Pa. House passes recreational cannabis bill, faces uphill battle in Senate

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Pennsylvania House Democrats passed a sweeping bill to legalize recreational cannabis this week that includes stores operated by the state, a social equity program, decriminalization measures, allows plant cultivation for personal use and raises tax revenue for state coffers.

It’s the farthest an adult-use recreational cannabis bill has advanced in the legislative process since the state legalized medical marijuana a decade ago.

The 173-page long bill was sponsored by Democratic state Rep. Rick Krajewski, who represents West Philadelphia.

“With this legislation, we have the opportunity to reign in a market that is completely deregulated in terms of potency, contents, labeling or advertising,” Krajewski said during his speech before the vote. “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.”

House Bill 1200 was introduced Sunday and then voted out of the Health committee on Monday by a Democratic majority 14-12.

Supporters argue that there’s been enough debate about recreational cannabis since the House and Senate held six different hearings on the topic in 2024.

Opponents are concerned that the process was rushed without public hearings and testimony on the bill before a vote by representatives.

Before voting against the bill, Republican state Rep. Kathy Rapp said there’s a big difference between alcohol and cannabis because it’s still illegal on the federal level and said she was frustrated about the process.

“The timing was clearly planned and intentional,” Rapp said. “This hasty display we are faced with today [Monday] revealing a bill on a Sunday evening to push it out of the house only three days later is the opposite of transparency.”

On Tuesday, the bill passed the House 102-101 after all Democrats voted for it and all Republicans voted against it.

On Wednesday, the bill passed the House again 102-101, with the same split along party lines.

“How are we allowing state employees to sell a federally illegal drug?” Rapp asked before the House bill vote.

Both Oregon and Minnesota allow government-run cannabis dispensaries.

Public consumption of cannabis would still be illegal, and renters would require an agreement with landlords to use cannabis in apartments. A home cultivation permit would cost $100 a year for two plants consumed for personal use.

State-run cannabis retailers

Under the proposed law, Pennsylvania would develop a network of state-operated stores where personal amounts of cannabis is sold by trained state workers to adults 21 years or older with valid identification. That means no more than 1.5 ounces of cannabis flower, 5 grams of cannabis concentrate or any other products up to 500 milligrams of THC.

There are also caps on the THC strength of cannabis products in the recreational market at 25% THC for cannabis flower and 5 milligrams for a single serving of edible products like troches or chewable pills, with a 25 milligram limit per package. Cannabis concentrates would be capped at 200 milligrams per package.

The cannabis products would be subject to a 12% tax while stores would levy a 6% sales tax – all of which would be put into the new Cannabis Revenue Fund. That would support social responsibility programs, substance use disorder prevention, among other efforts. A municipality could tack on another 3% sales tax for stores operating within the community.

A fiscal note for the bill estimates that the state would collect $1 billion in licensing fees from conversion, $23.2 million from non-conversion license fees, $83 million from the excise tax, $41 million from sales taxes and $96 million in profits. That’s a potential of $244 million in revenue for 2026. And $1.1 billion by 2027.

But that doesn’t include expected costs like $186 million for implementation by the Pennsylvania Liquor Control Board, $1.5 million for courts, $750,000 for the state police and attorney general and $1 million for both the new office of social equity and the department of economic development.

Cannabis retailers could be inside of an existing state liquor store or stand alone as a recreational cannabis public store. Any brick-and-mortar store cannot be located within 1,000 feet of an elementary and middle school or daycare. Communities can oppose an adult-use cannabis store in court if it violates those parameters.

The program would be overseen by the state Liquor Control Board, which would add more members with knowledge of cannabis.

Existing medical cannabis dispensaries could only convert to recreational operations under specific circumstances, which would require a dearth in the market for state stores.

That’s a different approach than in many other states that allowed conversion from medical to recreational for existing dispensaries.

The medical cannabis industry in Pennsylvania criticized the bill, calling it a “missed opportunity.”

“Excluding the current industry from a future adult use market risks delaying safe access, weakening consumer confidence, and unintentionally supporting the illicit market,” said Meredith Buettner Schneider, executive director of the Pennsylvania Cannabis Coalition, in a statement after the vote. “Our state has a robust, compliant, and job-creating cannabis infrastructure that should be a part of the path forward.”

Pennsylvania’s social equity plan

The social equity program would create an Office of Social and Economic Equity in Pennsylvania responsible for a microbusiness lottery system, the state’s loan and grant programs for diverse cannabis businesses among other efforts to improve diversity in the industry.

There would be two types of licenses, one that’s run by a scoring system for cultivators and processors and the other would be a lottery for microcultivators, microprocessors and transporters. Each category would have 50 licenses. In addition, there would be 100 licenses for on-site cannabis consumption establishments statewide.

Social and economic equity applications must be companies with at least 65% ownership of individuals who are part of a historically impacted community, those with cannabis-related criminal records or their family members. Any social equity permit cannot be resold.

Even the social equity framework faced legislative pushback from Republicans.

“This bill is a slap in the face to small businesses and minority entrepreneurs who have long waited for a fair shot in the cannabis industry,” said state Rep. Abby Major, who represents western Pennsylvania counties like Armstrong.

That’s because the bill doesn’t offer dispensary licences to social equity applicants.

“The only chance for minority owned grow and processing businesses is to sell them to the state if the regulator selects them. And here’s the kicker, there’s no upfront capital for social equity applicants,” Major said.

And there was concern from progressive advocates pushing for legalization.

“I sort of equate this to sharecropping. You’re free, but you can’t participate fully in the economic system,” said Cherron Perry-Thomas, director of social impact for the Diasporic Alliance for Cannabis Opportunities and founder of Philadelphia’s Black Cannabis Week, about the legislation.

Perry-Thomas predicts that independent microprocessors would get crushed in competition against the big corporate operators that largely control the medical cannabis market, even if offered 50% retail store shelf space in state-run stores.

That’s because it would limit social equity applicants from operating dispensaries.

But she was more interested in the concept of cannabis-use establishments like lounges.

“We know that entertainment is really huge in our city so having a licensed [place] where people can actually go and consume in a safe space is ideal,” she said.

Cannabis law reform

There are several decriminalization measures in the bill, such as streamlined expungements for old cannabis possession charges, warnings and nominal fines for unauthorized sale of cannabis to individuals under 21 years old, or possession of more than a personal amount either purchased or home grown.

Employers would not be able to discriminate against hiring individuals who consume cannabis but would be able to enforce on the job laws, such as drug testing to prohibit visible intoxication during work hours. Bill critics counter that THC remains in the bloodstream for much longer than other substances like alcohol, so drug testing is difficult to determine whether someone is actively high. Cannabis users would also be allowed to own a firearm permit.

Bill may struggle in Senate

The Republican-controlled Senate is expected to stall this recreational cannabis bill, especially because of the state store model.

In 2023, a comprehensive bipartisan bill co-sponsored by state Sen. Dan Laughlin, a Republican who represents Erie, and state Sen. Sharif Street, a Democrat who represents Philadelphia.

That bipartisan bill, Senate Bill 846, proposed to legalize marijuana for adult use, ban marketing to children, create a state regulatory board and a social equity program, and impose an 8% sales tax in addition to a 5% excise tax on dispensary sales, among other things. The Pennsylvania Legislature operates on a two-year cycle, so the bill has died without being voted on in committee.

State Sen. Laughlin told USA Today that he would not support any cannabis legislation that included a state-run store system.

The pair expects to reintroduce a similar bill in the Senate in the coming months but no specific timeline was shared.

“I don’t think that the state store model is what’s best for Pennsylvania,” Street said. “We should let the medical marijuana folks have an opportunity to participate but we should certainly expand it beyond them. I think we want to make sure there’s an opportunity for a social equity license and who has a chance to participate, diversity that would be difficult to do at a state store model.”

Nor is he convinced that it would have enough to pass in the Senate.

“We’ll take a look at it, but from what I understand there’s some really good things in there around social equity,” he said, like expunging records of past convictions. “I think this is a major step in the right direction, people should understand this is a process, not the final work product. But this is an important step in the process to ending prohibition of adult-use cannabis.”