We’re trying to do it, no matter what the path is.
Ian Karbal of the Pennsylvania Capital Star
Cannabis legalization sparks a major debate in Harrisburg.
Three sets of legislators, both from the Democratic and Republican parties, proposed legislation in less than two week that legalized recreational marijuana use in Pennsylvania. The discussion follows on the heels of a Democratic-led effort in May that passed the state House before being rejected in the Republican-controlled Senate.
As lawmakers extend their deadline of June 30 to submit a state budget and as the commonwealth is facing a deficit, these moves have been made. It is unlikely that the state will be able to balance its budget unless lawmakers cut service or generate new revenue.
Senate Majority leader Joe Pittman, R-Indiana has stated that it is unlikely for legal cannabis to be included in a budget agreement.
A heavily regulated sector, cannabis could have an impact on Pennsylvania’s business environment and the people who will benefit.
It’s an opportunity for some to help communities that have been disproportionately impacted by years of disinvestment or incarceration rebuild. According to a 2020 study by the American Civil Liberties Union, Black Pennsylvanians are more than three-times as likely to face charges for marijuana-related offenses as Whites, even though surveys report that both groups use the drug at roughly the same rates.
Some small businesses see this as a chance to join one of the most rapidly growing industries in the world while the industry is just getting started.
These arguments were echoed in Harrisburg by industry representatives, politicians and grassroots supporters.
“Legalizing adult-use cannabis is no longer just a smart option—it’s a fiscal and moral necessity,” said Brit Crampsie, a spokesperson for the cannabis industry trade group Responsible PA, following the introduction of a bipartisan bill in the state Senate. Pennsylvania is facing a huge budget deficit, and the legislation offered by this bill offers real solutions: more revenue, safer neighborhoods, help for small business, and justice that has been long overdue. The lawmakers must act immediately.”
Rep. Emily Kinkead(D-Allegheny), Democratic sponsor of the bipartisan House legislation said, in a press release, that, “we talk about creating thousands jobs, generating millions in revenue, as well as reinvesting back into our community.”
Pennsylvania’s cannabis medical market, however, is currently dominated by multi-state cannabis operators. Many of these companies are also among the biggest cannabis businesses in the United States. Pennsylvania’s recent proposals are not able to live up the high expectations of their proponents.
The weeds on allowing
Tahir, a 41-year-old man, was overjoyed when New Jersey decided to legalize recreational marijuana by 2021. It was signed into law to allow people with previous cannabis convictions, like Tahir Johnson, to enter the market at the beginning. The man had dreams about opening up a cannabis dispensary back in Trenton, his hometown.
Johnson, a finance graduate who worked for Maryland’s new cannabis industry at the time, was one 11 of first applicants to receive a New Jersey equity licensing license. This initiative established a special application process that gave priority to people who had cannabis convictions, or were from economically depressed communities.
Johnson ticked both boxes.
Johnson said that the equity program allowed him to “raise capital, find a good place and do all of those things.”
The roadblocks didn’t appear overnight. The first problem was financing. Because cannabis is illegal on the federal level, most major banks do not lend money to marijuana businesses. Local regulators were another option.
After more than 2 years of waiting, his dispensary was finally open last year. The market had been dominated for the past two years by vertically integrated marijuana companies who were able to offer more funding and expertise after earning millions in different states.
Johnson, whose business has been growing for a year and is about to celebrate its anniversary, believes that he was one of the fortunate ones and many other would-be-entrepreneurs were locked out of this market. Johnson believes that despite his setbacks, Pennsylvania has a lot to learn from New Jersey.
In a report from 2025, while 17 % of New Jersey cannabis business licenses went to Black majority owned companies, only 10 % of New Jersey dispensaries have Black ownership. It is higher than other states, which have legalized cannabis and even some that tried to introduce equity programs. The rate is double that of the nation, with less than five percent of cannabis owners identifying as Black.
Johnson, looking at current proposals, argued that the Senate Bill 120 (introduced last week by Sens. Dan Laughlin, R-Erie and Sharif Street, D-Philadelphia. Rep. Amen BROWN (D-Philadelphia), announced his intention to introduce the same bill in state House.
Street, who is the primary Democratic sponsor of the bill in the Senate said that social equity by investing in communities hardest hit by the prohibition was one of the principles behind this legislation. Johnson, and others who advocate for minorities to be involved in the cannabis business say that these measures fall short.
This measure will allocate 15 special business licenses to Pennsylvanians that are located in areas that have been “disproportionately” affected. These are determined by the poverty rate and other economic indicators such as how many households receive food aid.
Small businesses owned primarily by people from these areas would have to pay a $50,000 non-refundable fee in order to apply for a business license—half the price non-qualifying businesses would be charged. To have their application approved, applicants would also need to prove that they own or have control of the property where they intend to open a dispensary.
Johnson was able to get his application approved because of the way New Jersey’s law is written. He didn’t need to buy any property or put money down. Johnson doesn’t think he could have gotten to this point if the Senate Bill 120’s requirements had applied.
He said that while some people may have $50,000 to spare, he believes the ones they intend to assist will not. I think that setting such a high barrier opens people to predatory business, and you could have people selling their entire company to raise the money for an application.
Johnson took issue also with the Senate Bill 120, which would have licensed existing medical clinics.
A state Department of Health analysis shows that the majority of Pennsylvania’s 190 medical marijuana dispensaries are multi-state companies, which include some of the largest cannabis firms in the United States.
Cresco Labs Curaleaf Green Thumb Industries all have multiple medical dispensaries and are involved in manufacturing, growing and selling marijuana. They have market caps of over $1 billion.
Even large corporations are forced to grow marijuana in the state where it is sold, as cannabis remains illegal on a federal level. In the event that this law changes, it would allow for cultivation to be concentrated at a small number of sites.
Senate Bill 120 will allow these companies to obtain permits to convert medical dispensaries into recreational stores and their parent companies to open as many as 24 locations throughout Pennsylvania.
Johnson is concerned that the small businesses will not be able get their dispensaries up and running until the recreational market for cannabis in the state has been dominated by companies who already dominate the medical marijuana market.
Upon receiving his first recreational license, twelve medical facilities run by companies from multiple states were permitted to start their sales. When he opened his own small business they already had several locations.
Johnson stated, “That’s the thing that has really affected my career trajectory.”
Street explained that his bill allows for the state to provide low-interest grants and loans to entrepreneurs who qualify. This proposal doesn’t specify whether the state-backed loans with low or zero interest rates can be applied to a company application or real estate purchases for an unlicensed business. A spokesperson from Laughlin told us that the state may decide to approve this if necessary.
Street stated that they wanted to provide opportunities to disadvantaged communities.
Rep. Amen B. Brown (D. Philadelphia), who has announced his intention to introduce the same bill to the House of Representatives, admitted that there are shortcomings with the approach the measure takes to social equality for potential business owners.
However, he said any legalization bill has to pass the Republican-controlled Senate. No proposal means that no one will be able to start a small business. This would not only mean the end of cannabis penalties, but also no additional revenue to the state as it faces spending cuts.
“You don’t want to go so far that you alienate people,” he added. I support our bill, because it is a piece we think Senate Republicans will agree on.
House Bill 120 is a slightly different, yet similar approach, to equity, that was introduced by Kinkead (R-Armstrong) and Rep. Abby Major.
This measure sets aside 60 “equity licenses” for those who come from the areas hardest hit by prohibition. The new cannabis board, made up of appointed members, will decide what counts as an area disproportionately affected. However the measure does suggest that the relative rates of arrests for cannabis and cannabis charges be taken into consideration. The licenses can also be given to business owned by veterans, or those with 75 percent ownership by individuals who were arrested on non-violent marijuana charges.
The application fee would be waived and unlike other businesses applying for a license to run a dispensary, the only thing they’d have to do is prove that they can buy or rent the land where they want to operate. This would reduce the investment required by qualified business owners.
Kinkead explained that “the first licenses are issued for social justice.” She also stressed that, as with other bills, the Clean Slate Program would be established for those who have cannabis-related charges.
Existing medical dispensaries could also apply to become sellers of recreational marijuana, but their licenses would not allow them to expand.
Major, Major’s Republican Co-Sponsor of the Bill, admitted that there may be differences between the approaches taken by the lead sponsors in the respective chambers.
She said, “We are just trying to do it, no matter what the path is.”
It is a state-run store.
A third approach to legalizing cannabis narrowly passed the Democratic-controlled House on party lines in May, before facing bipartisan rejection in a Senate subcommittee.
Cannabis would be sold like alcohol in the state-run stores. Private dispensaries are effectively eliminated.
The medical marijuana industry in California was very opposed to the bill.
The bill was met with doubt by activists who said that any legislation aimed at legalizing marijuana must also include support for the entrepreneurs affected most by past policies, dating from the era of war on drugs.
Cherron Per-Thomas is the founder of Diasporic Alliance for Cannabis Opportunities. The organization promotes Black involvement in the cannabis sector.
Perry-Thomas emphasized that while she found Street and Laughlin’s bill a positive step, a bill establishing a model for private stores should provide broader support to business owners impacted the drug war.
Sponsors of the bill, Reps. Dan Frankel and Rick Krajewski from Philadelphia, emphasized how it could have also provided small-business owners with opportunities to cultivate and deliver marijuana, or establish cannabis lounges and bars.
Frankel noted that small companies that produce cannabis products or edibles, and grow it, have a difficult time competing against national corporations or getting their product on the shelves in some large chain dispensaries.
He said that state stores would be able purchase products from small Pennsylvania companies and showcase them, as well as set prices to make the shops more competitive.
Frankel stated that “it’s about creating the base for a Pennsylvania market to allow farmers, growers, and processors the opportunity to be able to sell products.” We saw what multi-state operators did in other states. “No one was able to get their products onto the shelves in their dispensaries.”
Senator Street, however, took exception to the idea of a state-run store.
He said that it was more costly to open a cannabis dispensary than to set up a business as a processor or grower. He said that if all dispensaries were owned by the government, small businesses would be deprived of many opportunities, no matter if they are Black, White or whatever.
According to an industry-sponsored poll, the decision by lawmakers and the general public to reject the expansion of powers and establishment of new state liquor stores was politically unpopular.
Set goals, then work backwards
Beau Kilmer is the Director of Drug Policy at RAND Institute. He said that the emphasis on cannabis legalization being a chance for small businesses could be misguided.
Kilmer stated that “if you want to increase wealth within certain communities it may make more sense for some money to be allocated to incubators, which will help these people launch other businesses.”
This is partly due to the volatile nature of the cannabis industry. Cannabis prices in many legalized states have dropped rapidly, which has made it difficult for small businesses to stay afloat.
Jon Caulkins of Carnegie Mellon’s Heinz College of Public Policy consulted with the bill’s sponsors and used the term “roadkill” to describe the fate of small business owners as the retail industry has become more consolidated.
Caulkins commented, “This focus on the little guy is similar to King Canute trying his best to wipe back the sea.” The idea that [legalization is] It’s a bit naive of lawmakers to believe this, but it is dishonest for the industry.
California and Colorado were among the states that legalized recreational marijuana first. They’ve seen their markets dominated by large, vertically-integrated and private equity-backed cannabis companies.
Caulkins explained that “the dominant story is that people have lost their lives’ savings in investing into this business.”
Kilmer, Caulkins and others said this is not to say that lawmakers should never legalize cannabis. However, both Kilmer & Caulkins stressed the importance of lawmakers determining their goals first and working backwards.
They both emphasized that there are alternative ways of helping communities who have experienced a high number cannabis arrests. All three proposals include some form of expungement for previous cannabis offenses.
Caulkins said that, from the perspective of general public policy, “the meat, potatoes, and guts” of the proposal are more important, in reference to the importance placed on the opportunities available for small businesses. Caulkins said that the focus on small business opportunities was more important from a public policy perspective.
The Pennsylvania Capital-Star published this story first.
Side Pocket Images. Photo by Chris Wallis.