Pa. Gov. Shapiro looks to legalize — and tax — marijuana to balance state budget

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In his third budget proposal, Pennsylvania Gov. Josh Shapiro has, once again, proposed legalizing recreational marijuana.

“Twenty-four states have already legalized adult-use cannabis. That includes almost every single one of our neighbors,” Shapiro told legislators as he presented his budget Tuesday afternoon, adding that as much as “60%” of customers in New Jersey, Maryland and New York are from the commonwealth.

“Pennsylvanians who want to buy cannabis are just driving across the border to one of our neighbors,” he said.

Shapiro said it was a “hard” decision to make “as a father of four and as the former chief law enforcement officer of this commonwealth,” but added that he “took the time to study it and understand the impacts.”

The governor argued that such legalization would generate $1.3 billion in new tax revenue over five years.

He also proposed regulating and taxing “so-called skill games” — slot machines found in bars and other establishments around the state. The governor’s office estimates that there are as many as 70,000 machines across the commonwealth.

Unlike the official lottery, they are unregulated and provide no tax benefits. Shapiro wants to tax them at a rate of 52% with 47% going to the General Fund and the rest to the Lottery Fund, which is used for programs that benefit older residents such as rent rebates, transportation subsidies, low-cost prescriptions and care services.

In total, the governor projects $8 billion in new revenue over the next five years.

Medicinal marijuana has been legal in Pennsylvania since 2016. Former Gov. Tom Wolf first proposed legalizing cannabis in 2019, but he was unsuccessful. Shapiro was similarly unsuccessful when he proposed it in his budget last year.

However, some Republicans have started showing an interest in legalization suggesting that the state may be even closer to joining its neighboring states. Republican State Senator Dan Laughlin of Erie joined Philly Democrat Sharif Street to introduce a bill for legalization last year.

Still, there are competing perspectives on how exactly it might be implemented. Some legislators have advocated for state-owned cannabis shops similar to Fine Wine and Good Spirits stores. Laughlin and Street proposed a bill to create a board that would approve sellers and otherwise regulate the industry.

The governor did not specify a preference, only insisting it should include language on social equity.

“I ask you to come together and send to my desk a bill that legalizes adult-use cannabis and expunges the records of people who have been convicted for nonviolent possession of small amounts of marijuana,” he said. “A bill that sets reasonable regulations, protects public safety, and gives communities that suffered from the criminalization of cannabis an opportunity to succeed.”

That approach bothers some Republicans who say that the budget process isn’t an appropriate venue to debate the issue and the governor shouldn’t budget based on tax revenue from an illegal industry.

“If he wants something done, he needs to lead on it,” said Republican Senate Majority Leader Joe Pittman. “He can’t throw an idea out there, which he did last year and say, ‘let the legislature figure it out, I’ll sign it. Then I’ll go do press conferences all over the state.’ He has to lead on something. What is his priority? What will he do to get some of this stuff across the finish line?”

Although legalization appears to have gained some steam, it’s not clear proponents have the votes with some legislators concerned about the fact it continues to be criminalized by the federal government.

“Remember, it’s still a schedule one narcotic. It’s still an all cash industry. This is not something that we need to look to to balance budgets,” said House Republican leader Rep. Jesse Topper. “I believe that it is an impediment to members from both sides of the aisle throughout the building.”

A majority of Pennsylvanians support legalization, according to a recent poll. Meredith Buettner Schneider, executive director of the Pennsylvania Cannabis Coalition, argued that the state is ripe to establish a marijuana industry.

“Pennsylvania is uniquely positioned to experience the economic benefits of cannabis legalization swiftly because of its robust existing cannabis infrastructure,” she said in a statement. “With 32 active grower/processors, almost 200 dispensaries and more than 25,000 employees, the current medical marijuana industry is ready to deliver safe, regulated cannabis on day-one while generating revenue for the Commonwealth immediately.”