Pennsylvania will generate as much as $2.1 Billion in tax revenue from marijuana within 5 years, according to an analysis.
The Marijuana Policy Project report, released as lawmakers try to come to an agreement on cannabis reform after the Senate rejected a House passed measure that would have legalized the drug with state-run shops. This underscores the argument of many of its supporters: Pennsylvania has been missing out on significant tax revenues by keeping the prohibition status quo.
Analysis of cannabis tax data in Arizona, Maryland and Michigan was adjusted for Pennsylvanian population. It was estimated that if marijuana were taxed at 16 percent, Pennsylvania would be able to generate anywhere between $105 and 197 million dollars in its first legal year.
Michigan had the largest amount of data, after five years. The state collected $1.6 billion from cannabis taxes in its fifth year. Comparative analysis showed that Pennsylvania, with its greater population, could generate $2.1 billion over that time period.
Karen O’Keefe said that as Pennsylvania deals with a time of financial uncertainty, it is missing out on tax revenues worth hundreds of millions dollars, which are instead going to neighboring states. The lawmakers must seize this opportunity to boost the budget, grow the economy and implement public health regulations.
In the study, it is noted that 56% of Americans reside in states with legal cannabis for adults.
MPP released an independent report Thursday showing that states across the country with markets for adult-use marijuana have collected almost $25 billion dollars in tax revenues since Colorado and Washington State launched their sales in 2014.
It remains to be determined whether Pennsylvania lawmakers will move forward with legalization in this session following the House Bill’s defeat. But two Democratic lawmakers—Sen. Sharif Street (D) and Rep. Rick Krajewski (D)—recently said they’re aiming to reach a compromise and pass reform legislation before a budget deadline in July.
Also, last week Sen. Marty Flynn (D) announced his intent to file a new bill to legalize marijuana in the state, calling on colleagues to join him on the measure.
Street is “cautiously hopeful” that the bill, which Krajewski and Rep. Dan Frankel sponsored together with the House’s expedited party-line passage was able to be revived and amended. He added: “We’ll move forward and produce a product that will allow us to put a bill before the Governor’s desk to realize revenue.”
That said, Sen. Dan Laughlin (R), who has sponsored legalization legislation with Street, recently seemed to suggest that lawmakers should pump the brakes on the push to enact the policy change amid resistance to reform within his caucus and instead pass a bill to create a new regulatory body that can begin overseeing medical cannabis and hemp while preparing to eventually handle the adult-use market as well.
“I’m committed to crafting a bill on cannabis that can be passed by the Senate, and signed into law in order to benefit Pennsylvanians as a whole,” Laughlin declared. “That starts with honest dialogue from everyone involved, including House leadership and the governor, to develop a realistic approach–not political theater.”
Meanwhile, the governor of Pennsylvania is criticizing the GOP-controlled Senate for “ignoring” the will of voters after killing the House-passed bill to legalize marijuana.
Gov. Josh Shapiro, a Democrat from Massachusetts, said the rejection of the bill is a disservice both to the majority of bipartisan voters who favor legalization and to the Commonwealth itself which loses out on tax revenues to states nearby that have adopted the policy.
Shapiro, a Shapiro who has included legalization as part of his budget requests for the 3rd time in a row this year, stated: “Look it is clear people want to.” It’s clear from poll after survey.
Following the Senate committee vote, lawmakers from both chambers who support legalization have been trading criticisms about each other’s roles in the stalled push to end prohibition.
Prior to the Senate panel’s vote, Pennsylvania’s Republican attorney general said that while he doesn’t currently support the House-passed marijuana legalization bill, he’s open to changing his mind about the policy change after continuing to review the details.
For what it’s worth, a recent poll found that Pennsylvania voters say they favor a model where cannabis is sold by licensed private businesses, rather than through a system of state-run stores.
He has called on the legalization of marijuana for adults. He has not endorsed a specific state-controlled marijuana model.
Rep. Abby Major (R)—who is sponsoring another forthcoming legalization bill that envisions a traditional private sales model alongside Rep. Emily Kinkead (D)—said during the House floor debate on HB 1200 that she stands opposed to the competing bill, emphasizing that she disagrees with the state-run stores proposal.
Even though Democrats have control of the House, Governor’s Office and Senate, they still must reach an agreement with Republicans to bring about change. In addition to the differing viewpoints among pro-legalization lawmakers, this political dynamic could be another barrier to reform.
Senate Majority leader Joe Pittman said that, while he saw a “path to forward” in enacting separate regulations related to gaming reforms, he “doesn’t see consensus among the four caucuses or the governor that I can identify.” [marijuana legalization] “Priority should be given to this.”
Regardless of which direction Pennsylvania lawmakers do—or don’t—go on marijuana legalization this session, a survey released in April shows a majority of adults in the state support the reform—and opposition to the policy change has fallen by nearly 50 percent over the last decade.
Kinkead has made the case in another recent interview that legalizing cannabis in Pennsylvania will help the state mitigate public health and safety concerns associated with the illicit market, including the fact that unregulated products can be laced with fentanyl.
The lawmaker previously introduced a separate bipartisan marijuana legalization bill, alongside 15 other cosponsors, last September. However, it did not move forward.
Meanwhile, Laughlin recently called for the creation of a state “legacy” fund, using tax revenue from adult-use marijuana sales and gaming to make long-term investments in the Commonwealth’s economy.
Senator argued, that the state, in addition to using tax revenues to finance day-today public projects, should also set aside a part of these tax dollars to create a “sustainable source of prosperity” that would last for many generations.
Another GOP Pennsylvania senator, Sen. Gene Yaw (R), is backing the push to legalize marijuana in the commonwealth, pointing out that, historically, prohibition “has not turned out well,” noting the country’s experience with alcohol criminalization.
Pennsylvania House Speaker Joanna McClinton (D) recently said that Democrats are ready to pass a marijuana legalization bill this session, but that the party “will need Republican support” to get the job done—adding that it will be a “heavy lift.”
There is bipartisan support in polls for legalization, but it has been stalled by the GOP in the legislative branch, in large part due to their opposition. But not all Republican members are against the policy change—and one recently said she felt her party should seize the “opportunity to snatch” the issue from Democrats.
Separately in March, the Pennsylvania House approved a bill sponsored by Frankel that’s meant to strengthen safety standards and oversight of the state’s medical marijuana program as lawmakers work to advance adult-use legalization.
Pennsylvania’s medical cannabis program, implemented nearly a decade earlier, has now been sent to the Senate. Lawmakers say it is needed to improve the testing compliance, the product audits, the lab inspections and other aspects of this industry.
Meanwhile, Pennsylvania Democratic lawmakers recently introduced a bill that would allow farmers and other small agriculture operators to sell marijuana they cultivate to existing growers and and processors if the state moves to legalize adult-use cannabis.
Separately, an independent Pennsylvania agency is projecting more tax dollars to be generated from adult-use marijuana sales compared to what the governor’s office has estimated, although it expects significantly less overall revenue from cannabis legalization due to differing views on licensing fees.
Pennsylvania officials launched an online survey asking legal marijuana companies across the nation to submit information about their businesses. The aim is to better help Pennsylvania understand the cannabis business as it considers adult use legalization in this legislative session.
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Also, in a video interview released in March, the governor emphasized that the state is “losing out” to others that have already enacted adult-use legalization, while maintaining a policy that’s enriched the illicit market.
“I believe it is an issue of freedom, and I support that.” “I mean, people should be allowed to smoke in a legal and safe way,” said he. “We should shut down the black market—and, by the way, every state around us is doing it. Pennsylvanians drive to other states, and pay taxes there.
The state’s agriculture secretary separately told lawmakers that he’s fully confident that his department is in a “really good” position to oversee an adult-use marijuana program if lawmakers act.
Meanwhile, in February, top Pennsylvania police and health officials told lawmakers they are prepared to implement marijuana legalization if the legislature moves forward with the reform—and that they stand ready to work together as the details of legislation to achieve it are crafted.
Amid the growing calls for marijuana legalization in Pennsylvania, a GOP state senator said prohibition has been a “disaster,” and a regulated sales model for cannabis—similar to how alcohol and tobacco are handled—could serve as an effective alternative.
A Republican Pennsylvania senator also recently defended the push to legalize and regulate marijuana, calling it “the most conservative stance” on the issue.
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Brian Shamblen is the photographer.
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