California Assembly Approves Bill To Legalize Marijuana Cafes

The California Assembly has passed a bill to legalize marijuana cafes, allowing dispensaries to offer non-cannabis food and drinks at their location if they receive local approval.

The legislation from Assemblymember Matt Haney (D) cleared the chamber in a 59-9 vote on Wednesday and now heads to the Senate for consideration.

“The legal cannabis industry is struggling,” Haney said on the floor. “Issues like an over-saturation, high taxes and thriving black market are hurting cannabis businesses who follow the rules and pay taxes.”

Our Cannabis Cafe bill just flew off the Assembly floor with bipartisan support.

California’s small cannabis businesses are struggling. Issues like over-saturation, high taxes, and the thriving black market are hurting cannabis businesses who follow the rules and pay taxes.

In… pic.twitter.com/zH1pc15mwF

— Matt Haney (@MattHaneySF) May 31, 2023

“AB 374 allows local governments to authorize the preparation and sale of non-cannabis foods and soft drinks at licensed cannabis consumption lounges,” he said. “To be clear this does not allow coffee shops to sell cannabis. It allows cannabis shops to sell coffee with pre-approval from local governments.”

“It shouldn’t be illegal for an existing cannabis business to move away from only selling marijuana and instead have the opportunity to grow, thrive and create jobs by offering coffee or live jazz,” the assemblymember said.

The sale of alcoholic beverages at the cannabis cafes would continue to be prohibited, as would smoking tobacco.

The legislation would further explicitly authorize “live musical or other performances on the premises of a retailer or microbusiness licensed under this division in the area where the consumption of cannabis is allowed, and the sale of tickets for those performances.”

Retailers and microbusinesses would be permitted to offer freshly prepared food and drinks, but the bill limits the sale of prepackaged food to retailers, which is consistent with regulations that the state’s Department of Cannabis Control (DCC) adopted late last year.

There have been examples of California businesses that have found workarounds to permit on-site consumption while making food available to guests—but they’ve operated in a grey area, partnering with separately licensed restaurants that receive the profits.

“Ironically, how the law is written now, we require cannabis shops to only sell drugs,” Haney said. “We believe that if these businesses want to move away from that model and sell muffins and coffee, they should be able to do that. This will support our small businesses, with local government autonomy.”

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Meanwhile, the state Senate approved a bill on Tuesday that would prohibit employers from asking job applicants about prior marijuana use. That now heads to the Assembly.

It would build on existing employment protections enacted last session that bar employers from penalizing most workers for using cannabis in compliance with state law off the job.

Last week, California officials announced that they’ve awarded more than $50 million in marijuana tax-funded community reinvestment grants.

DCC also recently awarded nearly $20 million in research grants, funded by marijuana tax revenue, to 16 academic institutions to carry out studies into cannabis—including novel cannabinoids like delta-8 THC and the genetics of “legacy” strains from the state.