Pennsylvania Cannabis Legalization Bills: SB 120, HB 1735, HB 20

The Private Market Consensus

Lead Bill: SB 120 (Sens. Dan Laughlin R-Erie, Sharif Street D-Philadelphia)
House Companions: HB 1735 (Rep. Amen Brown D-Philadelphia), HB 20 (Reps. Emily Kinkead D, Abby Major R)
Status: All pending in committee, no hearings scheduled
Session: 2025-2026 Regular Session

Executive Summary

Pennsylvania has three active cannabis legalization bills—all proposing private dispensaries, all bipartisan, and all designed to succeed where the state-run stores model (HB 1200) failed.

The May 2025 defeat of HB 1200 in the Senate Law and Justice Committee wasn't a rejection of legalization. Committee Chair Dan Laughlin made clear he supports legalization—just not state-run stores. He then introduced SB 120, the bill most likely to become law.

The Pennsylvania equation is simple: Laughlin controls the Senate committee. If cannabis passes, it passes through SB 120 or something nearly identical.

CBDT Assessment: SB 120/HB 1735/HB 20 represent the most CBDT-aligned legalization framework Pennsylvania has produced. The 14% combined tax rate (6% sales + 8% excise) is explicitly designed to compete with neighboring states and displace the black market. These bills address all five CBDT levers while avoiding the fragmentation risks that killed HB 1200.

Why These Bills Exist: The HB 1200 Failure

On May 7, 2025, the Pennsylvania House passed HB 1200 by a razor-thin 102-101 party-line vote. Five days later, the Senate Law and Justice Committee killed it 7-3.

What HB 1200 proposed:

• State-run cannabis stores operated by the Liquor Control Board (PLCB)
• 12% cannabis tax + 6% sales tax (18% total)
• No clear pathway for existing medical operators
• 25% THC cap on flower

Why it died:

Laughlin's message was clear: bring me a private market bill and we can talk.

SB 120, HB 1735, and HB 20 are the response.

Bill Comparison

Bottom line: SB 120 is the vehicle. Laughlin wrote it after killing HB 1200. HB 1735 and HB 20 exist to build House momentum and potentially merge into a compromise.

What SB 120 Does

Market Structure

• Private dispensaries regulated by a new Cannabis Control Board (not PLCB)
• Existing medical operators can convert to dual-use (medical + adult)
• New licenses issued through merit-based scoring with equity provisions
• Vertical integration permitted—cultivators can operate dispensaries
• Lab testing required for all products

Possession Limits

Taxation

Comparison to neighboring states:

Pennsylvania's 14% is competitive. Not the lowest, but designed to capture the estimated 60% of Pennsylvania consumers currently buying in neighboring states.

Social Equity & Expungement

• Clean Slate: Automatic expungement of nonviolent cannabis convictions
• Release: Those currently incarcerated for expungeable offenses will be released
• License preferences: Small business and "disproportionately impacted area" categories
• Financial support: Grants and low-interest loans through Dept. of Community and Economic Development
• Residency requirement: 51% Pennsylvania ownership required

Testing & Safety Requirements

All products must be tested for:

• Microbiological contaminants
• Mycotoxins
• Pesticide active ingredients
• Heavy metals
• Residual solvents
• THC potency

Timeline (if passed)

• Month 0: Bill enacted
• Month 6: Cannabis Control Board adopts transitional regulations
• Month 12: Licensed dispensary sales begin

The CBDT Framework Analysis

Lever 1: Price Gap (g) — STRONG POSITIVE

Weight: 4× (highest impact)

Rep. Amen Brown's HB 1735 co-sponsorship memo explicitly applies CBDT logic:

"Taxing adult-use marijuana at 26% will likely continue to drive individuals to the illicit market as well as to surrounding states with more competitive pricing. An overly burdensome tax rate undermines the legal market's ability to compete and incentivize consumers to transition away from unregulated sources."

This is price gap analysis in legislative language.

The Pennsylvania problem:

Governor Shapiro's office reports that border-state dispensaries see up to 60% of their customers from Pennsylvania. That's billions in revenue flowing to New Jersey, Ohio, Maryland, New York, and Delaware.

At 14% total tax, Pennsylvania:

• Undercuts New York's effective rate
• Matches New Jersey's combined burden
• Slightly exceeds Maryland and Ohio but gains convenience advantage

CBDT Prediction: Legal market captures 65-75% of consumption within 36 months, contingent on adequate retail density.

Lever 2: Access Density (D) — STRONG POSITIVE

Weight: 1×

Pennsylvania has 170+ medical dispensaries already operational. SB 120 allows these to convert to dual-use, providing immediate retail infrastructure across the state.

Density advantage:

• No need to build from scratch like New York
• Medical operators have existing supply chains, testing relationships, and compliant operations
• Adult-use sales could begin within 12 months of passage

Comparison:

Lever 3: Safety/Quality (S) — STRONG POSITIVE

Weight: 1.2×

SB 120 requires comprehensive testing and establishes a dedicated Cannabis Control Board with enforcement authority:

• Product testing for contaminants, potency, and purity
• $10,000 fines per violation
• Background checks for all licensees and employees
• Seed-to-sale tracking integration with existing medical program

Pennsylvania's medical program has 8+ years of testing infrastructure. Adult-use would inherit this system rather than building from scratch.

Lever 4: Convenience (F) — POSITIVE

Weight: 1×

The private dispensary model eliminates the PLCB convenience disaster that plagued HB 1200.

HB 1200 problem: Pennsylvania's state liquor stores are notorious for limited hours, poor selection, and inconvenient locations. Replicating this for cannabis would have driven consumers to continue buying out-of-state or from the black market.

SB 120 solution: Private operators compete on convenience—hours, locations, product selection, customer service.

Lever 5: Enforcement (E) — POSITIVE

Weight: 0.6×

SB 120 includes:

• Penalties for unlicensed cultivation and sales
• Cannabis Control Board enforcement authority
• Integration with existing medical program tracking
• Age verification requirements (95% compliance in comparable states)

The bill doesn't decriminalize until sales infrastructure exists—avoiding the New York trap where possession was legal but legal purchase was impossible for years.

Fragmentation Modifier (F_frag) — MINIMAL

Weight: −0.8×

SB 120 maintains policy coherence by:

• Using existing medical infrastructure rather than creating parallel systems
• Establishing a single regulatory body (Cannabis Control Board) for both programs
• Adopting testing standards already proven in the medical market
• Avoiding federal conflict by using private operators (not state employees)

The HB 1200 state-stores model introduced maximum fragmentation—federal preemption risk, PLCB bureaucracy, excluded industry stakeholders. SB 120 eliminates all of these.

Political Landscape

Why SB 120 Has the Best Odds

Remaining Obstacles

Revenue Projections

What's Missing

Even well-designed bills have gaps:

Interstate Commerce

Like all state programs, Pennsylvania's market would be intrastate-only. No imports from Oregon's surplus or exports to neighboring states.

Federal 280E

Until federal rescheduling (see Marijuana 1-to-3 Act), Pennsylvania operators still face 50-70% effective federal tax rates. State legalization doesn't fix this.

Banking Access

SAFE Banking hasn't passed federally. Pennsylvania operators would still face cash-handling challenges and limited financial services.

Home Cultivation

SB 120 limits home grow to medical patients only—no recreational home cultivation. This is a concession to industry stakeholders who want to capture the full retail market.

CBDT Comparison: Pennsylvania vs. Neighboring States