State-Owned Dispensaries: Pennsylvania’s Unique Path to Cannabis Legalization

As the movement for cannabis legalization gains momentum across the United States, Pennsylvania is taking a distinct approach that sets it apart from most states. A new recreational cannabis bill, spearheaded by State Representatives Dan Frankel (D-Allegheny) and Rick Krajewski (D-Philadelphia), proposes a state-run dispensary model, integrating cannabis sales into existing liquor stores managed by the Pennsylvania Liquor Control Board (PLCB).

While the proposal includes room for private businesses in cultivation, production, and consumption lounges, it suggests cannabis retailing remain under state control, creating what supporters describe as a safer, more regulated market. However, the model comes with unique challenges and raises questions about its viability in balancing public control, industry growth, and social equity.

Under the proposed framework, the PLCB would be restructured into the Liquor and Cannabis Control Board, overseeing both alcohol and cannabis sales. Rep. Frankel envisions cannabis being sold in state-operated stores, much like liquor, with the potential to utilize existing infrastructure.

“This is a substantial bill,” Frankel told the Capital-Star. “It’s a complex issue and trying to address many different aspects of adult use.”

Proponents argue that state-run dispensaries could offer a tightly regulated environment, ensuring consistent quality, safe sales practices, and responsible marketing while preventing excessive commercialization.

Stronger Public Oversight: By centralizing sales, the state can more easily enforce rules around public health, such as prohibiting predatory advertising and limiting excessive THC levels in products.

Revenue Generation: Similar to Pennsylvania’s control over liquor, the state could collect substantial revenue directly from cannabis sales, potentially funneling funds into public health initiatives, education, and community reinvestment programs.

Safety and Accountability: State stores could prioritize product safety, ensuring all cannabis sold meets rigorous testing standards.

Avoiding Over-Saturation: Unlike states where unregulated dispensary proliferation has led to market saturation, state-controlled outlets could prevent oversupply and stabilize pricing.

While the state-run model has its advantages, it faces significant hurdles:

Industry Pushback: Existing cannabis businesses and lobbyists, such as Responsible PA, have voiced concerns that a state-store model might stifle competition and innovation. Brittany Crampsie, a spokesperson for the pro-cannabis group, pointed out that such a structure could hinder efforts to create opportunities for minority entrepreneurs in retail.

Political Resistance: Republicans in Pennsylvania have long sought to privatize the state’s liquor system, making the expansion of the PLCB’s authority to include cannabis a potentially contentious issue.

Social Equity Concerns: Critics argue that the state-run retail model might conflict with goals of fostering diversity and inclusion in the cannabis market. “There has to be opportunities to rebuild both the entrepreneurs in that space and also the communities that were impacted by that loss of economic activity,” said Rep. 1Napoleon Nelson (D-Montgomery), chair of the Legislative Black Caucus.

Public Perception: Some worry that placing cannabis in state-run stores could stigmatize the product further or discourage consumers who prefer the experience of private dispensaries.

Despite these challenges, the proposed bill does create opportunities for private businesses in other parts of the cannabis industry. It includes provisions for cultivation, production, and bar-like consumption sites, leaving room for entrepreneurial innovation outside of retail sales.

Additionally, the bill aims to establish an Office of Social Equity within the Liquor and Cannabis Control Board to support minority-owned businesses and ensure communities disproportionately impacted by the war on drugs benefit from legalization. The plan also includes expungement for non-violent cannabis offenses and reinvestment into affected communities, addressing some long-standing social justice issues.

If passed, Pennsylvania’s state-run cannabis system would stand out in the national landscape. Most of the 24 states that have legalized recreational cannabis rely on private businesses to operate dispensaries. By integrating cannabis into its state-controlled liquor framework, Pennsylvania could create a unique hybrid system that combines public accountability with private-sector innovation.

However, the success of this model will depend on navigating significant political and logistical challenges while delivering on promises of equity, safety, and community reinvestment.

While Gov. Josh Shapiro has voiced support for recreational cannabis legalization, the road ahead for this bill is uncertain. It is likely to undergo significant debate and potential amendments as lawmakers and stakeholders weigh the advantages and drawbacks of a state-run model.

As Pennsylvania considers this bold approach, it faces the challenge of creating a system that balances public health, economic opportunity, and social equity—setting a potential precedent for how other states might approach cannabis legalization in the future.

Should Pennsylvania Use State-Owned Stores to Sell Cannabis?

• Yes, it ensures safety and oversight.
• No, private dispensaries are better for competition.
• Maybe, but only with strong equity provisions.