Pennsylvania House Passes Bill To Legalize Marijuana Sales At State-Run Dispensaries, Sending It To Senate

The Pennsylvania House of Representatives has given its final approval to a bill that would legalize marijuana through a system of state-owned dispensaries, sending it to the GOP-controlled Senate.

It has been a dizzying legislative process for the legislation, sponsored by Reps. Rick Krajewski (D) and Dan Frankel (D). The measure was introduced on Sunday, and it’s since moved through two committees, received initial approval from the full chamber on Tuesday and has now cleared the House on third reading in a 102-101 vote on Wednesday.

“After chairing six Health Committee hearings—meeting with stakeholders from industry, labor, social equity, criminal justice reform and more—I am proud and honored to be able to introduce legislation that I believe creates a balanced, responsible and robust framework,” Krajewski said on the floor.

“The reality is criminalization of cannabis does not work. It does not deter usage, it does not promote safety and it is not in the best interest of our commonwealth,” he said. “With legalization, we have the opportunity to rein in a market that is completely deregulated in terms of potency, content. labeling or advertising. We can promote public health, while also bringing in hundreds of millions of dollars that can be directed to communities hit the hardest by past criminalization.”

Frankel said “we set out to achieve something that no other state quite has: Put a permanent end to the criminalization of cannabis, protect the public health and make sure that Pennsylvanians and local businesses stand to benefit.”

“We followed the recommendations of the national experts. We created legislation that will legalize cannabis at the same time that it puts in place guardrails to protect children non-users and the health of our community,” he said.

The speedy process for the bill has given some lawmakers, particularly on the GOP side, heartburn. And on the floor on Wednesday, one member attempted to derail the bill by arguing it violates the state Constitution, in part because of provisions restricting court appeals of where cannabis shops could be located.

The motion to deem the bill unconstitutional failed in a 102-101 vote. A second motion challenging its legality on other grounds was ruled out of order and did not receive a vote.

Concerns about the legislation were also articulated during an earlier vote in the House Appropriations Committee on Wednesday before the legislation came back to the floor for a final vote.

The GOP minority chair of the panel, Rep. James Struzzi (R), said at the hearing that the proposal “creates significant concerns—both from a procedural standpoint and a physical standpoint on this Commonwealth.”

“This bill—170-plus pages, just introduced over the weekend essentially—we’ve had minimal time to process it,” Struzzi said. “We have a lot of questions. And this is a serious topic, as I think everyone will agree that will affect our Commonwealth for many, many years to come—good or bad, whether you stand for legalization or not.”

While there’s a competing bipartisan legalization measure that’s expected to be unveiled soon, this one already has 27 House Democrats signed on as cosponsors to the Krajewski-Frankel bill—more than one-fourth of the party’s caucus in the chamber.

“While our state is late to the game in terms of legalizing cannabis, this timing allows us to learn from the mistakes of other frameworks,” Krajewski said on the floor. To that end, he emphasized his sense that creating a “hybrid” model of public-private operations within the market represents a “bold new approach” that will boost the economy and avoid the “naked greed” of marijuana corporations that he argued has unfolded in other legal states.

“Massive multi-state cannabis companies have leveraged their existing medical and recreational footprints to control entire swaths of newly emerging recreational markets,” he said.

“Where states have tried to level the playing field of social equity guidelines, those states have been terrorized with industry lawsuits,” Krajewski said. “This naked greed has led to near impossible conditions for small entrepreneurs to successfully compete in cannabis, enterprising business owners—many of whom are formerly incarcerated due to cannabis related offenses—were sold a fake gold rush dream by predatory investors when social equity businesses failed due to the volatility of a new market and aggressive multi-state operators, private equity was ready to swoop in and seize the remains.”

“A vote on HB 1200 is a vote to move us one step closer to modernization, and I ask for your support.”

On the House side, GOP members have raised various concerns about the policy change itself, such as potential impaired driving and workplace intoxication. The procedural and policy-specific concerns are expected to be amplified in the Republican-controlled Senate, where members will likely propose significant amendments to the proposed plan to have the state run marijuana shops.

Here’s what the bill, HB 1200, would accomplish: 

• Under the bill, adults 21 and older would be able to legally possess and buy cannabis from stores licensed and operated by the Liquor Control Board (LCB), which currently controls alcohol sales in the state.
• LCB would directly control the cannabis retail side of the industry, but it would also be responsible for licensing marijuana cultivation, processing, transportation and on-site consumption businesses that could be privately owned.
• Cannabis shops could not sell more than 42.5 grams of marijuana, which would be the possession limit, to an adult within a 24-hour period.
• Possession of up to three times the allowable amount would be decriminalized. Possessing up to double the amount (around three ounces) would be punishable by a maximum $250 fine, while possession of up to three times the legal amount would carry a maximum $500 fine.
• Cannabis flower could not contain more than 25 percent THC, and edibles would be limited to five milligrams of THC per serving, with a maximum 25 milligrams total.
• Adults who obtain a home cultivation permit from LCB at a cost of $100 annually would be able to grow up to two mature and two immature plants in a secure location at their residence for personal use.
• Until marijuana sales begin, possession of small amounts of cannabis (defined as 30 grams or less) would be downgraded to a summary offense with a fine-only penalty of $250.
• Marijuana products sold at licensed shops would be subject to a 12 percent excise tax.
• Revenue from those taxes would be deposited in a Cannabis Revenue Fund, managed by the Department of Revenue (DOR). That fund would be used to cover administrative costs within the various departments that have a hand in regulating the cannabis program, including the facilitation of expungements for people with prior marijuana convictions for activity that would be made legal under the law. The remaining revenue would be distributed for a community reinvestment fund (50 percent), substance misuse treatment programs (10 percent), cannabis business development (5 percent), minority business development (2.5 percent) and grants to county courts that process expungements (2 percent).The rest would go into the state general fund.
• Local municipalities could impose an additional 3 percent tax on on-site consumption lounges operating in their jurisdiction.
• The Administrative Office of Pennsylvania Courts would be tasked with overseeing cannabis expungements, providing courts with a list of eligible cases that must be automatically sealed within two years.
• A Social and Economic Equity Advisory Committee would be established under the bill to “promote inclusion and participation in the regulated cannabis industry, including through an indirect cannabis business, by persons that may qualify to be a social and economic equity applicant.” The committee would be responsible for a new Social and Economic Equity Loan and Grant Program that would “provide financial assistance to certified social and economic equity applicants, certified social and economic equity licensees and indirect cannabis businesses that meet the qualifications of a social and economic equity applicant.”
• Eligible social and economic equity applicants are defined as those with a “household annual income below 200 percent of the Area Median Income in their county of residence,” and they’d also have to either have a minimum of 65 percent ownership by justice-impacted individuals or those who’ve spent five of the last 10 years in a designated historically impacted community.
• The bill also contains rules around policies related to cannabis advertising, packaging and labeling—as well as requirements for businesses around ownership and a mandate to have a labor peace agreement in place for workers.
• Public consumption would be prohibited, with offenders subject to a $100 fine for a first charge and up to $200 for subsequent offenses.
• The legislation would also provide state-level protections, clarifying that residents who use cannabis in compliance with the law cannot be denied firearms rights, medical care, custody rights and professional licensing.
• Workers who use cannabis off the job also could not be punished or fired based on the presence of THC metabolites in a drug tests—with key exceptions. Federally contracted workers could still face penalties, and employees would not be protected if the company has explicit prohibitions in its rules.
• The legislation would not permit local municipalities to bar cannabis retailers from operating within their jurisdictions.
• Possession of marijuana by an underage person would no longer carry the threat of jail time, replacing that penalty with escalating fines and a possible referral to a diversion program.
• With respect to licensing, LCB would be required to issue licenses for 50 cultivators, 50 microcultivators, 50 processors, 50 microprocessors and up to 50 transporters. Those numbers could increase depending on the results of a market study.
• If LCB determines that it’s in the state’s best interest to expand the market, it could issue licenses for existing medical cannabis cultivators and processors to service the adult-use market. Those prospective licensees would need to pay a non-refundable $15,000 application fee and $20 million for each license.

The largest challenge for the legislation going forward will likely come down to its proposal to have the state control cannabis sales—a regulatory model that exists in no other legal market in the U.S.

For what it’s worth, a recent poll found that Pennsylvania voters say they favor a model where cannabis is sold by licensed private businesses, rather than through a system of state-run stores.

Gov. Josh Shapiro (D) has repeatedly called for adult-use marijuana legalization, including the reform in his last three budget requests. However, he hasn’t endorsed the specific idea of having a state-controlled model.

Key Pennsylvania lawmakers have already made clear that they’re at odds on the path forward for legalization—while a top Republican senator recently dismissed the idea that the reform is achievable at all this session.

Frankel, for his part, said recently that “this will be the bill that we will see,” referring to his state-run legalization plan, adding that he’s worked “hand-in-hand” with Democratic leadership.

Rep. Abby Major (R)—who is sponsoring another forthcoming legalization bill that envisions a traditional private sales model alongside Rep. Emily Kinkead (D)—said on the floor on Wednesday that she stands opposed to the competing bill, emphasizing that she disagrees with the state-run stores proposal.

“Besides the fact that this would require state employees and the state itself to violate federal law—risking the freezing of employees, personal and state bank accounts and the state’s access to federal funding—this bill is a costly and inefficient approach for the commonwealth, posing significant risks to our economy, our medical program, social equity and public health and safety,” she said.

“House Bill 1200 is a deeply flawed proposal that drains our resources and weakens our financial footing long before we would ever see a return. It’s expensive, it’s inefficient, it delays revenue, it excludes those most impacted by prohibition, and it jeopardize the health and wellbeing of patients and consumers,” she said. “We must reject House Bill 1200 and instead look to a well-regulated private market—one that delivers immediate economic benefits supports entrepreneurs, protects patients, and ensures public safety.”

While Democrats control the House and governor’s office, they will still need to reach a deal with the GOP-controlled Senate to effectuate change. And in addition to the conflicting perspectives among pro-legalization legislators, another potential barrier to reform is exactly that political dynamic.

Senate Majority Leader Joe Pittman (R) said that while he sees a “path forward” for enacting regulations for separate gaming-related reform, “I’m not seeing consensus between the four caucuses and the governor collectively that [marijuana legalization] should be a priority.”

Regardless of which direction Pennsylvania lawmakers do—or don’t—go on marijuana legalization session, a survey released last week shows a majority of adults in the state support the reform—and opposition to the policy change has fallen by nearly 50 percent over the last decade.

Kinkead has made the case in another recent interview that legalizing cannabis in Pennsylvania will help the state mitigate public health and safety concerns associated with the illicit market, including the fact that unregulated products can be laced with fentanyl.

The lawmaker previously introduced a separate bipartisan marijuana legalization bill, alongside 15 other cosponsors, last September. It did not advance, however.

Meanwhile, a Republican Pennsylvania senator recently called for the creation of a state “legacy” fund, using tax revenue from adult-use marijuana sales and gaming to make long-term investments in the Commonwealth’s economy.

The senator argued that, beyond using any resulting tax revenue to fund day-to-day projects and public services, the state should earmark a portion of those tax dollars for a fund to “provide a sustainable source of prosperity that lasts for generations.”

Pennsylvania House Speaker Joanna McClinton (D) recently said that Democrats are ready to pass a marijuana legalization bill this session, but that the party “will need Republican support” to get the job done—adding that it will be a “heavy lift.”

Another Democratic lawmaker said legislature is “substantially closer” to reaching a deal on marijuana legalization, and an initial vote on a bipartisan cannabis reform bill could come as early as this month.

Polls have shown bipartisan support for legalization among voters, but the reform has consistently stalled in the legislature, owing in large part to GOP opposition. But not all Republican members are against the policy change—and one recently said she felt her party should seize the “opportunity to snatch” the issue from Democrats.

Separately in March, the Pennsylvania House approved a bill sponsored by Frankel that’s meant to strengthen safety standards and oversight of the state’s medical marijuana program as lawmakers work to advance adult-use legalization.

While Pennsylvania’s medical cannabis program was enacted nearly a decade ago, lawmakers say the measure, which now heads to the Senate, is necessary to improve testing compliance, product audits and lab inspections, among other aspects of the industry.

Meanwhile, Pennsylvania Democratic lawmakers recently introduced a bill that would allow farmers and other small agriculture operators to sell marijuana they cultivate to existing growers and and processors if the state moves to legalize adult-use cannabis.

Separately, an independent Pennsylvania agency is projecting more tax dollars to be generated from adult-use marijuana sales compared to what the governor’s office has estimated, although it expects significantly less overall revenue from cannabis legalization due to differing views on licensing fees.

Pennsylvania officials have also launched a new survey that invites legal marijuana businesses across the country to provide information about their operations to help the state better understand the cannabis industry as lawmakers consider enacting adult-use legalization this session.

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Also, in a video interview released in March, the governor emphasized that the state is “losing out” to others that have already enacted adult-use legalization, while maintaining a policy that’s enriched the illicit market.

“I think it’s an issue of freedom and liberty. I mean, if folks want to smoke, they should be able to do so in a safe and legal way,” he said. “We should shut down the black market—and, by the way, every state around us is doing it. Pennsylvanians are driving to those other states and paying taxes in those other states.”

Pennsylvania’s Republican attorney general recently said he wants to be a “voice for potential public safety risks” of enacting the governor’s proposal—though he said his office would be ready to enforce the new law if lawmakers did vote to pass it.

The state’s agriculture secretary separately told lawmakers that he’s fully confident that his department is in a “really good” position to oversee an adult-use marijuana program if lawmakers act.

Meanwhile, in February, top Pennsylvania police and health officials told lawmakers they are prepared to implement marijuana legalization if the legislature moves forward with the reform—and that they stand ready to work together as the details of legislation to achieve it are crafted.

Amid the growing calls for marijuana legalization in Pennsylvania, a GOP state senator said prohibition has been a “disaster,” and a regulated sales model for cannabis—similar to how alcohol and tobacco are handled—could serve as an effective alternative.

A Republican Pennsylvania senator also recently defended the push to legalize and regulate marijuana, calling it “the most conservative stance” on the issue.

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