It may be time to look at marijuana as a means to balance the Pennsylvania budget.
The pandemic has left big holes in the economy, and some lawmakers are searching for ideas that could help fill the gap.
“I’m always open to discussing anything,” state Rep. Russ Diamond said in a recent email.
“I would consider myself agnostic on the topic of recreational cannabis, with some concern for the impact it might have on our medical cannabis program, which I have worked very hard on,” Diamond, a Republican representing the 102nd District in Lebanon County, added.
“That said, I think we need to see exactly what our revenue situation is after July 15 comes, which is the date all the spring tax deadlines were extended to. We may actually have to come back in session in late July, depending on how bad those numbers are.”
Pennsylvania lost nearly $4 billion in tax revenues since the pandemic struck, according to a May 21 article in the Philadelphia Inquirer — and the income deficit has continued to grow over recent weeks.
But, the article noted, states that have legalized marijuana for recreational use are “reaping major tax revenues.”
“Illinois, with a population similar in size to Pennsylvania’s, has raked in more than $10 million a month in taxes and fees since it legalized weed for adult use in January. Last year, Nevada collected $99 million; Oregon, $102 million; Colorado, $302 million; Washington state, $390 million; and California, $635 million,” reporter Sam Wood states in the story. “And with New York, New Jersey, and Maryland also considering legalizing marijuana for recreational use, the Keystone State risks losing cannabis sales to its neighbors.”
Wood noted the potential income from a weed tax “would not solve the budget problem,” but it “could help the state’s fund-starved schools, or repair crumbling roads and bridges. For courts and prisons, legalizing would wipe out the cost of prosecuting marijuana-related offenses.”
Republican legislators, many of whom have supported the state’s legal medical marijuana program, have until lately avoided discussions of legalizing the drug for recreation.
Now, that may be changing.
“Given the pandemic and the fiscal problems that the state is facing, people who may not have formerly considered recreational marijuana as a revenue generator may be brought to the table,” state Sen. Dan Laughlin, a Republican from Erie County, told the Inquirer. “I fully believe that recreational marijuana is going to be one of the pieces of revenue that is certainly discussed in the budget cycle.”
Republican state Sen. Tom Killion of Chester County said taxes on marijuana could prevent significant cuts to the school budget.
“It’s a whole new world here. So everything is on the table,” Killion told the Inquirer.
State Sen. Dave Arnold, a Republican whose 48th District covers Lebanon County and parts of York and Dauphin counties, told LebTown he “has concerns regarding the full-legalization of recreational marijuana.”
Revenue estimates from legalization are often over-inflated to drum up support, Arnold said. For example, he noted, California projected first-year revenues of $1 billion but brought in only $345 million. Similarly, he said, Alaska projected $9.6 million but only generated $1.7 million, and Colorado projected $118 million but only generated $67 million.
He cited comments by Andrew Freedman, formerly the director of Marijuana Coordination for Colorado, who said in 2015 that states “do not legalize for taxation. It is a myth. You are not going to be able to pay teachers. The big red herring in the whole thing that the tax revenue will solve a bunch of crises. But it won’t.”
“I don’t think that legalizing a psychoactive drug, solely for the purpose of replacing lost revenue due to COVID-19, makes for good public policy,” he said.
For one thing, Arnold said, the research on marijuana’s impact on workers and the workplace is incomplete.
“We have a great understanding of the limits one can have alcohol in their system without inhibiting fine-motor skills,” he said. “We do not have the same level of research, nor consensus from the medical community, regarding marijuana.”
He also noted that marijuana use among teenagers is markedly higher in states that have legalized the drug for adult use.
“The notion that, ‘It’s just pot, man,’ is old, stale, and complacent,” Arnold said. “Not everyone sits on their couch eating snacks while using marijuana. These same people may be behind the wheel of a car, operating a forklift, going to work operating heavy machinery. While it may be comical to joke about stoned-drivers going slow and stopping at green lights, these are serious issues that need to be discussed and research needs to be conducted.”
He added: “Needless to say, I do not support legalizing recreational marijuana, simply to fill a hole in the budget. As Lebanon County District Attorney I supported, and still do, decriminalization of marijuana, but I still have concerns related to full recreational legalization.”
Arnold’s predecessor in office, Mike Folmer, said in a February 2013 interview with the Press & Journal that legal recreational marijuana “is going to come” to Pennsylvania eventually, but he hoped to slow its advance.
Folmer resigned from office last September after being charged with possessing child pornography. He pleaded guilty to the charge in February.
During his 12 years in office, Folmer was a champion of medical marijuana use but worried that legalizing the drug for recreational use would cause the medical supply to tank.
“In every state that went from medicinal right into[(recreational], the medicinal programs went down the tubes because no one cared about growing for medicinal. All the money was in the next buzz,” he told the Press & Journal.
Folmer also said in 2019, however, that legalizing marijuana would not be “the cure-all of cure-alls” for revenue deficits.
But the move to legalize recreational weed was already moving forward long before COVID-19 reared its head.
Gov. Tom Wolf tweeted in December 2018 that “it is time for Pennsylvania to take a serious and honest look at recreational marijuana.” In January 2019, Lt. Gov. John Fetterman launched a tour of all 67 counties to hear residents’ thoughts on the initiative.
At a rally in Erie in February, Fetterman said a majority of residents favor legalization.
“There’s no reefer madness. All that is going away,” he said, according to the Pittsburgh Post-Gazette. “I don’t smoke it, and a lot of people don’t smoke it, but it belongs in a different basket of goods like tobacco and alcohol, and a majority of Pennsylvanians, including Republicans, feel that way as well.”
Fetterman said the state is “saying no to billions of dollars over the next 15 or 20 years” by not legalizing the drug.
Survey results released in October 2019 by the Center for Opinion Research, the Floyd Institute for Public Policy and Franklin & Marshall College showed that 58 percent of registered voters surveyed support legalization of the drug in Pennsylvania.
Broken down by party affiliation, the survey found that 45 percent of Republicans supported legalization, compared to 67 percent of Democrats and 68 percent of independents.
In a poll conducted less than 10 years prior, only 33 percent of respondents said they supported legal marijuana.
A study released in May by Harper Polling said more than 60 percent of likely voters in Pennsylvania favor legalizing the use of marijuana for adults, including 54 percent of voters who lean “very conservative” or “somewhat conservative.”
Rep. Susan C. Helm, a Republican representing the 104th District, which lies largely in Dauphin County but includes East Hanover and North Annville townships in Lebanon County, said “the Legislature needs to listen” when the citizens speak.
“I think it is time for discussion, and I emphasize discussion, so that all members of the Legislature have all the facts and are fully informed with statistics and medical advice as to how does the use of recreational marijuana may possibly lead to drug abuse and addiction,” she said in an email Wednesday morning.
However, “I would never vote to legalize recreational marijuana because of income for the state. I do not believe that is the right reason,” she added. “I would not put the health of anyone at risk just to bring money to the Commonwealth. Until I have the accurate medical information, I would be a no vote, but I am open to gathering facts and listening to the concerns and desires of my constituents.”
Her counterpart in the 101st District, state Rep. Frank Ryan, said he is “in favor of the decriminalization of marijuana but I do not support the legalization of it for a variety of reasons.”
For one thing, Ryan said, he questions the use of marijuana as a source of revenue because “the state’s over-reliance on ‘sin’ type taxes is troubling to me.”
Ryan said it’s hard to estimate the impact of a tax on legal marijuana because state lawmakers don’t use dynamic scoring to evaluate new legislation.
Dynamic scoring, in the words of D.C. lobbying firm District Policy Group, is “a method of analysis used to calculate the prospective macroeconomic effects of a bill” by estimating “changes in behavior or effects to the wider economy that may yield or preclude economic benefits or government revenues in the future.” For example, according to Business Insider, dynamic scoring can be used to predict how raising sales tax on an item will affect sales; it gets more complicated, the article explains, when trying to forecast the impact a change in taxation will have on a population’s spending decisions.
Ryan introduced House Bill 110 — which moved to the Senate after passing unanimously in the House — to introduce dynamic scoring into the process.
In the case of legal marijuana, he said, the state Auditor General has estimated a positive tax impact of $500 million … “but that does not include the costs of the social programs needed because of it,” Ryan said, “which have been estimated to be as high as $400 million.”
Those numbers, he added, hail from an “unscientific estimate.”
He is also concerned that the state is relying on taxes on “alcohol, gambling, medical marijuana, and the like” to increase revenue, rather than addressing overspending “and poorly designed systems which cost taxpayers significantly.”
Noting that the state expects further shortfalls in fiscal year 2021, as well as the costs of bailing out hospitals and senior care facilities that have been hit hard by the COVID-19 crunch, Ryan said legislators “need to start solving problems and we need to know what we’re getting into before we start doing things like this.”
“I would absolutely be willing to support a study of it even though at this point I am not supportive of the effort to legalize recreational marijuana,” Ryan said.
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Full Disclosure: The campaign Dave Arnold was an advertiser on LebTown during a previous election cycle. The campaign of Frank Ryan is a current advertiser on LebTown. LebTown does not make editorial decisions based on advertising relationships and advertisers do not receive special editorial treatment. Learn more about advertising with LebTown here.
This article was updated to include a comment from Rep. Susan Helm.