HARRISBURG, (WHTM) – Legalized marijuana in Pennsylvania has the potential to bring in more than $1 billion in tax revenue over the next five years, according to a new report by the Independent Fiscal Office.
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The study shows, if legalized this year, legalized marijuana could generate $41 million in General Fund revenue in 2024-25.
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That number increases to $185 million in 2025-26 and surpasses $250 million every year after 2026, according to the study.
The IFO’s study assumes legalized marijuana sales would begin in January 2025 if Governor Josh Shapiro’s proposal is passed by the split legislature.
“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.”
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Currently, five of the six states bordering Pennsylvania have some form of legalized marijuana, whether for adult or medical use. Pennsylvania legalized medical marijuana in 2016 under Governor Tom Wolf, however, full adult-use cannabis remains stuck in the legislature.
Pennsylvania lawmakers pushed last year for new marijuana legislation, including a bill from Senator Sharif Street (D-Philadelphia) and Senator Camera Bartolotta (R- Beaver, Green, Washington) to decriminalize marijuana.
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The IFO’s report notes banking challenges cannabis companies could face because marijuana remains a Schule I substance under the federal Controlled Substance Act.
Also highlighted in the report is the potential impact of regulating and taxing games of skill, electronic games often found in bars and gas stations. Governor Shapiro has proposed a 42% tax on the games.
“I think it’s time for a solution,” said Shapiro on games of skill. “We can’t do away with them. We should regulate them in tax.”
The study found Pennsylvania could see $103 million in general fund revenue during the 2024-25 fiscal year. That number would nearly triple in 2025-26 to $308 million and could surpass $400 million in 2028-29.
“It is unclear how the proposal might impact the longterm operations of those non-profits,” says the report. “The estimate assumes that the proposal is unlikely to impact current gaming revenues, because it simply regulates an existing activity, and does not establish a new form of gaming.”
There is potential bipartisan support for Shapiro’s game of skill tax plan.
“I do think there is some belief that it is time to regulate and tax games of skill,” said Pennsylvania Senate Majority Leader Joe Pittman (R-Armstrong, Indiana, Jefferson, and Westmoreland) when asked about games of skill tax earlier this year.
The non-partisan Independent Fiscal Office “provides revenue projections along with impartial and objective analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions.”
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