A marijuana legalization bill being developed by two Pennsylvania lawmakers will promote using existing state-run liquor stores as the backbone for an adult-use cannabis industry in the years to come.

The proposal from state Reps. Rick Krajewski (D-Philadelphia) and Dan Frankel (D-Allegheny) would make Pennsylvania an outlier among the 24 states that already have passed laws creating private-sector markets for recreational marijuana. The two lawmakers circulated a memo this month seeking co-sponsors for their bill, which would decriminalize marijuana and reinvest retail revenue in a range of restorative justice programs.

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"The way that we are thinking through legislation is you have a state store system as a means of primary retail, but you also have opportunities for small business retail as well," Krajewski said. "Basically, it's a hybrid proposal. It's not just state stores."

The approach calls for putting marijuana under the umbrella of the Pennsylvania Liquor Control Board, a move that could make cannabis available to purchase at Fine Wine & Good Spirits stores across the state. Krajewski called the concept "preliminary" and said many of its finer details still need to be developed, including how the private market would coexist with state stores. In a mixed model, the goal would be to steer more resources toward social equity in ways some states have struggled to achieve with their programs.

"All of the money we get from state stores is public revenue that can be used toward community reinvestment programs that support people to engage in the industry," Krajewski said. "It can go toward community programs for people who have been impacted by past criminalization. It can go toward violence prevention and affordable housing."

The pending bill is the latest of adult-use cannabis proposals. The others have withered in the Pennsylvania legislature in recent years, despite some receiving bipartisan support. The state has fallen behind nearly all of its bordering neighbors, leaving hundreds of millions of dollars in tax revenue on the table entering 2025.

"Pennsylvania is currently an island of prohibition," said Chris Goldstein, regional director for the National Organization for the Reform of Marijuana Laws. "There's plenty of support amongst both parties for legalizing cannabis, allowing home cultivation and decriminalizing possession immediately. Getting a bill up for it, getting formal legislative support, the magic is just missing in Harrisburg. ... It should be an easy win for everybody."

Questions arise about social equity, feasibility 

Over the past year, Krajewski chaired five hearings on issues surrounding marijuana legalization. His priority is creating a pathway for people to get marijuana offenses expunged from their records and open up more economic opportunities for those who have been disadvantaged by criminalization.

At the hearings, Krajewski and other lawmakers heard feedback from established players in the cannabis industry. Many already operate medical marijuana dispensaries in Pennsylvania. This is often a stepping stone for companies to expand their footprints with full legalization, as has happened in other states. Having a state store model in Pennsylvania could complicate that type of rollout, but Krajewski believes it would be better for small businesses in the long run.

"You have a lot of businesses that struggle to actually compete against large, multi-state operators that take on a lot of capital and equity in the industry,"  Krajewski said. "A lot of people are not given the support they need to be entrepreneurs in the space, so they fail that way. Running a business of any kind is hard, and I think a lot of states don't do enough to offer support in a very volatile market."

The existing infrastructure of the Fine Wine & Good Spirits stores could offer stability for Pennsylvania to gradually increase private licensing, Krajewski said, and the model would allow for marijuana revenue to be invested in entrepreneurs entering various parts of the industry.

Responsible PA, an organization representing the cannabis industry, prefers that Pennsylvania follows and improves on the models in other states. 

"It's hard to know exactly what that would look like," Brittany Crampsie, the lobbying group's spokesperson, said about the state store proposal. "There have been failings in social equity measures in other states, but I think we would be looking for a bill that sets standards for minority participation and also enforces those standards."

Crampsie has a hard time envisioning bipartisan support for a state store model, especially because there has been a growing push to privatize alcohol in Pennsylvania.

"Last session, they got ready-to-drink cocktails out of there. They have continued to expand wine options outside of liquor stores. They have added additional beer serving and brewery licenses," Crampsie said. "I cannot foresee a situation where the House sends the Senate a cannabis bill with the state expanding liquor stores and Senate Republicans jump to do it."

Goldstein, who attended some of Krajewski's hearings in Harrisburg, said the sessions were too narrowly focused on the corporate cannabis industry and law enforcement. He argued there wasn't enough time devoted to figuring out how to craft a bill that will help consumers and medical marijuana patients.

"Arguably, Pennsylvania has one of the most well-running medical marijuana systems on the East Coast," Goldstein said. "It's more affordable than most of the medical marijuana in surrounding states. Why would we want to close down those dispensaries when the model in every other state is to grandfather them in and have them start selling adult-use products?"

In states that have legalized adult-use cannabis, Goldstein blamed corporate consolidation for undermining social equity. Despite the best intentions of state grant programs meant to support minority- and women-owned businesses, large operators often stifle competition by dominating both the retail and wholesale sides of the industry.

Goldstein called a potential state store proposal a strategic misstep that would cater to large operators at the expense of consumers. It also would requires costs to modify existing stores, he said. 

Goldstein also questioned whether Pennsylvania – which has yet to pass a standalone marijuana decriminalization law – is well-suited to run a marijuana market or politically capable of getting such a plan across the finish line.

"I'm not sure that the state of Pennsylvania is really in the business of selling cannabis. It really has been in the business of prohibition for nearly 100 years," Goldstein said. "I think flipping the switch for the state to do that job is pretty far-fetched."

Competing state bills likely to follow

Krajewski said the main barrier to legalizing marijuana in Pennsylvania has been a lack of political will.

"It's going to be a negotiation, as with everything in Harrisburg with a divided legislature," he said. "We're going to have a starting proposal with what we can do around a cannabis legalization framework and we're going to go to the other side to have a conversation about what can be done. We're surrounded by states that have legalized cannabis, so I think it's an inevitability."

Crampsie and Goldstein expect that other bills based on a private market model will be introduced in the coming months, likely garnering more momentum than the state store proposal being floated.

"There's a lot of discussion on how we build out this model instead of whether we should do it at all," Crampsie said. "Three, four sessions ago, it was a little bit more amorphous. I would expect to see more bipartisan consensus legislation introduced, as well. Even being stuck on the details is such a better place than rancorous debates about 'Just Say No' and War on Drugs kind of stuff."

In the coming year, Goldstein wants to see lawmakers focus on solutions that will preserve the affordability of marijuana for medicinal purposes and put an end to arrests for marijuana possession. He thinks creating an adult-use market will be a long shot in 2025 unless there's a significant shift in direction in Harrisburg.

"I've seen this play out in other states, and getting down to the nuts and bolts of actually regulating cannabis is dirty business," Goldstein said. "This legislature is not getting down to that kind of business, so it's going to be difficult."