Governor Wolf Calls for the Legalization of Marijuana to Support Small Businesses Amidst Pandemic

By Katie Herrmann

Will the COVID-19 pandemic promote the legalization of recreational marijuana in Pennsylvania? Governor Tom Wolf would like it to. As part of a recent press release, Governor Wolf called on Pennsylvania lawmakers to legalize the use of recreational marijuana for commercial purposes, citing the need to generate revenue to support small businesses.

Amongst several coronavirus relief proposals, Governor Wolf proposed $225 million in forgivable loans and grants available to Pennsylvania small businesses through the COVID-19 Relief Statewide Small Business Assistance Program. Under this program, eligible “small businesses” must meet the following requirements: being physically located and certified to do business in Pennsylvania, having an annual revenue of $1 million or less before the impact of COVID-19, and having 25 or fewer full-time equivalent employees before February 15, 2020.

Governor Wolf further proposed $100 million in forgivable loans and grants for the hospitality, leisure, and service industries, which includes restaurants and bars, salons, and barber shops.

As a way to generate money for these funds, Governor Wolf stated that the proceeds from recreational marijuana would go to the grant funding—50% of which would go to Historically Disadvantaged small businesses. Historically Disadvantaged small businesses, according to the program, are at least 51% owned and operated by persons who are Black, Hispanic, Native American, Asian American, or Pacific Islander because they have traditionally been discriminated against and disadvantaged when seeking financial services and financial products.

He also proposed that a portion of the proceeds go to furthering restorative justice programs for those convicted of marijuana-related offenses, although he did not provide any further details as to what programs would benefit from this.

This recent push to legalize marijuana is not Governor Wolf’s first attempt. He signed off on Pennsylvania’s legalization of medical marijuana in 2016. He most recently announced last fall that he supported legalizing recreational marijuana. This push, however, comes at a time when Pennsylvania’s economy is greatly suffering due to coronavirus shutdowns and restrictions. Governor Wolf expressed his hope that those previously opposing recreational marijuana would now be more willing to vote for its legalization, seeing the financial benefits as “one way to plug a hole” in the coronavirus devastation.

While the actual economic effect of the legalization of recreational marijuana may not be easily projected during a time of economic uncertainty, previous research has supported Governor Wolf’s representations that it could bring Pennsylvania a significant chunk of cash. A special report done by Pennsylvania’s Auditor General Eugene DePasquale in 2018 compared Pennsylvania’s population and marijuana use with Colorado’s and Washington’s, states where recreational marijuana has been legal since 2012. The report concluded that Pennsylvania could generate approximately $581 million per year by legalizing, taxing, and regulating recreational marijuana. Further, if Allegheny County were to add a local 1-2% tax, it could mean an additional $3.8 million per year, according to the report. Governor Wolf further suggested that marijuana be regulated through a state store system, much like alcohol sales.

At the moment, however, this avenue of funds to small businesses seems  a long shot. With only a dozen in-session days left for the PA legislature before the November election, it would be surprising to see such a hotly contested subject pass without debate and compromise. Governor Wolf’s proposal was quickly answered by Pennsylvania’s House of Representative and its Majority Leader, Republican Kerry Benninghoff, calling Wolf “disingenuous” to “put forward an unaffordable legislative agenda and require taxpayers to bail him out of his unilateral mandates that have devastated their lives and livelihoods.” With so many small businesses struggling, however, this may not mean the complete refusal of legalizing recreational marijuana in PA. Governor Wolf’s term does not end until 2022, and his idea of bringing in revenue this way may soon become a viable option.

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