A new report from Pennsylvania's Independent Fiscal Office (IFO) suggests that legalizing marijuana could generate over a billion dollars in tax revenue for the state. The study estimates that if adult-use marijuana sales begin in January 2025, it could generate $41 million for the General Fund revenue in the first year. This figure could increase to $185 million in the next fiscal year and surpass $250 million every year after that.
The report comes as the state legislature considers whether to approve legalized adult sales of marijuana. Currently, five of Pennsylvania's six neighboring states have some form of legalized marijuana.
Pennsylvania Governor Josh Shapiro has proposed that marijuana legalization would be effective from July 1, with sales beginning on January 1. Under his proposal, there would be a 20% tax on the wholesale price of marijuana. Revenue of $5 million would be put towards "restorative justice initiatives," and he has called for the expungement of criminal records for those accused of possessing a small amount of marijuana.
The IFO's study assumes that if Governor Shapiro's proposal is passed by the split legislature, legalized marijuana sales would begin in January 2025. The report also notes the potential banking challenges cannabis companies could face because marijuana remains a Schedule I substance under the federal Controlled Substance Act.
"We're losing out on an industry that, once fully implemented, would bring in more than $250 million in annual revenue," said Shapiro during his February budget address. "And our failure to legalize and regulate this only fuels the black market and drains much-needed resources for law enforcement. It's time to catch up."
However, the proposal has met with some skepticism. Pennsylvania Senate President Pro Tempore Kim Ward expressed doubts about the proposal and the planned spending, saying legalizing marijuana "is not as simple as (Shapiro) makes it sound."
"As far as marijuana legalization is concerned, the governor is making a big assumption that it will pass the Legislature. He's spending a lot of money and not really telling us where we are getting the money," Ward said.
The report's release comes as more states across the U.S. are considering or have already legalized marijuana. A study from New Frontier Data, a data analytics firm focused on the cannabis industry, suggests that legalizing marijuana nationwide could create at least $132 billion in tax revenue and more than a million new jobs across the United States in the next decade.