Pennsylvania Cannabis Program Updates

Pennsylvania Cannabis Program Updates

Medical cannabis has been legal in Pennsylvania since 2016. Despite efforts to push recreational
cannabis in Pennsylvania forward, the state appears to be at a standstill once again. To the
dismay of many Keystone State residents, the Pennsylvania Legislature decided not to move
forward with the most recent push to legalize cannabis. Though some advocates hope to see cannabis legalization on the legislative agenda come September, others have pointed out that the upcoming session will likely be too politically charged to accomplish the necessary steps for adult-use cannabis to make it on the ballot for November.

Pennsylvania budget legislation and 280E updates

While Pennsylvania Governor Josh Shapiro proposed adult-use cannabis legalization in his budget request submitted back in February, the final version of the budget legislation does not include the legalization of recreational cannabis in Pennsylvania. Still, the approved budget legislation packet that includes a section will allow some medical cannabis companies to take state tax deductions—a workaround for the IRS tax code, 280E, which prevents cannabis businesses from taking tax deductions due to the plant’s federally illegal status.

Recreational Pennsylvania cannabis market potential

In Governor Shapiro’s initial budget pitch in February, he requested lawmakers pass a 20% tax
on adult-use cannabis sales. He estimated this would bring in more than $250 million in annual
tax revenue. According to an independent analysis by FTI Consulting, Pennsylvania could see up to $2.8
billion in sales in the first year of operations. Further, the analysis estimates the creation of nearly 45,000 jobs as a result of recreational cannabis in Pennsylvania. While Pennsylvania residents wait for their state to pass legislation legalizing recreational cannabis, neighboring states are pushing forward with their adult-use markets.

“As Pennsylvanians go on vacation this summer to New York, New Jersey, Maryland, and even
‘friggin’ Ohio, they will witness these states rake in millions, as our state legislature fails to act,”
said Brit Crampsie, a spokesperson for the advocacy group that paid for the independent
analysis, ResponsiblePA.

What’s next for Pennsylvania cannabis?

While the 280E tax workaround is a victory for medical cannabis businesses in the state, Pennsylvania still has a ways to go before it catches up with neighboring states. Until legislation for recreational cannabis passes, the state lacks a framework for purchasing products or starting a cannabis business in Pennsylvania.

Cannabis legislation may be on the agenda come September, but many fear it will be too late to
push the state forward for a vote in November. We will keep a close eye on the state’s progress.

Are you interested in obtaining a cannabis business license in Pennsylvania? Call us to speak with an industry expert at 602-290-9424.

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