Legal cannabis would be sold by private dispensaries under key GOP proposal

The long-awaited GOP proposal moves Harrisburg’s marijuana talks forward, but the issue still divides the Pa. Senate.

Spotlight PA is an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania. Sign up for our free newsletters.

By KATE HUANGPU
Spotlight PA
HARRISBURG — Despite a pressing need for lawmakers to find new revenue sources, recreational marijuana won’t be part of this year’s state budget. But the long-running debate over legalizing the drug is still progressing in Harrisburg, now that a key state Senate Republican has finally unveiled a proposal.

Whether his caucus will support it, however, remains an open question.

The bipartisan bill, introduced by state Sens. Dan Laughlin (R., Erie) and Sharif Street (D., Philadelphia) — both cannabis advocates — would legalize use of the drug for adults 21 and over.

It would also allow existing medical marijuana dispensaries to apply for a permit to begin recreational sales if they pay a $100,000 fee.

How easy it should be for established medical sellers to convert their operations for recreational sales has dominated the legalization debate. Prospective small sellers and their advocates have said a $100,000 conversion fee might be too low, and worry the setup would give existing companies too much of a market advantage.

Chris Goldstein, a Pennsylvania- based advocate with the pro-legalization National Organization for the Reform of Marijuana Laws, said that the fee is relatively low compared to neighboring states such as New Jersey, which can charge up to $1 million. Goldstein added that he expects lawmakers to land on a steeper fee as they negotiate — as high as in the millions.

“They put the low number in the beginning of the bill, not to scare [lobbyists] off, but it grows until they get to a pretty hefty number,” Goldstein said.

The bill would charge a lower permit application fee, $50,000, for small businesses, as well as for those that are located in or owned by people from “disproportionately impacted” areas. It defines these as places with high poverty, high unemployment rates, high past rates of cannabis-related incarceration, or some combination of the above. Up to 15 each of both types of applicants would be able to get permits.

The bill would also create a state control board to regulate both the recreational and medical cannabis industries and issue licenses to new retailers. Members of the board would be appointed by the governor and legislative leaders.

Laughlin chairs the GOP-controlled Senate’s Law and Justice Committee, the panel through which any marijuana bill would need to pass.

In May, he killed a proposal from state House Democrats that would have legalized cannabis through a controversial model involving state-run retail stores. These would have resembled Pennsylvania’s Fine Wine & Good Spirits stores.

Laughlin called the bill up only for it to be voted down, and explained he did so to show that model for legalizing weed “has no path forward in the Senate.”

Following the vote, state House Majority Leader Matt Bradford (D., Montgomery) told reporters that the issue was now in the hands of Senate Republicans.

“The House has obviously put down what its priorities are, what it wants to see in a final deal,” Bradford said. “The next step is for the Senate, not just to show what it doesn’t support, but what it has 26 votes for.”

It’s not clear if Laughlin has done that so far.

Key members of the state Senate Republican caucus have said that they would not support the legislation or do not consider it a priority.

State Senate Majority Leader Joe Pittman (R., Indiana) told Spotlight PA last week that he does “not see a prevailing view for legalization of recreational marijuana within our caucus as part of the current budget.”

And state Sen. Scott Martin (R., Lancaster) told LNP | LancasterOnline last week that he would not move any of the recreational-use bills in the state Senate through his committee. Martin chairs the Appropriations Committee, where all budget-related bills get considered before being voted on by the entire chamber.

Rank-and-file Republicans in Laughlin’s committee also aren’t sold, and told Spotlight PA earlier this year they have public safety and health concerns about legalizing the drug.

Meanwhile, state House Democrats have introduced proposals as well.

State Rep. Amen Brown (D., Philadelphia) introduced companion legislation to the Senate bill, meaning it shares the same language.

Another bill, pitched by state Reps. Emily Kinkead (D., Allegheny) and Abby Major (R., Allegheny), takes a different tack.

It would also create a new state board to regulate recreational and medical cannabis sales and allow existing medical cannabis sellers to convert their operations to recreational sales after paying a $100,000 fee.

But unlike Laughlin’s bill, this would require two of the governor’s board appointees to represent labor interests, and one to represent a “social and economic equity community.”

Additionally, the Kinkead and Major bill would reserve more new licenses for small business owners and people from groups impacted by the criminalization of marijuana. Sixty permits would go to “social equity” applicants, four to small businesses, and 10 to micro-growers. Application fees for these prospective entrepreneurs would be decided by the new oversight board.

A spokesperson for Bradford said that he is “reviewing the bills,” but did not comment on whether he and state House Democrats would consider an alternative to the state-store model bill they already passed.

State Rep. Rick Krajewski (D., Philadelphia), one of the lawmakers who sponsored that bill, said he doesn’t consider any of the three new proposals bills to be viable paths toward legalizing adult-use cannabis, since state Senate Republican leaders have already said they don’t plan to run them.

He said that if he were to support a private model, he would need to see strong protections for small business owners to prevent larger companies from dominating the market, such as interest-free loans and early access to buyers.

“For a private model to work, these are the things that are critical,” Krajewski told Spotlight PA. “Until we’re given any kind of direction about a path, I don’t see why we should do all the work.”