Pennsylvania will join the ranks of the U.S. adult-use markets either this year or next. That’s the prediction laid out by Gibran Washington, chief executive of Pennsylvania-based Ethos Cannabis – and he’s willing to put money on it.

The primary question, he said, is what kind of market structure lawmakers will authorize and what the details, such as state marijuana tax rates, will look like.

“We’re excited. We think it’s going to happen … Whether the governor wants it this year, based on what we’re seeing from the financial outlook of the state of Pennsylvania, they’re going to need it by next year,” Washington said, referring to Pennsylvania’s $3.6 billion budget shortfall. “Unless they want to go to their constituents and tell them that they’re going to raise taxes, I think cannabis is probably the best solution for both sides of that gap there.”

Washington, who’s been in communication with Gov. Josh Shapiro’s team regarding how legalization could work, said the legislature already has a “couple of competing bills” that lay out different visions for a recreational cannabis market in Pennsylvania.

One Democratic-sponsored bill would create a marijuana industry run by the state government, similar to the state’s government-run liquor industry. Washington doubts that framework will become a reality. Another model on the table for lawmakers – and Washington’s preference – includes a social equity program, retail license caps, and allows licensed medical operators to transition seamlessly into adult-use sales.

“It’ll be somewhat of those two coming together,” Washington predicted. “We don’t feel the state model will be really involved at all by the time it’s all said and done. It’d be too complicated for the state to try to figure out how they’re going to grow cannabis and then sell cannabis.”

Washington said he’s eager for the state to take that leap, so Ethos can bring its full business expertise to bear in its home state, the way it’s done with vertical integration in neighboring Massachusetts and Ohio. After that, he’s looking forward to more expansion.

Ethos is already considering entrances to Connecticut, Kentucky and New Jersey, and would consider pretty much any market where it could set up as vertically integrated, which rules out New York.

“We expect to see a lot of distressed assets kind of come into the marketplace over this next 12 months, if not sooner, that should be able to be good additions to our core business, whether it’s in the three states that we’re currently in or it’s in other states that we’re currently looking at, especially if there’s a path towards verticality,” he said.

Ethos is already profitable, Washington said, a mere six years after the company was founded in 2019, thanks primarily to its lean-and-mean strategy that relies on efficiency and adapting to current market conditions – as opposed to pinning hopes on federal reforms like rescheduling, the SAFER Banking Act and 280E tax relief.

“We run business as if nothing ever is going to change. That’s how we evaluate our businesses. If nothing changed, is this a viable business?” Washington said.

Ethos’s still faces some big challenges, however, including competition from both the underground marijuana market and the newer intoxicating hemp gray market, which are both major threats in all three states where Ethos operates.

“The black market was our biggest concern for years. That was who we were up against, who were fighting with, the legacy operators in this space. Then this gray market kind of popped up with hemp,” Washington said. “They are the biggest threat to our existence because, unlike the black market where you’re still hand to hand, more person-to-person, these people have storefronts.”

Another concern for Washington: potential backlash from consumers and regulators if contaminated hemp THCA flower sickens customers, which he said could easily become a “black mark on the entire (cannabis) industry.”

“It was the black market operators and those who were shipping from California was our biggest concern, but now they’re not shipping it anymore. They’re just showing up in the damn storefronts with big jars of weed,” he said.

Regardless, Washington and his team are in the business for the long haul, and Ethos is prepped to grind its way to success.

“This is not a get rich quick scheme. This is not a ‘You can do everything because you’ve dream it’ kind of industry,” Washington said. “It’s, ‘What can we make money on and what can we do at scalable levels to turn good margin and good profits?’”