But what does it mean for the future of legalization in Ohio, and the rest of the country?
Here are some burning questions that advocates will contemplate during Ohio's marijuana postmortem.
1. Was the result a 'no' to marijuana or 'no' to a monopoly?
Leading up to the vote, polls showed that Ohioans favored legalization, but not Issue 3 because of the plan to grant exclusive licenses to 10 growers in the state. This was a deal-breaker for the initiative's many opponents that nonetheless favour legalization.
"Issue 3 has been soundly defeated!" Ohioans Against Marijuana Monopolies posted on Twitter. "No marijuana monopolies in this state!"
2. What's next for Ohio?
The group is gathering signatures to turn a rival legalization proposal into a 2016 ballot question. Its proposal would prevent a marijuana monopoly by allowing anyone in Ohio to apply for a commercial license. Residents would also be allowed to cultivate plants at home without a permit.
Legalize Ohio 2016 released the following statement after last night's vote against Issue 3:
"This year's initiative failed because a greed-driven monopoly plan is wrong for the state of Ohio. Some activists were let down tonight because they put their faith in a bad plan, but their efforts have brought us a step closer to legalizing marijuana in 2016."
3. Are Ohio's pro-legalization forces divided?
Sri Kavuru, president of Legalize Ohio 2016, did not simply disagree with Issue 3. He campaigned against it, joining forces with anti-legalization groups like The Fraternal Order of Police, Drug-Free Action Alliance, and Dayton Regional Employers Against Marijuana.
He understands that his allies this year may be his enemies in 2016.
"We know that we're going to be going up against them next year," says Kavuru.
And he certainly can't count on pro-legalization groups like ResponsibleOhio for support after what happened yesterday.
4. Will there be another Issue 3?
Not in Ohio. While voting against legalization, Ohioans approved Issue 2, a ballot measure that would invalidate any constitutional amendment that grants an economic monopoly in the state.
But what about the rest of the country? Will activists look at Issue 3 as a cautionary tale? Considering the harsh criticisms that came from activists and commentators nationwide, it seems unlikely that another group in the country would pitch something similar to voters.
"I would like to see marijuana legalized in Ohio, but I would also like to see it done the right way — and it is hard for me to think of a worse way to legalize marijuana in Ohio than to create a constitutionalized drug cartel," wrote Jonathan H. Adler in The Washington Post.
5. Is This A Hiccup Or Major Stumbling Block For the Legalization Movement?
The failure of Issue 3 could be a big setback for the cannabis reform movement nationwide.
"That failure will be the only failure in the country," he said, "and then the media will feed on that: 'Oh my God, legalization is backsliding.' If they lose [...] it might change the national narrative for a year."
So brace yourselves: Issue 3 may become partisan fodder for prohibition politicians like Republican presidential candidate Chris Christie.
Aaron Smith, executive director of the National Cannabis Industry Association, is still optimistic about the strong support for legalization, despite last night's vote.
"The people of Ohio have understandably rejected a deeply flawed, monopolistic approach to marijuana reform that failed to garner broad support from advocates or industry leaders," said Smith. "This debate has shown that there is a strong base of support for legalizing, taxing, and regulating marijuana. Now the foundation has been laid for a potential 2016 effort that would put forward a more common-sense initiative and have a major impact on the presidential conversation in the process."