PHILADELPHIA — Gov. Josh Shapiro again proposed legalizing recreational marijuana as part of his $51.5 billion budget pitch last week, the third time he has pushed for its legalization since he took office, and as nearly every state bordering Pennsylvania already permits adult-use cannabis sales.

But this year, Shapiro’s estimates of how much revenue the recreational marijuana industry would bring to Pennsylvania increased by more than 3,000% from his budget pitch last year, where he estimated the state would bring in $14.8 million in the first year of legalizing cannabis. Shapiro now predicts the state will bring in $535.6 million in its first year of legalization, mostly from licensing fees — and projects that taxing cannabis sales could rake in a total of $1.3 billion in the first five years.

To many Democrats in Harrisburg, the move is a commonsense new revenue generator that could help the state fill its forthcoming budget shortfall. Republicans, however, have been unhappy with the state’s rollout of its medical marijuana program and have broader safety concerns that could block movement on the issue this year.

The Shapiro administration believes recreational marijuana would bring in more than half a billion dollars to Pennsylvania’s coffers in its first year, a number conceived after talking to officials in surrounding states that have legalized it and accounting for more than $500 million in potential licensing fees, a senior Shapiro administration official said last week. State Senate Republicans, however, claim Shapiro is inflating the numbers to fill a budget hole.

Shapiro’s estimates outpace what surrounding states have made off cannabis sales, and he is proposing a sales tax rate of 20%, which is double that of most of Pennsylvania’s neighbors.

West Virginia is Pennsylvania’s only bordering state that has not legalized adult-use cannabis. Meanwhile, neighboring states like New Jersey and New York, both of which legalized marijuana in 2021, celebrated sales surpassing $1 billion by the end of 2024. And Pennsylvania desperately needs new revenue streams — or to cut spending — as Shapiro faces a $4.5 billion shortfall in this year’s budget, as costs are expected to outpace revenue.

“Letting this business operate in the shadows doesn’t make sense, and by doing nothing, we’re making Pennsylvania less competitive,” Shapiro said during his budget address last week. “Let’s not kid ourselves: Pennsylvanians who want to buy cannabis are just driving across the border to one of our neighbors.”

Twenty-four states have legalized recreational use of the drug, and 39 states have medical marijuana programs, creating a patchwork of regulations and taxes in each of Pennsylvania’s border states.

Here’s a look at the state of medical marijuana sales in Pennsylvania, and how Pennsylvania’s neighbors have already regulated the marijuana market.

New Jersey

New Jersey sold $1 billion worth of adult-use cannabis in 2024, a 25% increase over the prior year, according to a news release from New Jersey’s Cannabis Regulatory Commission. The recreational marijuana program brought in more than $43.3 million in tax revenue from its 6.625% sales tax, as well as an additional $6 million from its 0.33% social equity excise tax to support communities previously negatively affected by the criminalization of marijuana.

Recreational marijuana has been legally for sale in New Jersey since April 2022.

New York

Legal sales of recreational marijuana began in New York in December 2022, with a 13% excise tax collected on cannabis products. The state had brought in $67 million in the first half of this fiscal year from tax, fee, and fine revenues on more than $800 million in marijuana sales, according to New York Gov. Kathy Hochul’s office.

Maryland

Maryland, which had its first legal sale of adult-use cannabis in July 2023, is expected to surpass $1 billion in sales this year and yield more than $100 million in tax revenue from its 9% sales tax on recreational marijuana.

Approximately half of revenue collected from cannabis sales in Maryland goes to the state budget’s general fund, and the rest is split among a community reinvestment fund, cannabis business assistance, counties, and a cannabis public health fund.

Delaware

Delaware will begin the legal sale of recreational marijuana on April 1, and expects to bring in between $28 million and $42 million annually, Delaware Live reported.

Marijuana will have Delaware’s first sales tax, with the state taxing 15% of all recreational marijuana sales. The state in 2023 also created a marijuana commissioner to set up its marijuana market and began issuing licenses late last year into this one.

Ohio

Ohio began selling recreational marijuana in August 2024 with a 10% sales tax, following a voter referendum nine months earlier that approved its sale.

Ohio splits its tax revenue largely among three funds, for municipalities with dispensaries, a social equity program, and substance use disorder treatments, the Cincinnati Enquirer reported.

Municipalities are allowed to ban recreational marijuana sales, but won’t receive any of the tax revenue if they do. More than 120 local governments in Ohio have banned the sale of adult-use cannabis in their communities, the Ohio Capital Journal reported.

Ohio Gov. Mike DeWine proposed last week in his budget pitch to revamp the program to tax sales at 20% and split the funds across 11 funding streams, including 988 crisis hotline funding, jail construction and renovations, and a program to expunge marijuana possession charges.

Could Pennsylvania be next?

Shapiro’s proposal for legalizing recreational marijuana says the Department of Agriculture should oversee an adult-use cannabis program in consultation with the Department of Health. Under his plan, funds would be put into a restricted account and split among several agencies, including $2.25 million for enforcement and expungement, $10 million for restorative justice, and $15 million to the Department of Agriculture to operate the program, for sales to begin in Pennsylvania on July 1, 2026. The rest would be deposited into the general fund.

Pennsylvania’s medical marijuana program already supports 25,000 jobs, 32 grower/processors, and nearly 200 dispensaries — which makes Pennsylvania “uniquely positioned” to open up the market to all adults age 21 and older, according to the Pennsylvania Cannabis Coalition.

Still, legalizing recreational marijuana in Pennsylvania remains an uphill battle.

Top leaders in the GOP-controlled state Senate said they do not have broad support to legalize adult-use cannabis, with concerns including its federal classification as a Schedule I substance alongside heroin, issues with Pennsylvania’s medical marijuana rollout, and general safety apprehensions about the effect its legalization would have on communities across the state.

Lawmakers have until June 30 to pass the state’s budget.

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