“The evidence from other states is unambiguous: over-taxation kills cannabis markets’ ability to displace illicit sales and generate sustainable revenue.”
By Max Jackson, Cannabis Wise Guys
Pennsylvania Gov. Josh Shapiro’s (D) 2026/27 budget proposal to legalize marijuana projects $729 million in first-year cannabis revenue to address Pennsylvania’s $4.8 billion structural deficit. It’s a politically appealing pitch: legalize cannabis, capture tax dollars currently flowing to neighboring states and fund education and infrastructure without raising income taxes.
But Shapiro himself acknowledged the central challenge in his budget proposal: approximately 60 percent of customers at New Jersey and Maryland border dispensaries are Pennsylvania residents. Nearly half of Pennsylvania’s population lives in a county bordering a state with legal cannabis. Pennsylvania residents are already cannabis consumers—they’re just funding other states’ tax programs instead of Pennsylvania’s.
The $729 million projection assumes those customers will shift to Pennsylvania dispensaries once adult-use sales begin. But that only happens if Pennsylvania’s legal market can compete on price, quality and access with the options consumers already use: border-state dispensaries, illicit dealers and THCA hemp shops.
And the fastest way to guarantee they don’t is to design a tax structure that treats cannabis as a captive revenue source while expecting
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