Shapiro’s budget proposes a tax on adult-use marijuana

As part of his 2023-24 budget, Pennsylvania Gov. Josh Shapiro has proposed taxing legal, adult-use marijuana at a rate that is projected to bring in more than $188 million in revenue by the end of the decade.

Released Tuesday, Shapiro’s budget proposes a 20% tax on the wholesale price of marijuana products “sold through the regulated framework of the production and sales system, once legalized.” The proposal includes estimates that assume adult-use sales would begin in January 2025 and bring in about $16 million in tax revenue that year.

Estimates for tax revenue increase to $64.1 million in 2026, $132.6 million in 2027, and $188.8 million in 2028.

Shapiro, who has publicly supported legalization since 2019, does not include any proposed policy changes in the budget. Rather, the document looks at the tax revenue legal cannabis could bring to Pennsylvania. Since late last year, several lawmakers have filed memos about legalization proposals that give an idea of what an adult-use market could look like — though it’s unclear if or when a legalization bill will be passed.

In January, for example, Reps. Donna Bullock (D., Philadelphia) and Dan Frankel (D., Allegheny) issued a memo about upcoming adult-use legislation that aims to create a framework regulating the “cultivation, processing, transportation, distribution, delivery and sale at retail of cannabis and cannabis products.” That legislation would also include consumer safety, social justice, and economic equity components, the memo indicates.

Other memos point to Pennsylvania’s State Store system for alcohol as a framework for the sale of legal marijuana. A bill from Rep. David Delloso (D., Delaware) outlined a similar plan in 2019, but it didn’t pass.

In a memo from December, Sen. Marty Flynn (D., Lackawanna/Lehigh) wrote that his plan for adult-use cannabis would rely on the State Store system in order to “ensure the safety and integrity of cannabis sales” in Pennsylvania. Doing so would also “prevent large, out-of-state corporations from dominating the industry.”

Flynn’s memo also focused on the expungement of low-level cannabis convictions, and allowing residents to grow up to six marijuana plants. Those elements would “provide for a more fair, equitable system.”

In a February memo, Delloso wrote that using the State Store system would not allow “large corporations to take over the cannabis industry.” Delloso added that his legislation would allow for the cultivation of up to six marijuana plants, and expungement of low-level cannabis convictions.

“This would in turn free law enforcement to focus on the other issues our communities face and would reduce the racial disparity in the criminal justice system related to cannabis convictions,” Delloso wrote.

Also in February, Reps. Melissa L. Shusterman (D., Chester) and Ismail Smith-Wade-El (D., Lancaster) filed a memo about legislation that would help farmers and small businesses participate in the adult-use marijuana industry. While it doesn’t provide a legal framework for marijuana, that memo describes legislation that would “establish a permit for farmers and other small agricultural ventures” to grow and sell adult-use marijuana to existing growers and processors.

Pennsylvania has yet to pass adult-use legislation despite a number of seemingly promising bills in recent years.

In 2019, for example, Sen. Sharif Street (D., Philadelphia) and former Sen. Daylin Leach (D., Montgomery) introduced an expansive bill that would have provided for growing cannabis, delivery, marijuana offense expungement, and a low bar for entry into the industry. But Republican lawmakers in the Pennsylvania House of Representatives said they had “no plans or interest in legalizing recreational marijuana.”

Democrats, however, won a narrow majority in the House this year. It isn’t clear whether enough votes can be secured to pass adult-use legislation, but more Democrats than Republicans support legalization, Spotlight PA reported in February. The state Senate remains under Republican control.

Incoming cannabis bills now may have a better chance of receiving committee hearings, Patrick Nightingale, a Pittsburgh-based attorney and executive director of the city’s chapter of the National Organization for the Reform of Marijuana Laws, told Spotlight PA last month.

“When the Republicans were in the majority ... they appointed the committee chairs, and if their leadership didn’t want something moving through committee, it didn’t,” Nightingale said. “That barrier no longer remains.”