Pennsylvania once again seems to have momentum to become one of the next states to legalize cannabis for adult use. After a bipartisan bill was introduced in the commonwealth’s Senate last year, the House now has submitted an identical bill. Rep. Amen Brown (D) is the lead sponsor of the legislation, which he says is “grounded in safety and social equity.” There is more optimism from lawmakers that this legislation will be passed as neighboring New Jersey and New York have implemented adult-use cannabis laws– and created jobs and tax revenue that Pennsylvania legislators do not wish to permanently cede to their neighbors. Moreover, Pennsylvania Gov. Josh Shapiro stated in February that the cannabis industry should be “regulated and taxed responsibly.” Accordingly, it appears that it is a matter of when and not if adult use will be legalized in Pennsylvania.

The highlights of the proposed bill include the following:

• Adults 21 and older can purchase up to 30 grams of cannabis, but the proposed bill would not allow for home-grown cannabis unless an individual remained in the commonwealth’s medical cannabis program (in which case they could grow up to five plants for personal use).
• A “cannabis clean slate” program is created allowing for the automatic expungement of nonviolent offenses of certain arrests, charges and/or convictions of prior cannabis criminal history.
• The bill establishes a new independent regulatory authority, the Cannabis Regulatory Control Board, to oversee the medical and adult-use cannabis programs in Pennsylvania. The board will have seven members, with the governor holding the right to appoint three members and the majority and minority leaders of the Pennsylvania Senate and House of Representatives holding the right to appoint one member each.
• An 8% sales tax is imposed on all sales of cannabis and cannabis-infused products to consumers, which is paid by the consumer, as well as a 5% excise tax that is paid by the adult-use dispensing organization that makes the sale. Sales taxes and excise taxes are deposited into the Cannabis Regulation Fund.
• In addition to the Cannabis Regulation Fund, the bill also establishes a Cannabis Business Development Fund. Funded by required annual transfers from the Cannabis Regulation Fund as well as other transfer and licensing fees established by the bill, the money in the Cannabis Business Development Fund is required to be used in connection with providing loans and grants to qualified social and economic equity applicants, outreach to social equity applicants, research involving the participation of women, minorities, veterans and individuals with disabilities in the cannabis industry, job training and assistance to community organizations.
• The bill prohibits discrimination against cannabis users in certain proceedings or administrative processes solely as a result of their legal cannabis use or possession, including with respect to child welfare and custody proceedings, lawful firearm ownership, and medical care (including organ transplants).
• Notwithstanding the prohibitions against discrimination described above, employers are still permitted to adopt and enforce zero tolerance policies concerning the use and/or possession of cannabis in the workplace and being under the influence of cannabis in the workplace, while performing job duties or on call. In addition, the statute specifically states that nothing in the statute should be construed to permit any individual to take any action under the influence of cannabis where doing so would constitute negligence, professional misconduct or professional malpractice.
• The bill creates a robust social and economic equity program including low- or no-interest rate loans to qualified social and economic equity applicants, grants to such applicants to pay for ordinary business expenses, legal expenses and other business startup expenses.
• Current medical cannabis organizations with a dispensary permit will be able to convert and commence dispensing adult use cannabis for a $25,000 fee, while holders of grower/processor permits will be required to pay a nonrefundable $100,000 fee to be authorized to sell adult use cannabis.
• Notably, should the board not be seated within 180 days of adoption of law, or if the board otherwise fails to authorize a permitted medical marijuana organization from commencing adult use cannabis sales within such 180-day period, the medical organization would be automatically authorized to commence adult-use cannabis sales.
• Medical dispensaries may also apply for a second adult-use permit for each medical permit held, and each medical dispensary may operate up to three adult-use locations per permit.
• Each nonvertically integrated grower/processor that does not currently hold a dispensary permit can apply for one adult-use dispensing organization permit that allows it to operate up to three adult use dispensaries. Applicants will submit applications to the board within 60 days of the board being seated, on a form to be provided by the board.
• In addition to the permits issued to existing medical cannabis organizations, the board is authorized to issue up to four additional dispensing organization permits after Jan. 1, 2024. In connection with the issuance of those new permits, the board is required to establish a merit-based application process to ensure that cannabis permits are geographically dispersed throughout the commonwealth.
• Limits are established on the potency of cannabis and cannabis-infused products. Cultivation centers will be prohibited from selling, manufacturing or distributing cannabis flower in excess of 15% THC and cannabis concentrate in excess of 40% THC.
• Limits are also established on the total number of each type of permit to be issued, as well as the number of permits of each type that can be held by an individual. Grower/processor permits are initially limited to 25, and dispensary permits are initially limited to 50 (with each dispensary permit allowing the holder to open up to three separate locations). No individual may hold more than five dispensary permits or more than a single grower/processor permit.
• Micro Cultivation Center Permits will also be granted under the proposed bill, which would be limited to 3,000 square feet of canopy and allow for easier entry into the market by small operators.
• A random sample from each batch of cannabis and cannabis-infused products to be sold to a dispensary is required to be submitted to an approved, independent laboratory for testing prior to sale. The bill establishes qualification and independence standards for those laboratories, including prohibitions on overlapping ownership with other permitted cannabis organizations in the commonwealth.
• Cannabis businesses are permitted to advertise so long as the advertisements are not false or misleading (including making unsupported health claims) and do not promote overconsumption or target minors. All cannabis products must be packaged in child-resistant containers and labeled prior to sale in accordance with the requirements of the bill.

The summary above does not purport to cover every aspect of the proposed legislation. A complete copy can be found at this link: Pennsylvania HB 2210.

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