Committee rereports adult-use cannabis bill after debate over costs and revenue estimates

The House Appropriations Committee voted to rereport House Bill 1200, the proposal to legalize and regulate adult-use cannabis in Pennsylvania, to the House floor after extended questioning about fiscal impacts and program implementation.

Republican members said the bill raises major fiscal and procedural questions at a time when the Commonwealth must finalize a budget. "House Bill 1200 that would legalize recreational marijuana creates significant concerns both from a procedural standpoint and a fiscal standpoint on this commonwealth," a committee member said during the hearing, adding that agencies involved in implementation had not been fully consulted and that cost estimates were inconsistent.

Committee discussion included specific fiscal figures provided by staff. Committee staff explained that Section 720 of the bill would authorize up to 25 processor and 25 cultivator conversion licenses at $20 million each; "multiplying 50 times 20,000,000 would arrive at a billion dollars," a staff member said. Staff also described a 12% excise tax plus a 6% sales tax on retail sales: "Sales tax does apply to these transactions as well. So it's 12% excise tax and 6% sales tax." Committee members asked about a proposed $100 million bond to cover startup and grant costs; staff said there would be no debt service in the first year and estimated a 2026–27 debt-service payment of $10.9 million on a revenue bond at about 5.99% over 20 years.

Republican members said those projections, combined with a staff estimate that implementation costs could reach roughly $260 million over the first two years while revenue might be only about $15 million in year one, meant the committee lacked sufficient information to advance final approval. "Given the current plan ... the LCB has indicated to us that that cost is going to be in the area to do this of about $260,000,000 over the first 2 years, while the Department of Revenue states that it will only generate roughly about $15,000,000 over the first year," the committee member said.

Supporters and other members noted that surrounding states have legalized adult-use cannabis and that Pennsylvania residents currently purchase cannabis across borders, returning tax revenue to neighboring states rather than Pennsylvania. The chair then called the roll; Republicans on the committee voted no. The chair announced that HB1200 will be rereported to the House floor.

The committee’s action advances HB1200 to the floor but does not enact the bill or resolve the outstanding fiscal questions. Committee members said additional analysis and agency consultation will be necessary as the bill proceeds through the legislative process.