As part of his plan to juice tax revenues for his 2025–2026 budget, Gov. Josh Shapiro is proposing to legalize and tax recreational marijuana — which he’s calling “adult-use cannabis” — in Pennsylvania. The governor rosily projects $1.3 billion in additional state revenue in the first five years after passage, which would help reduce the bleeding from the commonwealth’s structural deficit.
It’s not an unreasonable idea: With so many of Pennsylvania’s neighbors — in fact, all of them except West Virginia — offering legal weed, the commonwealth’s hand is almost forced, as its residents already easily acquire the drug (and pay the taxes) across state lines.
Even so, we’d urge caution, for three reasons. The experience of states that have fully legalized recreational marijuana is mixed. Scientific studies are increasingly recognizing the risks of cannabis use disorder and the drug’s associations with mental health disorders, at the same time much higher potency products are becoming available. And massive Big Tobacco-style corporations are beginning to dominate the industry.
With so much unknown, Mr. Shapiro and the legislature should find other ways, including cost-cutting and other revenue generation, to place the state’s finances on a firmer footing.
Changed circumstances
Until roughly the turn of the millennium all available weed had concentrations of THC — tetrahydrocannabinol, the psychoactive compound that occurs naturally in the cannabis plant — in the low single-digits. It was either smoked or eaten, the THC infused in a product such as a gummy or (infamously) a brownie.
By the time Washington and Colorado became the first states to legalize recreational use in 2012, selective breeding of the cannabis plant had resulted in average potencies reaching double-digits. In other words, the same amount of marijuana would have twice the effect.
Meanwhile, isolating the THC compound has allowed for new products, from vaping devices to highly concentrated (90+%) tinctures that can be placed one drop at a time under the tongue, or even absorbed through the skin. None of this existed a dozen years ago.
Nor did multi-billion-dollar international corporations that profited from cannabis use. During the first wave of legalization, one of the appeals of retail cannabis was creating opportunities for small, locally-owned and -oriented dispensaries. Today, a few behemoths like Trulieve and Sunnyside are scooping up mom-and-pop dispensaries, creating international empires. Pennsylvania would be the third-most-populous state to legitimize the drug, a significant prize for the burgeoning business.
Real dangers
The increasing potency, the new ways it can be used and the growing domination of the market by corporations, has complicated the question of legalization. It is not obvious, as supporters confidently predict, that no harm will come from full legalization.
Not long ago, the idea of marijuana addiction was often derided as “Reefer Madness” moral panic. Today, with more and more people becoming accustomed to higher and higher doses, cannabis use disorder (CUD) is a recognized medical phenomenon, alongside alcohol and opioid use disorders. About 10% of substance use treatment admissions in America are for CUD.
At the same time, research has established a definitive link between overuse of cannabis and psychosis and schizophrenia, especially in young men predisposed to mental health disorders. One National Institutes of Health study, for instance, determined that “as many as 30% of cases of schizophrenia among men aged 21–30 might have been prevented by averting cannabis use disorder.”
The experience of other states with negative outcomes from legalization is mixed. The most worrying possible consequence — increased cannabis use among teenagers or pre-teens — has generally not come to pass. There is good evidence, however, for increases in emergency room visits and impaired driving due to cannabis use after the drug is fully legalized.
Complicated finances
The financial argument is similarly unsettled. Supporters argue that since the state already profits from alcohol, which has essentially all the same negative effects as cannabis, why shouldn’t it also profit from this drug?
It’s a compelling argument — but the reality is more complicated. Mr. Shapiro’s estimate of $1.3 billion in revenues over five years is just that, an estimate, and will depend on how marijuana taxes are structured and the state of the market in the future, which cannot be accurately predicted. Colorado, for instance, saw reliably increasing tax revenues for nearly a decade — until a steep decline that began in 2022.
The ability of states to profit from marijuana is also complicated by the durability of the black market. While it may appear common-sense that the black market disappears upon legalization, that hasn’t happened — in fact, sometimes the illegal business booms, as overall use increases and legal (that is, taxed) cannabis struggles to compete with cheaper alternatives.
Higher taxes fuel the illegal trade. Competition with other states will apply further downward pressure to tax rates, further limiting revenue potential.
Cannabis taxes are an unstable basis on which to stabilize the budget.
Better solutions
Legalization of recreational marijuana would come with some clear benefits. Regulation of the industry would enhance the safety and reliability of the wide range of cannabis products. Certainly some new revenues would be generated.
Perhaps above all, it would remove from the books a prohibition that has resulted in a disproportionate number of poor people and people of color becoming ensnared in the criminal justice system.
But revenue can be found and criminal justice reformed through other means. And the state’s broad medical marijuana program already ensures the safety of products for over 1 million Pennsylvanians with medical marijuana cards.
There is too much yet unknown about the long-term effects of cannabis use, especially concentrated THC, for Pennsylvania to take the dramatic step of full legalization. There are other ways to fix the budget — maybe more difficult, but also better for the people of the commonwealth.
