California Legislature Passes Cannabis Cafe and Farmers Market Bills

by Omar Figueroa and Lauren Mendelsohn

August 29, 2024

The California Legislature passed two bills on August 28, 2024 which would allow Amsterdam-style cannabis cafes and also allow licensed cultivators to engage in direct-to-consumer sales at  cannabis events.  The bills are now headed to Governor Newsom for consideration.

Assembly Bill 1775 would empower local jurisdictions to allow Amsterdam-style Cannabis Cafes where Californians can enjoy food, coffee, and entertainment while consuming cannabis.  According to its author, Assemblymember Matt Haney, AB 1775 was crafted to address the Governor’s concerns about providing a smoke-free environment for workers:

Assembly Bill 1775 empowers cities to choose to allow Amsterdam-style Cannabis Cafes where Californians can enjoy food, coffee, and entertainment while consuming cannabis. Last year the bill sailed through both the Assembly and Senate with broad bipartisan support before being vetoed by Governor Gavin Newsom, citing concerns about workers being provided a smoke-free environment. At the Governor’s urging, Haney is in conversations with the Department of Cannabis Control and the Governor’s office, to address those concerns and to create a bill that allows Cannabis Cafes but protects workers’ health.

Haney Brings Back Bill to Create Amsterdam-Style Cannabis Cafes in California, Press Release by the Office of Assemblymember Haney, January 10, 2024.

When AB 1775 passed the Assembly and went on to the state Senate with broad bipartisan support, Assembly Member Haney emphasized that the legislation simply allows cannabis retailers to diversify their business and move away from the struggling dispensary model by selling non-cannabis-infused foods:

While cannabis cafes in the Netherlands thrive and capitalize on the social experience of cannabis by offering coffee, food, and live music, all of those opportunities are currently illegal under California law. AB 1775 simply allows cannabis retailers to diversify their business and move away from the struggling and limited dispensary model by selling non-cannabis-infused foods.

“Lots of people want to enjoy legal cannabis in the company of others,” said Haney. “And many people want to do that while sipping coffee, eating a scone, or listening to music. There’s absolutely no good reason from an economic, health or safety standpoint that the state should make that illegal. If an authorized cannabis retail store wants to also sell a cup of coffee and a sandwich, we should allow cities to make that possible and stop holding back these small businesses.”

Bill Legalizing Amsterdam-Style Cannabis Cafes Passes Assembly with Bipartisan Support, Press Release by the Office of Assemblymember Haney, May 20, 2024.

Assembly Member Haney also highlighted diligent work with the Governor’s Office to address concerns about protecting the health of workers in cannabis cafes:

A previous version of this bill, AB 374, was passed last year by the Legislature and vetoed by the Governor. Assemblymember Haney has been working diligently with the Governor’s Office to address concerns raised in the veto message.

Bill Legalizing Amsterdam-Style Cannabis Cafes Passes Assembly with Bipartisan Support, Press Release by the Office of Assemblymember Haney, May 20, 2024.

The revised version of the bill contains numerous protections for workers, so it can be inferred that the Governor’s concerns have likely been addressed.  You can read the text of AB 1775 here and check the status here.

Assembly Bill 1111 would require the Department of Cannabis Control (DCC), beginning no later than January 1, 2026, to issue small producer event sales licenses authorizing retail sales by certain licensed cultivators at state-licensed cannabis events.  You can read the text of AB 1111 here and check the status here.

According to the Assembly Floor Analysis filed on August 28, 2024, author Assemblymember Pellerin’s intent was to give California’s small cannabis producers direct-to-consumer access similar to that available for small producers of products like wine or coffee:

California’s small cannabis producers are world-renowned for their craft and quality, but lack access to scale-appropriate marketing activities that would be available if they were small producers of products like wine or coffee. As a result, communities of small producers across the state are struggling to compete against better-resourced competitors. Enabling small producers to sell their own products at licensed cannabis events would support the development of a craft cannabis market in California and facilitate sustainable economic development in cannabis producing regions.

Significantly, AB 1111 would allow craft cultivators to obtain a temporary sales license so they could engage in direct-to-consumer sales at licensed cannabis events, subject to numerous restrictions.  For example: “All cannabis or cannabis products sold by a small producer event sales licensee at a licensed state temporary event shall only contain cannabis cultivated by that licensee.”   Moreover, retail sales “shall not exceed one hundred seventy-five thousand dollars ($175,000) in gross revenue per year. Beginning July 1, 2027, the department may increase this cap by regulation after reevaluating the cap in response to inflation and market conditions.”  Additionally, only “small producers” are allowed to obtain event sales licenses, and the definition of who qualifies as a “small producer” changes over time:

(D) On and after January 1, 2025, and until January 1, 2027, inclusive, the applicant satisfies all of the following:

(i) The applicant cultivates no more than 10,000 square feet of cannabis, inclusive of all licensed premises.

(ii) The applicant cultivates no more than 5,000 square feet of cannabis under a mixed-light tier 1 cultivation license or licenses, inclusive of all licensed premises.

(iii) The applicant cultivates no more than 2,500 square feet of cannabis under a mixed-light tier 2 or indoor cultivation license or licenses, inclusive of all licensed premises.

(E) On and after January 1, 2027, the applicant satisfies all of the following:

(i) The applicant cultivates no more than one acre of cannabis, inclusive of all licensed premises.

(ii) The applicant cultivates no more than 22,000 square feet of cannabis under a mixed-light tier 1 cultivation license or licenses, inclusive of all licensed premises.

(iii) The applicant cultivates no more than 5,000 square feet of cannabis under a mixed-light tier 2 or indoor cultivation license or licenses, inclusive of all licensed premises.

(2) Notwithstanding the limitations in subparagraph (D) of paragraph (1), a licensee who holds a valid state cultivation license may apply to the department for a small producer event sales license before January 1, 2027, if that applicant satisfies both of the following:

(A) The applicant is a local equity applicant or licensee, as defined in Section 26240.

(B) The applicant meets the requirements for cultivation size under subparagraph (E) of paragraph (1).