(This story was updated at 11:30 a.m. ET on Aug. 21 to reflect Ohio’s most recent sales figures.)
Ohio’s marijuana retailers experienced a threefold increase in revenue in the days after launching adult-use sales, and, two weeks later, sales are still double the pre-rec numbers, according to Headset.
Before adult-use sales kicked off, the average Ohio dispensary was pulling in around $12,740 per day in medical marijuana sales, the Seattle-based cannabis data firm also reported.
After the launch of adult-use sales on Aug. 6, that figure skyrocketed to $33,864 – a 270% increase in daily sales.
By Aug. 17, Ohio had recorded 276,125 transactions totaling $22.5 million.
While revenue figures dropped after the initial day of sales, earnings are still well above levels seen before recreational sales debuted: Ohio marijuana stores tracked by Headset averaged $25,487 in sales on Aug. 15, or twice as much as the average before the debut of recreational marijuana.
‘Very strong’ sales
“Sales were highly positive, very strong,” Kathleen Olivastro, senior vice president of retail at Ascend Wellness Holdings, told MJBizDaily.
The New York-based marijuana multistate operator has five shops in Ohio and licenses to build three more.
“Customers were so excited,” she said.
“They came in curious to learn about cannabis in general … and were thrilled Ohio was moving forward with an adult-use program.”
State regulators approved 98 retailers to begin recreational sales before the Aug. 6 launch in Ohio, which has the potential to be one of the largest cannabis markets in the United States.
As in many new recreational cannabis markets, MMJ dispensaries were given first-mover advantage to begin adult-use sales.
Ohio is imposing a 10% tax on adult-use purchases, with the revenue divided among administrative costs, addiction treatment, municipalities with dispensaries and paying for social equity and jobs programs that support the state’s cannabis industry.
The state has not yet provided data about the tax.
Billion-dollar cannabis market?
Recreational cannabis customers accounted for 76% of regulated marijuana sales on Aug. 6, but the share of adult-use sales has since receded to about 68%.
Headset expects Ohio retailers will see a larger portion of their sales go to recreational customers as the market matures.
Pre-rolls and high-potency concentrates won’t be available until at least September, and flower is the No. 1 seller with Ohio customers.
Colin Ferrian, portfolio manager for San Francisco-based cannabis investment firm Poseidon Investment Management, expects Ohio to hit $1 billion in sales by the end of next year.
As the market matures, Ferrian said, Ohio could reach up to $3 billion.
The population in Ohio is 16% larger than in neighboring Michigan, which recorded $3 billion in cannabis sales last year, Ferrian said.
“This should be an exciting market,” he added.
Municipal opt-outs
Not all municipalities are embracing recreational marijuana sales, however, even though Ohio voters overwhelmingly approved allowing adults 21 and older to possess, purchase and grow limited amounts of cannabis for personal use.
Euclid, Miamisburg and New Albany, for example, all prohibit the sale of adult-use marijuana.
The New Albany City Council approved emergency legislation prohibiting the sale of recreational cannabis the same day as dispensaries across the state began selling it, and Miamisburg approved a 12-month moratorium on the sales of adult-use cannabis so it can “collect operational data and information.”
The city of Euclid, which permits medical marijuana sales, halted MMJ operator Nectar Ohio – which operates three retail outlets in the state – from selling recreational cannabis on the day sales launched in Ohio.
“As per our present zoning codes, adopted in November of 2021, only medical dispensaries are permitted to operate within the City of Euclid,” the city said in a statement provided to Cleveland TV station WEWS.
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Breaking into Ohio cannabis
As the Ohio market matures over the next 12 months, Poseidon’s Ferrian projects it will experience a handful of mergers and acquisitions because of the saturation of some of the top MSOs already doing business in the state, including Cresco Labs, Curaleaf Holdings and Green Thumb Industries.
“TerrAscend (Corp.) wants to buy, and Jushi (Holdings) wants to acquire or develop six additional stores,” he said.
Ferrian added that most MSOs want to build their own businesses because it’s challenging to buy at this stage in the market.
Many Ohio operators raised capital between 2019 and 2021 at valuations that are five to 10 times higher than they are today, making offers at today’s valuations unappealing.
“You have independent sellers who want to be valued on their trajectory; with new adult use, the value is going up,” Ferrian said.
“Buyers want to buy on cash flow; there’s a wide expectation gap between buyers and sellers.
“That prevents deals from getting closed as markets transition into adult use.”
Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.
