California is paving the way for weed outlets to become restaurants

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California has given the green light for cannabis lounges in the state to convert their establishments into cafes where patrons can eat, drink and light fires.

Under the bill signed into law by Gov. Gavin Newsom on Monday, starting Jan. 1, local jurisdictions can now allow cannabis stores to prepare and sell cannabis-free food and beverages for on-site consumption. Only non-alcoholic drinks like coffee can be offered.

Restaurants are already allowed to sell prepared meals and packaged drinks laced with THC, but are not allowed to prepare the food on site or allow consumption there.

The measure also allows establishments to offer live entertainment if local lawmakers give the green light.

Advocates say the relaxed controls will allow certified dispensaries to operate like cafes in Amsterdam, selling marijuana as well as coffee, baked goods, sandwiches and other food for on-site consumption. The outlets have become a trademark of the Dutch city and an important tourist magnet.

Dispensaries say they need additional attractions and revenue streams to combat the loss of cannabis sales on the black market, where marijuana prices are often lower. Licensed establishments only took in one in three dollars spent on cannabis products in 2020, or about $4 billion of the $12 billion in total revenue, according to Rep. Matt Haney, the bill's sponsor.

“This is the future,” Haney said at a news conference. “Supporting our small businesses and helping them succeed is the future.”

Haney and other supporters of the bill have also claimed that easing restrictions will create more jobs.

The bill passed both chambers of the California Legislature in bipartisan votes. The bill AB 1775 has also been publicly endorsed by celebrities such as Whoopi Goldberg, Bill Maher and Woody Harrelson.

Similar legislation was passed by the Legislature a year ago, but Gov. Gavin Newsom vetoed the measure. He claimed at the time that the bill did not provide adequate protection from secondhand smoke for servers who took customers' food and drink orders.

“I commend the author for including additional safeguards, such as explicitly protecting employees' discretion to wear a respiratory mask, paid for at the employer's expense, and requiring employees to provide additional guidance on the risks of secondhand cannabis smoking to receive,” Newsom said in a message he sent to the Legislature when he signed the bill.

Newsom added that he would view any future legislation that weakens protections negatively.

The bill marks another important step in the evolution of California's cannabis business. In 1996, the state became the first in the country to legalize retail sales of marijuana for medical purposes. Dispensaries were permitted to sell THC products for recreational use in 2016, and approval for on-site consumption followed.

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