In his fall legislative agenda, Pennsylvania Gov. Tom Wolf urged the state Legislature to legalize recreational marijuana and use proceeds from its sale to support business grants and restorative justice programs, as well as pass a six-month reduction or cancellation of the state’s alcohol tax on the hospitality industry.
I'm calling on the legislature to legalize recreational marijuana, with the revenue going to:
🔹 Small business grant funding
🔹 Restorative justice programsAt the same time, we must pursue policies that restore justice for individuals convicted of marijuana-related offenses.
— Governor Tom Wolf (@GovernorTomWolf) August 25, 2020
Pennsylvania would join 11 other states and Washington, D.C., in fully legalizing marijuana. Those states are Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington. The tax rates charged on recreational marijuana range from 10% in Maine to 47.1% in Washington.
Legalization can prove quite lucrative for states that enact it. After two years of legal recreational sales, Massachusetts raised $122 million in tax revenue, which includes state sales tax, excise tax and local taxes that municipalities have the ability to add to transactions within their borders.
“It’s almost, from a legislative and a state government perspective, a no brainer, because it’s a new source of revenue that you don’t have at a time where you need it desperately,” McDermott Will & Emery partner Alva C. Mather said. “And there’s lots of precedent for how to make it work in many other states, so the tide has turned quite a bit in the last several years where I think it’s not as taboo as it used to be.”
The economic downturn caused by the COVID-19 pandemic has put many states in financially precarious positions, and taxes raised through legalization could help pad budgets.
“States are in a very difficult situation in light of the pandemic, in terms of how they’re going to be able to generate more revenue and more job opportunities,” Mather said. “This is an entirely new industry that brings both to the table.”
Mather, whose law firm represents clients in the alcohol and cannabis industries, said she expects several states to explore legalization.
In Pennsylvania, Wolf has asked that half of the funds raised be “earmarked for historically disadvantaged businesses.” Another portion would “be used to further restorative justice programs that give priority to repairing the harm done to crime victims and communities as a result of marijuana criminalization.”
The criminalization of cannabis has often led to unfair application of the law, particularly against the Black community. In addition to creating restorative justice programs, Wolf also asked the state General Assembly to “pursue criminal justice reform policies that restore justice for individuals convicted of marijuana-related offenses.”
Mather said she expects some states that legalize marijuana will seek to make things right for people the system has wronged.
“We are certainly at a time in our country where we are looking to address those in a much more systematic way,” she said, noting NBA players’ strike Wednesday of the league’s Playoffs Wednesday while calling for justice in response to the shooting of Jacob Blake by police in Kenosha, Wisconsin. “The stories that I read — and certainly they’re one-offs — of people who are imprisoned and have had their lives and their families’ lives ruined for very minor marijuana convictions where it is now legal seem to be a very basic issue of fairness and justice.”
Wolf’s call for state lawmakers to pass legalization would make Pennsylvania somewhat unique. So far, only Illinois has legalized cannabis through its Legislature, rather than via ballot initiatives, according to THCnet.
In the same legislative agenda, Wolf also asked the Legislature to cancel or reduce the state’s alcohol tax for six months “to revitalize Pennsylvania’s hospitality, leisure and service industry,” and allow bars and restaurants to purchase alcohol at or near cost for six months.
Pennsylvania controls the sale of wine and spirits through its Liquor Control Board (PLCB) and bars and restaurants must purchase from PLCB outlets at retail, rather than wholesale, prices.
Another item in Wolf’s agenda is a proposal for a $225 million fund for forgivable loans and grants to small businesses through the state’s COVID-19 Relief Statewide Small Business Assistance Program, and $100 million in forgivable loans and grants for the hospitality, leisure and service industry.
“This funding will provide critical working capital financing to the commonwealth’s small businesses adversely affected by the COVID-19 pandemic,” the governor’s website said.