Governor Shapiro and Legislators Revive Push for Adult-Use Cannabis in Pennsylvania

• Legalize adult-use cannabis effective July 1, 2025, with legal sales beginning on January 1, 2026;
• Invest $10M in restorative justice initiatives from adult-use proceeds;
• Expunge the records of those incarcerated for only a possession-related offense attributable to cannabis; and
• Invest $25M to help new small and small diverse businesses enter the new adult-use marketplace.

Motivating this renewed sense of urgency are the lost tax revenues flowing to neighboring states in amounts that are becoming hard to ignore. Pennsylvania currently finds itself almost landlocked by adult-use jurisdictions and the blossoming cannabis markets which are drawing Pennsylvanians across state lines in droves to purchase flower and finished products. Indeed, the Governor’s budget proposal specifically identified lost revenue as a factor in the decision to move forward, stating: “Pennsylvania is currently at a competitive disadvantage, losing out on critical revenue and new business to our neighbors.”

The proposal also notes that “Executives from neighboring states with cannabis stores on the border have reported that up to 60% of their customers are from Pennsylvania.” This revenue leakage is especially prevalent in the densely populated eastern part of Pennsylvania where residents need not travel far to reach dispensaries just across the border in New Jersey and New York. The Governor’s budget proposal estimates that legalizing adult-use cannabis will yield $250M in annual revenue and will “generate $1.3B over the first 5 years as the marketplace gets up and running.”

And, critically, it appears that the Governor and legislature may be aligned on this issue to a degree not seen in prior years. In December, Representatives Rick Krajewski and Dan Frankel published a House Co-Sponsorship memorandum signaling an intention to introduce adult-use cannabis legislation that prioritizes:

• Expungement and restorative justice for those affected by draconian drug policies;
• Reinvestment of funds into communities disproportionately harmed by the war on drugs;
• Public health protections, such as limiting excessive THC levels, prohibiting predatory marketing and packaging, preventing accidental ingestions by children, and other recommendations developed by our nation’s leading scientists; and
• Providing sustainable cannabis businesses opportunities for local and diverse operators.

Notably, the Pennsylvania House Health Committee, chaired by Rep. Frankel, held six hearings in the 2023-2024 legislative session to examine the successes and failures of cannabis programs in other states. Even among conservative lawmakers, there appears to be growing consensus that the time is now to legalize adult-use cannabis. In the 2023-24 session, several bills proposing to legalize adult-use cannabis were co-sponsored by Republican lawmakers, including Senator Daniel Laughlin and Representative Aaron Kaufer.

Although this renewed inertia toward legalization is welcome news, there is still a long road ahead in Pennsylvania and many important questions about a future licensing framework and market operation remain unanswered, among them:

1. Will medical cannabis licensees be allowed to convert (and when)?
2. Will there be caps on adult-use licenses?
3. Will adult-use licenses be awarded by lottery or competitive applications?
4. Will vertical integration be permitted?
5. Will there be any limitations on product formulation or routes of administration?
6. Will municipalities be permitted to opt out?

It’s likely that these fundamental questions will not be answered for several months and the path forward will remain in flux. We will continue to monitor progress in real time and provide updates as they occur.