Pennsylvania budget crisis boosts state’s adult-use marijuana legalization chances

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A budget crisis could make Pennsylvania the next state to legalize adult-use marijuana.

Pennsylvania lawmakers are staring down a gap as big as $3.7 billion, and they have few options to fill it other than revenue from regulated and taxed cannabis.

Gov. Josh Shapiro, a likely contender for the 2028 Democratic presidential nomination, has pledged that he will once again use his annual budget address on Feb. 4 to call on state lawmakers to legalize adult use in Pennsylvania.

The marijuana industry, in turn, organized a fundraiser for the governor in early January, and some of the state’s medical cannabis operators took the opportunity to inform Shapiro that up to 60% of customers shopping at adult-use stores in Maryland, New Jersey and Ohio come from Pennsylvania, several attendees told MJBizDaily.

That represents lost revenue for Pennsylvania marijuana businesses, which underscores a key issue for Shapiro – the state’s budget deficit.

Lawmakers, operators and advocates alike believe that budget pressure will be what finally gets longstanding bipartisan recreational marijuana legislation across the line in 2025.

‘Mood and tone has shifted’

“I think last year there was this understanding that adult use is coming, but it wasn’t happening. Whereas now, the mood and tone has shifted to, ‘Adult use is happening, and this is probably our best year to get it done,’” said Peter Marcus, the vice president of communications at Terrapin Care Station, which operates an MMJ dispensary in Bellefonte, not far from the main campus of Pennsylvania State University.

At the fundraiser, Shapiro adopted a more urgent tone about adult use, which operators expect him to repeat during his budget address and whenever legalization is mentioned.

“It was, ‘This needs to happen, this needs to happen,’” Marcus said.

For a marijuana industry desperate for a win after a deflating November loss in Florida after nearly $150 million was spent on a ballot initiative campaign, hearing similar urgency from a prominent politician with a national profile is significant progress.

“Pennsylvania presents one of the clearest opportunities and pathways for major reform available right now at the state level,” added Michael Bronstein, a lobbyist and organizer of the Shapiro fundraiser.

The governor “is going to go all-in for legalization,” Bronstein predicted, “and there will be a very serious effort in the Legislature to get this done.”

Pennsylvania is top attainable win

Pennsylvania is considered the biggest prize awaiting regulated cannabis in the United States this year, the stalled rescheduling of marijuana notwithstanding.

Nearly 13 million people live in the state, which is home to major universities and tourist attractions in Philadelphia and Pittsburgh as well as a strong medical marijuana program that has a mix of major multistate operators and small businesses.

Pennsylvania had roughly 440,000 active MMJ patient certifications as of November, according to the most recent state data available, with 186 dispensaries and 32 grower-processors to serve them.

Monthly medical cannabis sales topped $140 million in October, according to the Pennsylvania Department of Public Health, on pace with the MJBiz Factbook‘s projection of $1.7 billion in MMJ sales for 2024.

But creating an adult-use market open to a much larger consumer base would spark immense growth almost immediately.

Legal recreational cannabis sales could exceed $2.8 billion within a year, according to a projection from Washington, D.C.-based FTI Consulting that was commissioned last year by legalization advocacy group Responsible PA.

That same projection pegged potential tax revenue at $212 million, based on the state’s 6% sales tax and an assumed 15% excise tax on recreational marijuana.

Pennsylvania ‘losing out’ on marijuana revenue

All that is music to politicians’ ears at the state capitol in Harrisburg, where Shapiro last week relayed the legalization urgency to reporters.

“To me, this really comes down to two issues that the legislature has to grapple with,” he said in a statement provided by his media office.

“Are we going to be more competitive? Because right now, we’re losing out to every other state around us that’s legalized, the exception of West Virginia.

“Pennsylvanians are buying cannabis. But right now, what’s happening is they’re paying taxes in other states.

“We need to change that. We need to be more competitive.”

Observers believe upcoming proposals will resemble past efforts.

One previous bill would have allowed existing MMJ dispensaries to convert to adult use.

Under another proposal that state representatives pledged in December to revisit in 2025, adult-use cannabis would be sold at state-run outlets in a manner similar to how Pennsylvania sells liquor.

State-run sales would represent a nationwide first, but it might not be an option until federal law changes.

However, previous efforts to legalize adult use in Pennsylvania have stalled out in the Legislature for a familiar reason: partisan deadlock.

Last year, three separate proposals failed to advance out of the Republican-controlled state Senate.

This year, however, any legalization proposal introduced through the Senate’s Law & Justice Committee will have a friend in a high place: Republican state Sen. Daniel Laughlin – a co-sponsor of bipartisan marijuana legalization efforts several sessions running – is now the committee chair.

Laughlin did not respond to MJBizDaily requests for comment, but he recently told Spotlight PA he plans to introduce another adult-use bill this year.

State Sen. Sharif Street, a Philadelphia Democrat and Laughlin’s co-sponsor on past bills, told MJBizDaily in a statement that the “upcoming cannabis bills represent a significant step toward the legalization of adult-use cannabis.”

“With bipartisan support from all four caucuses and growing public demand, the prospects for these bills passing this year are high,” Street added, in part.

Adult use ‘much needed’ for Pennsylvania industry

Much is up in the air around recreational marijuana, including exact proposals and whether expected social equity provisions can survive either horse-trading by lawmakers or expected legal challenges.

The benefits for the cannabis industry are immense: Notching a win amid flagging sales in legacy states and stalled-out reform in Washington – and doing it without the massive outlay of cash required to qualify, run and win a legalization campaign, as happened in Florida – would lead to increased revenue for businesses.

“Pennsylvania has the potential to be a significant catalyst at a much needed time for the industry,” Boris Jordan, the chair and CEO of New York-based multistate operator Curaleaf Holdings, which has 18 locations in the state, said in a statement to MJBizDaily.

“Our continued focus on supporting responsible cannabis policy reform is unwavering. and adult-use legalization would dramatically benefit the state as a result of increased tax generation.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.

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Pennsylvania budget crisis boosts state’s adult-use marijuana legalization chances