According to a new report conducted by the Pennsylvania Independent Fiscal Office (IFO), the state would garner hundreds of millions of dollars in new tax revenue by FY 2028 to 2029 if marijuana is legalized for recreational use.
The IFO report is based on a proposed budget by Governor Josh Shapiro’s (D), released last week, which would see marijuana legalized for everyone 21 and older.
“The Executive Budget includes a proposal to legalize cannabis for adult recreational use and impose a 20% excise tax on the wholesale price of products sold”, states the report. “Assuming legal sales begin on January 1, 2025, the IFO projects the proposal could generate $41 million in General Fund revenue for fiscal year (FY) 2024-25 and $271 million for FY 2028-29”.
The revenue estimate “is based on the annual average dollar amount of legalized cannabis purchased per adult (age 21 or older) from other states and applied to Pennsylvania’s population.”
The report notes that currently, all border states except West Virginia have legalized and impose tax on adult recreational use cannabis. These taxes were enacted recently in Ohio (2023), Maryland (2023), New York (2021) and New Jersey (2020). Because nearly all border states already tax recreational cannabis, the estimate is not increased for cross border sales that may have occurred in other states that were first to tax recreational marijuana in a region.
You can find the full report by clicking here.
