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With Medical Market Booming, Pennsylvania Governor Urges Adult-Use Legalization

September 1, 2020

Pennsylvania Governor Tom Wolf is mounting a new legalization push for adult-use cannabis, as medical sales in the state continue to skyrocket, offering evidence of robust demand and an untapped revenue opportunity. Wolf’s plan would use the tax revenue generated by legalizing sales to fund small business grants, with 50% of the total set aside for historically disadvantaged businesses. Another portion of the funding would go toward restorative justice programs repairing harm done by the war on drugs.

Legalization in Pennsylvania would be a landmark for the U.S. cannabis category. With a population of nearly 13 million, the state is the fifth most populous, trailing New York, Florida, Texas, and California. Its medical marijuana market, operational since early 2018, has surged during the pandemic in a clear indication of growing demand and massive potential for the recreational market. Weekly visits to medical dispensaries have grown from 70,000 statewide in February to 120,000 in August and sales for the period totaled approximately $385 million, rivaling the first two years of the program combined, according to the state Office of Medical Marijuana.

Because of the robust nature of Pennsylvania’s medical market, many of the country’s largest cannabis producers are already present in the state. Chicago-based Cresco Labs, for instance, recently completed an expansion project at its cultivation and manufacturing facility in Brookville, Pennsylvania, bringing it to 88,000 square-feet of growing space. It also operates dispensary locations in Pittsburgh and plans to open more in the state. “Pennsylvania continues to be one of the most attractive and highly coveted markets in the country,” said Cresco CEO Charlie Bachtell.

Green Thumb Industries similarly operates both production facilities and more than 10 dispensaries in the Keystone State. Curaleaf has likewise accelerated its entry into Pennsylvania via its recent acquisition of Grassroots. Other companies have also made in-roads there which cumulatively could make for one of the fastest and smoothest transitions to a recreational market of any state thus far, as much of the infrastructure is already present.

While multi-state cannabis operators are keen to open Pennsylvania up to retail sales, Wolf has floated the idea of retailing adult-use product through the existing state store system used for wine and spirits. The Pennsylvania Liquor Control Board had retail sales of $2.67 billion and net income of $191 million in its 2019 fiscal year.

Public opinion on the issue is firmly on the governor’s side, but it’s unclear if he’ll be able to shepherd legalization through the state congress. Wolf sent Lieutenant Governor John Fetterman on a statewide listening tour to gather opinions about legalization last year. Out of 44,000 total comments from the tour, email, and phone calls, among other forms of communication, 82% favored legalization, 16% opposed, and 2% were undecided. The most common reasons cited for support included criminal justice reform, economic benefits, and belief that cannabis is safer than alcohol and opioids.—Danny Sullivan

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