Senate Committee Examines Oversight and Economic Growth with Adult Cannabis Legalization
After wondering if legalizing cannabis for adult use could curb demand on the black market earlier this monthA Republican-controlled Pennsylvania Senate committee heard from experts on Monday on how — if the state goes ahead with legalization — to regulate the product and ensure economic growth.
The two-hour Senate Law and Justice Committee hearing was part of a series of meetings to assess the possible benefits of legalizing recreational cannabis for adult use in Pennsylvania and to draft oversight measures.
Pennsylvania’s Neighbors — New York, Virginia and New Jersey – have legalized recreational cannabis. Governor Tom Wolf, a Democrat, changed his stance on adult-use cannabis to 2019joining Lieutenant Governor John Fetterman in seeking legalization.
There is also growing support for similar legislation among Pennsylvania residents. A October 2021 Poll by Franklin & Marshall College showed 60% support among registered voters for cannabis legalization.
Sen. Mike Regan, R-York, who chairs the Senate panel, announced plans introduce legislation legalizing adult cannabis use to help fund enforcement last fall alongside State Representative Amen Brown, D-Philadelphia. Sen. Dan Laughlin, R-Erie, became the first Senate Republican to support adult cannabis use, introducing a legalization proposal with Sen. Sharif Street, D-Philadelphia, last year.
But Pennsylvania is unlikely to join its neighbors and states across the country in passing adult-use cannabis legislation. House and Senate leaders have not expressed support for the measure, though some have signaled an openness to considering a proposal.
When asked at a Pennsylvania Press Club luncheon on Monday whether an adult-use cannabis proposal would have legs in the bedroom, House Majority Leader Kerry Benninghoff, R-Center, replied, ” Shorter than mine.”
If elected governor, Senate Speaker Pro Tempore Jake Corman, R-Center, told the Capital-Star in November that it would consider legalization proposals. Any bill, he said, must meet “really important standards.”
Regan, who supported the state medical marijuana programon Monday reiterated its commitment to those standards, saying the hearings aimed to develop “comprehensive” legislation that uses best practices for implementation and enforcement.
“There is no need for us to go blindly when 18 other states have already gone through the process,” Regan said.
Jordan Wellington, a partner at Vicente Sederberg LLP, a cannabis law and policy firm, told lawmakers that cannabis use and business activity is already happening in Pennsylvania.
“The question is really who will engage in this business activity, if they are authorized, controlled and regulated companies that do things like verify identity and follow security procedures or if they are are illicit operators? said Wellington.
He proposed that lawmakers consider testing procedures to ensure the safety of cannabis products.
“That’s one of the great competitive advantages of the regulated market over the illicit market,” Wellington said. “Consumers know they are consuming a safe product, and studies show that consumers will pay a higher price for a regulated product.”
Brandon Nemec, associate director of government and regulatory affairs for PharmaCann, Inc. — an Illinois-based cannabis company, told lawmakers that having a centralized regulatory plan from the start of any cannabis program would help with oversight. and would ensure stricter policies.
Jesse Alderman, partner and co-chairman of Foley Hoag LLP, a Boston-based cannabis law firm, urged lawmakers to consider “clear statutory mechanisms and clear timelines” to allow cardholders to marijuana for medical purposes to obtain authorization to operate with dual authorizations.
This could allow Pennsylvania to impose conversation fees immediately while attracting new applicants through a separate program, Alderman suggested.
Nemec promoted the potential for “new, sustained, and significant” revenue if Pennsylvania legalized cannabis for adult use.
“However, the Commonwealth should ensure that it sets an adult tax rate that will allow it to compete with the illicit market and bring adult consumers into the regulated market as quickly and efficiently as possible,” Nemec said.
Citing Michigan as an example, Nemec told lawmakers that the state’s combined effective tax rate is 16%, with a cannabis excise tax of 10% and a regular sales tax of 6%. Last year, Michigan reported more than $1.3 billion in sales for adult use and generated about $250 million in tax revenue, Nemec said.
He said tax administration is more easily enforced by the state and operators, meaning the tax rate is applied at the retail point of sale.
Nemec added that there are workplace development opportunities, referring to partnering in Illinois with local community colleges with formalized training programs through trades groups or schools.
“The Commonwealth has the possibility that if it decides to move to adult use, tens of thousands of new high-paying, high-paying jobs will need to be created in order to sustain a market the size of Pennsylvania’s,” Nemec said. “And at the start of the program it would be very beneficial for the Commonwealth to consider setting up public-private partnerships.”
Street also recognized the opportunities for farmers in Pennsylvania to get involved in growing cannabis. He added that there was a chance for dealers currently working in the illicit market to turn to a legal cannabis program.
“I want the kid who’s been asked 100 times how he can brand illegal weed – I wish he could have the opportunity to work at a dispensary or join one of your companies as well “, he added.
Although the legalization of recreational cannabis is still up for debate in the General Assembly, some lawmakers have different ideas about spending the extra revenue generated from cannabis sales.
Sen. James Brewster, D-Allegheny, suggested using the money — even some of the funds — to fight addiction in Pennsylvania.
“No matter what we tried to do, we didn’t do anything in it,” Brewster said.