing Frequency: Monthly
• Due Date: 23rd of each month
• Filing Method: OH Tax eServices

Sales Tax

• Rate: 5.75% + local add-ons
• Who Pays: All cannabis retailers (including medical)
• Filing Frequency: Monthly
• Due Date: 23rd of each month
• Filing Method: Ohio Business Gateway

Additional Notes

• Quarterly filing is not permitted for cannabis excise tax.
• Zero-sales returns are still required each month.

Penalties and Compliance Risks

• Late filings incur penalties and interest.
• Noncompliance may result in:
  • License suspension or revocation
  • Increased audit scrutiny
  • Financial penalties

The Division of Marijuana Control has indicated that audit risk is highest during the first years of adult-use implementation.

How to Calculate Your Cannabis Tax Liability

1. Determine Your Sales Location
   Add 10% excise tax + 5.75% state sales tax + local sales tax rate.
2. Apply Excise Tax First
   Multiply total sales by 10%. Add this to your receipt total.
3. Apply Sales Tax
   Apply the combined sales tax rate (5.75% + local) to the total price including excise tax.
4. Medical Sales
   Exempt from excise tax. Apply sales tax only.

Key Industry Associations

• Ohio Cannabis Coalition – Working to enhance and improve the Ohio Cannabis Industry.
• Minority Cannabis Business Association (MCBA) – Social equity-focused advocacy and education.
• National Cannabis Industry Association (NCIA) – National advocacy and compliance resource with Ohio members.

Government Contact Directory

Ohio Department of Commerce – Division of Marijuana Control
Phone: 855-466-3921
Address: 77 S. High St., Columbus, OH 43215
Licensing: DCCApplications@com.ohio.gov
Compliance: DCCCompliance@com.ohio.gov
Support: DCCSupport@com.ohio.gov

Ohio Department of Taxation
Administers cannabis excise and sales taxes

Ohio Department of Development
Oversees social equity and economic opportunity programs

Ohio Cannabis Tax Calendar: 2025

Disclaimer

This guide is for informational purposes only. Before making any business, taxation, or compliance decisions related to cannabis in Ohio, consult with a qualified professional such as a CPA, attorney, or regulatory advisor.