The impact of conflicting interests on Pennsylvania’s marijuana legalization discussion

Gov. Josh Shapiro recently had a meeting with cannabis dispensary owners from neighboring states such as Maryland, Ohio, New York, and New Jersey. His objective was to inquire about the number of customers who were crossing state lines to purchase their products at stores near the Pennsylvania border.

According to him, their response exceeds 60%.

The cannabis industry in Pennsylvania is hopeful about the possibility of marijuana legalization in 2025. However, given the state’s history of failed attempts in the past, there are doubts about whether it will actually happen.

“Pennsylvanians are actively purchasing cannabis, but the concerning issue is that they are currently paying taxes in other states,” expressed Shapiro, emphasizing the need for change. “It is crucial that we address this and become more competitive in the cannabis industry.”

Shapiro has voiced his support for legalizing recreational adult-use cannabis on multiple occasions. He previously advocated for it during his budget address last year. Despite some attempts by lawmakers, no significant progress has been made in passing a legalization bill through the legislature. However, public polling, funded by a pro-cannabis advocacy group, indicates widespread support for legalization.

Advocates like Shapiro are optimistic about the current legislative session, which began this month. There are a few reasons for their optimism. Firstly, the state’s surplus funds are expected to decrease due to the reduction in state spending increases that were supported by Shapiro and other Democrats in the previous budget. Additionally, there is a consensus among lawmakers that raising taxes to bridge this gap is not a desirable solution.

Advocates are optimistic that this will serve as a motivating factor for Republicans in the state Senate, who currently hold the majority, to give greater consideration to the passage of a recreational cannabis bill. According to Kate Flessner, spokesperson for Sen. Majority Leader Joe Pittman (R-Indiana), she stated that “this matter is complex, and any proposals would need to undergo thorough examination by standing committees before progressing further and receiving input from all our members.”

One Senate Republican has expressed strong support for recreational cannabis, indicating that it is not a complete rejection of the idea.

House Democrats have generally shown more support for the legalization of recreational cannabis. However, their efforts to pass relevant bills in the chamber last year faced significant challenges. It is important to note that Democrats held a slim majority in the House until recently, when a representative from Allegheny county passed away. Nonetheless, a special election is scheduled for March in the heavily Democratic district to fill the vacant seat.

Passing recreational cannabis legislation may face hurdles beyond gaining support for its legalization in principle. State leaders must confront various concerns related to the impact on public health, social equity, criminal justice, industry, and state finances in order to draft a bill that can pass in a divided legislature. However, prioritizing these concerns can prove challenging as lawmakers and constituencies hold differing opinions on the matter.

Senate Majority Leader Joe Pittman, a Republican from Indiana, was captured speaking at a press conference on March 7, 2023. The photograph was taken by Amanda Mustard for the Pennsylvania Capital-Star.

‘The devil really is in the details’

According to Pittman’s spokesperson, the caucus remains committed to prioritizing the strengthening of communities and ensuring public safety.

According to Shapiro, he had two goals in mind: preventing potential tax revenue from going to neighboring states, and upholding the principles of liberty, rights, and freedom.

Members of the Legislative Black Caucus are actively seeking a bill that aims to allocate funds for reinvestment in communities that have been disproportionately affected by the war on drugs. Additionally, they are advocating for the creation of state-supported opportunities for minority entrepreneurs to participate in the emerging industry.

There are also concerns among lawmakers regarding the potential impact of legalization on public health and the measures that could be implemented to prevent an increase in cannabis consumption, as observed in other states where it has been legalized.

According to Beau Kilmer, co-director of drug policy research at the think tank RAND, the decision to legalize cannabis is not a straightforward one. It is not simply a matter of saying yes or no, as the devil lies in the details.

Kilmer has dedicated over a decade to assisting various U.S. states and even foreign countries in developing cannabis laws tailored to their specific requirements. According to him, the initial crucial step for legislators is to clearly define their policy objectives.

The decisions made by legislators, such as determining the taxation and licensing of cannabis-related businesses, can significantly affect the price of the product and the individuals who are allowed to sell it. Consequently, these factors have the potential to influence consumer behavior and the revenue generated by the state.

According to Kilmer, if a lawmaker wants to effectively eliminate the illegal cannabis market, they should consider adopting a strategy that involves minimizing restrictions for private cannabis companies and granting a large number of business licenses.

“There are, however, individuals on the public health side who advocate for increased regulation and are not in favor of the price hitting rock bottom,” Kilmer explained. “Their priority is to gradually diminish the illegal market, even if it means the process takes longer.”

One way to prioritize public health is to implement measures that regulate the potency of legal products. This could involve setting limits on the strength of cannabis, or controlling the production quotas to increase prices. Additionally, there may be a consideration to prohibit the sale of edibles and vapes, which are known to have potential health risks.

“In the United States, we have tended to shift our attention abruptly from prohibition to the opposite extreme,” Kilmer commented. “However, outside of the U.S., there is a greater level of curiosity and consideration for more balanced approaches.”

In a recent discussion, members of a Pennsylvania subcommittee dedicated to cannabis had the opportunity to listen to insights from Canadian health experts regarding the legalization of cannabis in Quebec. In this province, cannabis is sold through state-owned stores, much like the way liquor is distributed here. Furthermore, Quebec has implemented some of the most stringent regulations on cannabis products among all the governments in North America that have legalized recreational marijuana.

Lawmakers were informed that the legalization of cannabis has resulted in a decrease in cannabis-related DUIs, calls to poison control, and visits to the emergency room compared to other regions that have also legalized cannabis.

Reps. Rick Krajewski (D-Philadelphia) and Dan Frankel (D-Allegheny), who serve as the chair of the cannabis-focused subcommittee, have expressed their intention to introduce a bill that would limit the majority of cannabis sales to state liquor stores.

Advocates supporting the legalization of cannabis in Pennsylvania gathered on the state Capitol steps on Tuesday, June 11, 2024, for a special event called “Cannabis Day at the Capitol.” A picture was taken to capture the moment, showing the advocates standing united in their cause.

‘We want to make sure that they’re ahead of the line instead of at the end’

However, lawmakers and advocates are not only taking into account public health and state revenue. There are other factors that are being considered in their decision-making process and that advocates are pushing for.

Cherron Perry-Thomas co-founded and currently serves as the director of social impact for the advocacy group Diasporic Alliance for Cannabis Opportunities (DACO). Their primary goal is to advocate for the inclusion of Black entrepreneurs and individuals who have been disproportionately affected by the war on drugs and prohibition in any recreational cannabis legislation.

Black people are disproportionately targeted and arrested for cannabis-related offenses compared to their white counterparts. This unjust disparity in the criminal justice system results in harsher sentencing for Black individuals. Perry-Thomas and many others view cannabis legislation as a chance to address these systemic injustices and rectify the existing inequalities.

Perry-Thomas has been engaging in discussions with legislators in Pennsylvania to advocate for a crucial provision in the bill. She is urging for state funds and resources to be allocated towards supporting Black entrepreneurs and individuals affected by prohibition in establishing their small businesses once the market becomes accessible again.

“We prioritize socially impacted communities by ensuring they are at the forefront, rather than being left behind,” emphasized Perry-Thomas.

Many states that have already legalized cannabis have implemented what are known as “social equity programs,” but the success of these initiatives has varied. These programs typically aim to ensure that a certain percentage of cannabis business licenses are granted to entrepreneurs from communities that have been disproportionately impacted by cannabis-related arrests. This includes individuals residing in areas with high rates of cannabis arrests, individuals with past convictions for cannabis offenses, as well as minority groups that have been disproportionately targeted for drug crimes.

In Illinois, numerous aspiring entrepreneurs who qualified for equity licenses feel that the state did not adequately support them. The agencies responsible for licensing and regulating their businesses were overwhelmed and understaffed. As a result, these new business owners faced lengthy delays while waiting for the program to process their applications, causing them to experience financial strain. Moreover, rising interest rates further hindered their ability to secure funding for their next business endeavors. Meanwhile, multi-state cannabis businesses and chains had already established a strong presence in the market by the time the equity license holders were able to begin operating.

Perry-Thomas suggests that Pennsylvania can learn from these errors. She proposes the establishment of a state-sponsored “incubator program” that would offer training and technical support to entrepreneurs from specific communities, even before the market opens.

In addition, she proposes that new businesses should not be permitted to commence operations until equity businesses have had the opportunity to establish themselves. Furthermore, she recommends that the state consider providing support in the form of low-interest loans to eligible individuals with well-developed business plans.

Many Pennsylvania lawmakers are in agreement with at least some of what Perry-Thomas is proposing. They had the opportunity to hear from entrepreneurs in neighboring states about their firsthand experiences with equity licensing during committee meetings last year. These discussions shed light on the potential benefits and drawbacks associated with such a system.

Perry-Thomas expresses concerns about how the ongoing national discussions regarding diversity, equity, and inclusion (DEI) initiatives could potentially influence the decision-making processes within the Pennsylvania statehouse.

Rep. Napoleon Nelson, the chair of the Pennsylvania Legislative Black Caucus, made it clear that he will not back any legalization bill unless there are provisions in place to assist those who have been disproportionately affected by the war on drugs in entering the emerging cannabis industry.

Nelson emphasizes the importance of including criminal justice reforms in any cannabis legislation that he would endorse. He particularly emphasizes the potential expungements for individuals who have been charged with cannabis-related offenses.

“There needs to be genuine reforms in the criminal justice system that accompany the support and development of an industry centered around a product that has caused individuals to be incarcerated and separated from their loved ones,” expressed Nelson. “Equally important is the need to provide opportunities for both the entrepreneurs involved in this industry and the communities that have been adversely affected by the loss of economic activity and disrupted family bonds.”

State Rep. Napoleon Nelson, a Democrat from Montgomery, delivered a powerful speech at a rally held at the Pennsylvania Capitol on Thursday, March 23, 2023. The event, organized by CeaseFirePA and March For Our Lives, aimed to raise awareness about the urgent need for gun control measures. Rep. Nelson’s presence and impassioned words added to the significance of the gathering, highlighting the importance of taking action to prevent gun violence in our communities.

Nelson is open to discussing the details, including who would be eligible for automatic expungement and the fate of individuals incarcerated on multiple charges, one of which is cannabis-related. Moreover, he considers providing assistance or even compensation to repeat offenders whose initial encounter with the criminal justice system stemmed from a minor cannabis offense.

According to Nelson, the bill’s intricacy, complexity, and significance cannot be overstated.

According to him, the absence of a criminal justice component in a cannabis bill would be a non-negotiable issue for Black lawmakers. Although he is uncertain about the specific details of this component, he emphasizes its importance in ensuring equity and fairness in the legislation.

Some Democrats have expressed their refusal to support a cannabis bill unless it has the support of the Legislative Black Caucus. This stance is based on the recognition of the disproportionate impact of prohibition on Black Pennsylvanians.

Private vs. public

Lawmakers in Pennsylvania are faced with the challenge of dealing with the influential cannabis lobby. This lobby has been vocal in expressing their opinions and desires to the legislators.

During last year’s committee meeting, there was a noticeable reaction from lobbyists and industry advocates when Frankel seemed to express support for the state-store model.

According to Britt Crampsie, a spokesperson for Responsible PA, which represents a diverse range of businesses in the medical cannabis industry, including local businesses and major cannabis chains, they are firmly opposed to the idea of a state store model.

“As Crampsie emphasizes, it is crucial for us to transition to a private retail market as quickly as possible,” stated.

According to her, a private sector model increases the feasibility of social equity programs by providing greater business opportunities for minority entrepreneurs.

Both Perry-Thomas and she share the same viewpoint on this matter. Perry-Thomas has expressed her willingness to back a state-store model as long as there are regulations in place to ensure that certain products come from equity-licensed companies in the supply chain.

According to Kilmer, the RAND researcher, a state-store model and social equity programs can work in harmony. By giving states more control over cannabis revenue, they can allocate funds towards programs aimed at supporting individuals who have been affected by the war on drugs and want to become entrepreneurs.

Proposing a state store model in any bill might encounter significant challenges. According to polls, the majority of Pennsylvanians are already not in favor of state liquor stores. Moreover, influential lawmakers, such as Nelson, have expressed doubts regarding this approach, echoing Perry-Thomas’ concerns. However, Nelson did not completely dismiss the idea and mentioned the possibility of supporting it if robust social equity and criminal justice provisions were included.

According to Crampsie, the industry currently shows overall support for a new cannabis bill. This bill, co-sponsored by Rep. Emily Kinkead (D-Allegheny) and Republican Aaron Kaufer, who has decided not to seek reelection in 2024, has gained significant attention.

According to Kinkead, she intends to reintroduce a comparable bill in the upcoming session.

The Black Legislative Caucus championed several measures in the 220-page bill, including equity licensing and criminal justice reforms. Kinkead mentioned that some of these measures will be amended this year to incorporate feedback from affected constituents. Additionally, the bill would allocate state funds to support equity-qualifying entrepreneurs.

The bill also included provisions regarding product labeling, packaging, and advertising. Kinkead even sought input from individuals in the billboard industry to ensure that there was precise language outlining what could be displayed on their signs and where.

State Representative Emily Kinkead, a Democrat from Allegheny, was photographed on January 7, 2025, while serving in the state House.

Kinkead’s bill, however, does not incorporate a provision for a moratorium on the sale of licenses held by social equity-qualifying business owners to non-qualifying businesses.

“We don’t impose such regulations on any other type of business, telling them ‘You are prohibited from selling your business’,” Kinkead argued.

According to Perry-Thomas, she advocates for a program that allows qualifying business owners to retain their licenses. She believes that other states with equity programs have struggled to achieve their objectives, with big cannabis companies often dominating the dispensary industry.

Existing medical marijuana businesses are also in favor of Kinkead’s bill, as it would permit them to transition into selling recreational cannabis.

The fate of existing medical dispensaries remains uncertain as Frankel and Krajewski’s state-store bill lacks a specific language regarding this matter.

Peter Marcus, a Pennsylvania native, is currently serving as the vice president of communications at Terrapin Care Station, a private cannabis business. Although the company previously operated stores in Colorado, it has now shifted its focus exclusively to Pennsylvania.

Marcus, a cannabis industry expert, highlighted the complexities surrounding cannabis markets in various regions. However, he specifically identified Pennsylvania as an exceptional marketplace due to its substantial patient base. Additionally, Marcus acknowledged the imminent possibility of adult-use legalization in the state.

According to Marcus, Colorado and other states are currently grappling with a phenomenon known as the “marijuana recession.” In essence, the market has become oversaturated, resulting in significant price declines that have disproportionately affected small businesses.

According to Kilmer, the current “marijuana recessions” being experienced by states across the country are a clear indication of how a state store model could provide assistance.

A state-store model could provide the state with more authority to regulate prices, ensuring stability. This stability would be crucial in supporting government programs that rely on revenue generated from cannabis sales.

Marcus believes that a state store model is not necessary for regulating the market, but he acknowledges that Pennsylvania has the advantage of “foresight.” He supports the idea of restricting new licenses and gradually expanding the industry.

Pennsylvania is currently the favored state in the cannabis industry due to its robust background and valuable insights that have contributed to the establishment of a stable and harmonious marketplace.

According to Kilmer, there is another benefit to the state store model: it helps to reduce the influence of the cannabis lobby.

According to Kilmer, involving for-profit companies in the legalization of marijuana can complicate matters, especially when they start profiting from it and hiring lobbyists. This can make it more difficult to reverse the decision in the future. Kilmer suggests that states like Pennsylvania could take an incremental approach, starting with a state store model and evaluating its success. After five to ten years, they can reevaluate and consider opening up the market further if necessary.

Reference Article