As our state’s economy evolves, we must ensure that today’s tax revenue is not just spent in the moment but invested wisely to benefit future generations. One way to achieve this is by creating a Pennsylvania Legacy Fund — a permanent investment vehicle fueled by revenue from adult-use cannabis and potential expansions in gaming, such as skill games. This fund would provide a sustainable source of prosperity that lasts for generations.
Other states have done it successfully. Look at Alaska and Texas, both of which use specific revenue sources to fund long-term investment accounts that benefit to their residents. Pennsylvania can follow this model by directing cannabis tax revenue and future gaming expansion proceeds into a Legacy Fund that secures our financial future, rather than spending these funds on short-term budget gaps.
Cannabis and skill games
Let’s start with adult-use cannabis. Legalization isn’t a matter of if anymore — it’s when. Ohio took the step in 2023, and every year we wait, we lose tax revenue to neighboring states. A well-regulated cannabis market in Pennsylvania could generate hundreds of millions of dollars annually through sales taxes and licensing fees.
These funds could be directed into the Legacy Fund, ensuring that revenue from this emerging industry contributes to long-term investments in education, infrastructure, and other critical needs. Additionally, legalization would create jobs, support local businesses, and reduce the prevalence of the illegal and unregulated market. It is imperative that Pennsylvania takes action now to stay competitive and reap the benefits of this inevitable shift.
Another major opportunity lies in the expansion of gaming, specifically the regulation and taxation of skill games. These machines are already widespread across the state, yet they currently operate in a legal gray area.
By formally recognizing and taxing skill games, Pennsylvania could generate significant new revenue. Rather than using this money for short-term expenditures, we should dedicate it to the Legacy Fund, ensuring that gaming revenues benefit Pennsylvanians for generations to come. While these two sources present substantial opportunities, we remain open to exploring other funding options to ensure the long-term success of the Pennsylvania Legacy Fund.
Investment benefits
So how would the Pennsylvania Legacy Fund work? Revenues from cannabis taxation and gaming expansion would be placed into a carefully managed investment fund. Instead of spending the money immediately, the fund would be invested in a diversified portfolio of stocks, bonds, and real estate.
An independent board would oversee the fund, ensuring responsible management. Like Alaska’s Permanent Fund, we’d set a limit on withdrawals to a sustainable percentage, allowing the principal to continue growing. This approach guarantees that the fund remains a lasting resource, benefiting not only our generation but also our grandchildren’s and their grandchildren’s.
The benefits are clear. First, economic stability — the fund would provide Pennsylvania with a reliable revenue stream, having a smoothing effect on our budget process to protect us from wild swings in funding. Second, fairness—why should today’s revenue be spent entirely when future Pennsylvanians could still benefit?
Third, it’s a common-sense, bipartisan idea—conservatives can support it as a fiscally responsible, long-term financial strategy, while progressives can back it for its potential to support social programs and public investments.
Some concerns will be raised. Will legal cannabis create public safety issues? States like Colorado and Washington have demonstrated that crime rates remain stable and that tax revenues can help fund law enforcement and addiction treatment programs.
What about gaming expansion? A well-regulated system ensures consumer protection and prevents illegal market activity. The key is strong oversight and transparency in managing the fund so that every dollar is accounted for.
Peak revenues
Timing is crucial. As Pennsylvania considers the legalization of cannabis and further expansion of gaming, we must act now to harness these revenues at their peak. A bipartisan effort could establish the fund with initial investments from early cannabis tax revenue and gaming expansion proceeds.
Over time, this fund would grow, becoming a cornerstone of Pennsylvania’s financial future. This isn’t just about solving today’s budget issues — it’s about creating a lasting financial asset for generations to come.
Pennsylvania’s motto is “Virtue, Liberty, and Independence,” and that means thinking beyond just today. A Pennsylvania Legacy Fund is our chance to take the wealth we generate now and make it work for generations. Let’s not just collect revenue — let’s invest it, protect it, and build a future where Pennsylvania thrives long after we’re gone. The opportunity is here. Let’s seize it.
Dan Laughlin, a Republican, represents the 49th District in Pennsylvania's state senate, which encompasses nearly all of Erie County. His previous article was “Better laws make better policies that save children's lives.”
First Published: April 8, 2025, 8:30 a.m.
