Pennsylvania Budget Passes Without Adult-Use Cannabis Revenue

Budget Negotiations Conclude Without Cannabis Provision

Pennsylvania Governor Josh Shapiro signed the $47.6 billion budget into law on July 28, finalizing appropriations that don't allocate funds from adult-use cannabis taxes. The budget bill, House Bill 1300, passed the House 102-101 and the Senate 26-24, reflecting the narrow margins that have characterized cannabis debates in Harrisburg since 2023. No cannabis-related amendments were introduced during final floor consideration.

Senate Bill 846 would have established a regulatory framework for adult-use sales and imposed a 20% excise tax on recreational transactions. It remained in the Senate Appropriations Committee as of July 28. The bill's sponsor, Senator Sharif Street (D-Philadelphia), told reporters in June that leadership had declined to schedule a vote before the budget deadline. Street's office didn't issue a statement following the budget's passage.

Revenue Projections and Fiscal Impact

The Independent Fiscal Office projected in March 2026 that adult-use legalization would generate $250 million in combined excise and sales tax revenue in fiscal year 2027, rising to $485 million by FY2029. Those estimates assumed a January 2027 launch date for retail sales and a 20% excise tax rate, consistent with the rates in New Jersey and New York. The IFO's model also assumed Pennsylvania would capture roughly 15% of the adult cannabis market currently served by gray-market operators or cross-border purchases in neighboring states.

Without that revenue, the 2026 budget relies on a $1.2 billion transfer from the General Fund surplus and a $400 million increase in corporate net income tax collections. No new broad-based tax increases. But the budget defers $600 million in planned pension contributions to future fiscal years. Budget analysts note that the deferred contributions will require either spending cuts or new revenue sources in the 2027 budget cycle.

Legislative Timeline and Committee Status

Senate Bill 846 has been in the Appropriations Committee since April 15, 2026, following a 7-4 party-line vote in the Senate Law and Justice Committee. The bill would authorize the Pennsylvania Liquor Control Board to issue up to 500 adult-use retail licenses, with 50% reserved for social-equity applicants defined as residents of census tracts with marijuana arrest rates exceeding the state median. Automatic expungement for prior convictions involving possession of up to 30 grams is also included.

House Bill 2380, a companion measure introduced by Representative Amen Brown (D-Philadelphia), remains in the House Finance Committee. That bill differs from the Senate version by proposing a 15% excise tax and a cap of 400 retail licenses. Neither chamber has scheduled hearings on the measures for the fall session, which begins September 19. For full background on Pennsylvania's legalization efforts, see the CannIntel topic hub on Pennsylvania adult-use legalization.

What Comes Next

Advocates are now targeting the 2027 budget cycle, which will require passage of enabling legislation by March 2027 to allow the Liquor Control Board sufficient time to draft regulations and issue licenses before fiscal year 2028. That timeline is tighter than the 18-month rulemaking periods used in New Jersey and Maryland, both of which launched sales about two years after their respective governors signed legalization bills.

Republicans control the Senate 28-22. At least three GOP votes would be needed to advance SB 846 if all Democrats vote in favor. In the 2025 session, no Republican senator voted for the bill in committee. The House is narrowly divided, with Democrats holding a 102-101 majority, meaning a single defection would require Republican support to pass HB 2380.

The next legislative indicator: whether leadership schedules committee votes on either bill during the September session. Without movement by October, advocates say a 2027 launch becomes logistically improbable.