Michigan marijuana shops make money off Ohio consumers. Issue 2 could change that

Not too far from Toledo, a billboard greets Ohioans who cross into Michigan on Interstate 75: "You made it. Now it's time to roll."

Marijuana dispensaries are so prolific near the Ohio-Michigan border that one stretch of them in Monroe is nicknamed "dispo row." Businesses have signs aimed directly at their out-of-state clientele. Cheyenne Thomachefski, a team lead at Weedys, said she no longer struggles to find someone's birthday on an Ohio driver's license.

"The main thing I usually hear is it’s so expensive in Ohio to get flower that it’s just easier to come over here, get cheap flower and go back home," Thomachefski said.

Ohio Issue 2: What to know about proposal to legalize recreational marijuana

It's no secret to anyone paying attention: Every day, Ohioans drive to the state up north to buy marijuana. Ohio launched its medical cannabis program in 2016, but patients frequently complain about prices and the bureaucracy around maintaining their registration. And medical marijuana is accessible only to people with one of 26 qualifying conditions.

Proponents of an effort to legalize recreational marijuana want to keep these consumers in the Buckeye State. Voters will decide Nov. 7 whether to pass Issue 2, which would allow adults 21 and older to buy, possess and grow marijuana. Products would be taxed 10% on top of the state sales tax − just like they are in Michigan.

“The two biggest opponents of Issue 2 are Michigan dispensary owners and drug dealers," said Tom Haren, spokesman for the Coalition to Regulate Marijuana Like Alcohol.

But several Michigan dispensary operators say they aren't sweating what Ohio's ballot issue could mean for business.

'I don't understand all the rigmarole'

Michigan voters approved adult-use marijuana at the ballot in 2018 by a 56-44 margin. The law has a similar framework to Ohio's proposal, including identical rules for how much marijuana adults can buy and grow. Like Issue 2, Michigan tasked a state agency with hashing out many of the specific regulations.

One of the biggest differences lies in the tax revenue. While the 10% excise tax would be the same, Michigan allocates 70% of its marijuana funds to schools and road maintenance. The remaining 30% goes to counties and municipalities with marijuana businesses.

The K-12 and transportation funds each received around $70 million from the 2022 fiscal year, according to the Detroit Free Press. Under Ohio Issue 2, by contrast, revenue would go to the marijuana social equity program, a substance abuse fund, municipalities with dispensaries and administrative costs.

For dispensaries along the Ohio-Michigan border, some of that tax money is coming from Ohioans. Michigan's Cannabis Regulatory Agency does not break down sale numbers by region, so it's unclear how much these businesses bring in each year. But multiple operators in Monroe said the bulk of their customers come from Ohio.

“If the pricing is not where it needs to be, they’ll be right here," said Doug Laura, head of security for URB Cannabis.

Indeed, Michigan prices are a big draw for Ohio consumers. Dispensaries that used to sell an eighth of an ounce for $60 now offer it as low as $20. At another shop, users can get 15 vape cartridges for $100. The cost of products dropped as the market became more saturated − which can present other challenges for businesses − but deals also keep customers coming back.

Some Ohio medical marijuana companies say they can compete with Michigan pricing, particularly as the industry contends with oversupply. The biggest problem, in their view, is a regulatory structure that's burdensome to patients − something they hope to fix with Issue 2.

Firelands Scientific CEO Jeff McCourt said even his elderly mother's friends, who use cannabis to alleviate various conditions, will travel to avoid headaches under Ohio's program.

“Some of them have just resigned themselves to going up to Michigan," McCourt said. "You have these 75-year-old ladies saying, 'I don’t understand all the rigmarole.'"

What legal marijuana in Ohio means for Michigan

Managers in Monroe, some of whom are originally from Toledo or Lancaster, are familiar with Ohio's proposed legalization effort. But no one seems too worried about how it could affect their bottom line.

These dispensaries also cater to Monroe residents and pride themselves on the relationships they build with customers. Managers also think highly of their products and believe some Ohioans may continue making the trip to buy something familiar. Those who set up shop further into Monroe believe if anyone takes a hit, it will be the stores on "dispo row" that are closer to the highway.

“Margins matter," said Laura Merritt, general manager for Lume Cannabis Co. "Being able to stay here and produce good service and good conversation whereas other dispensaries, I’m not really sure what their strategy is going to be because they’re all trying to undercut each other right now.”

Plus, if Issue 2 passes, Ohio's adult-use market won't be ready in a day. The proposed statute gives state regulators nine months to set rules and dole out the first licenses, most of which go to licensees in the medical program. Proponents of the measure say this will ensure the program gets off the ground quickly.

But it's unclear how affordable products will be at the program's onset.

Quality Roots CEO Aric Klar hopes to expand into Ohio if voters approve Issue 2. At the same time, he said, Ohio has some catching up to do to reach Michigan, which has become one of the top marijuana markets in the country. Crain's Detroit Business reported that 75% of sales happen legally instead of in the black market, largely because of supply and low prices.

“We don’t think Ohio will catch up to where Michigan is for five to 10 years," Klar said.

Haley BeMiller is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

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This article originally appeared on The Columbus Dispatch: Ohio Issue 2 could impact marijuana sales in Michigan