California Governor Says No to Cannabis Cafes

October 9, 2023 · Green Market Report

California Gov. Gavin Newsom vetoed a bill on Friday that sought to permit Amsterdam-style cannabis cafes in the state, despite widespread bipartisan support in both legislative chambers.

Assembly Bill 374, championed by San Francisco Assemblymember Matt Haney, would have allowed cannabis dispensaries to transition into cafes, offering food and cannabis products, and featuring live concerts, upon receiving local government approval. The intent behind the bill was to give the legal cannabis industry, which faces stiff competition from the state’s thriving illicit market, an even playing field.

Cannabis lounges, where customers can consume on-site, are already lawful. However, selling non-cannabis items, such as food, remains prohibited in these establishments. Supporters highlighted the bill as a necessary step to tackle huge unlicensed competition.

Haney previously compared the measure to how the Netherlands, recognized alongside California as a hub of cannabis culture, successfully eradicated its illicit cannabis market post the 1970s by legalizing cannabis cafes. He stressed the importance of bolstering the state’s legal cannabis businesses, pointing to the industry’s cultural and financial significance.

Newsom’s veto cited potential threats to the state’s smoke-free workplace policies.

Other Actions

The governor’s decision also comes on the heels of his veto of a psychedelic drug possession bill and a cannabis packaging bill. However, he did endorse several other cannabis-related measures, including changes in equity, tracking, testing, and licensing.

One such measure, SB 622, aims to promote environmental sustainability by changing how marijuana plants are tagged, potentially reducing costly plastic waste.

Regarding the vetoed cannabis cafe bill, Haney expressed disappointment but remained hopeful for future collaboration.

“So much of the world’s cannabis culture comes from right here in California,” said Haney. “Californians are proud of our state’s wine culture, and we do everything we can to make sure that our winemakers receive the support they need — we need to be doing the exact same thing for cannabis. If we don’t start better supporting these businesses we are going to lose decades of being at the forefront of the cannabis movement and other states will be ready to swoop in and take it from us.”

“AB 374 just allows businesses where smoking is already happening to sell coffee and food and hold live shows,” he added`. “I’m looking forward to working closely with his office and with labor leaders to make sure we get this right when I introduce the bill next year.”

In contrast, industry leaders applauded the governor’s decision to veto a bill regarding cannabis packaging, which they believed posed excessive restrictions that could inadvertently boost the illegal market.

Pamela Epstein, the president of the California Cannabis Industry Association, said in a press release she was “grateful” for Newsom’s veto, and said the bill would have cost legal cannabis companies millions if it had become law.

The packaging bill “posed a significant threat to the industry with excessive restrictions, inadvertently favoring the illegal market and depleting critical tax revenues earmarked for youth deterrence programs,” Epstein said in an emailed statement.

CCIA noted happily that Newsom instead signed into law Senate Bill 540, an “alternative” to Assembly Bill 1207, the vetoed measure. The industry-preferred bill still requires regulators to occasionally review cannabis labeling rules for possible tweaks. (Full Story)

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