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Gov. Josh Shapiro's proposed budget calls for the legalization of adult-use cannabis in Pennsylvania, arguing that the state is missing out on millions of dollars in revenue every year to its neighbors.
Any legalization of adult-use cannabis would have to be approved by the state legislature, which is controlled in the House by the Democrats and the Senate by Republicans. The effective date would be Jan. 1, 2025, if approved.
Only medical marijuana, sold by a limited number of licensed dispensaries, have been legal in Pennsylvania. Attempts to approve adult-use cannabis sales, including during the Wolf administration, were unsuccessful.
The Shapiro administration noted that each of the states bordering Pennsylvania, with the exception of West Virginia, have legalized adult-use cannabis. Ohio voters approved the legalization in a statewide referendum in November 2023. Shapiro said Pennsylvania was at a competitive disadvantage and losing revenue and new businesses.
"We're losing out on an industry that, once fully implemented, would bring in more than $250 million in annual revenue," Shapiro said during his budget address Tuesday. "And our failure to legalize and regulate this only fuels the black market and drains much needed resources for law enforcement."
Across the Delaware River in New Jersey, adult-use cannabis sales kicked off in April 2022 to heavy demand. Maryland also went live with recreation marijuana last July.
New Jersey, for example, adds its 6.625% sales tax to all recreational marijuana sales. The state brought in $38.5 million in tax revenue from recreational cannabis sales in the 12-month period ended Sept. 30, 2023.
Shapiro's proposed budget estimates tax revenue of $14.8 million in 2024-25 from a cannabis use tax as well as the existing sales/use taxes. That would climb to $77.1 million in 2025-26 and $254.7 million in 2028-29 as the program is fully ramped up under the budgetary estimates.
From the revenue would be $5 million in restorative justice and the expungement of records for people who had been jailed for a cannabis-possession offense, according to the proposed budget.
The program would be run by the Pennsylvania Department of Agriculture. The medical marijuana program, which has been active since 2017, has been administered by the Pennsylvania Department of Health.
There's no proposed legislative track endorsed by Shapiro for the legalization.
"I ask you to come together and send to my desk a bill that legalizes marijuana," Shapiro said.
